Israel's tech employees cost more than US counterparts

For years, Israel's tech workforce has been a premium option, with costs second only to Silicon Valley. Companies were willing to pay more for Israeli talent, believing the superior quality and experience justified the expense over workers in India or Eastern Europe. However, a new study by the Israel Growth Forum reveals a significant reversal: Israeli developers now cost more than their U.S. counterparts.

The study, which analyzed data from 10,000 employees at seven Israeli growth companies, found that the cost of an Israeli tech worker is 1.02 times that of a U.S. worker. This marks a first-time occurrence, a stark contrast to May 2025 when Israeli salaries were only 85% of U.S. salaries. The primary driver behind this change is the strengthening of the Israeli shekel against the U.S. dollar. Since much of the capital in Israeli tech is raised in dollars, while most operational expenses, including wages, are paid in shekels, a stronger shekel significantly inflates costs for employers.

This development also reshapes Israel's competitive standing against Eastern Europe. Previously, lower employment costs in countries like Poland, Lithuania, Romania, and Ukraine made them attractive alternatives. Now, Israeli tech workers are 2.4 times more expensive than their counterparts in these nations. This widening cost gap, coupled with improving talent quality globally and the changing dynamics of team building due to the AI revolution, creates a growing incentive for companies to direct new hiring to Eastern Europe and potentially slow or halt recruitment in Israel.

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In the past year, the cost of employment in Israel in dollar terms has increased by 17%-22%, and the balance point at which the cost of employing a worker in Israel is equal to that of an equivalent employee in the US is around NIS 3.21/$