How AI is changing the software developer job market

AI has not wiped out software developer jobs, but it is changing who gets hired. In the US, software development job postings are still 27.5% below their February 2020 level, yet they have grown almost 15% since early 2025, and most of that growth is in senior and AI-related roles. The clearest losses are at the entry level, among developers aged 22 to 25.

This article pulls together the most recent official and research data (up to mid-2026) on employment, job postings and skills, then translates it into what it means if you are a founder about to hire.

Employment: still growing, but not evenly

The US Bureau of Labor Statistics counted 1,717,800 software developer jobs in 2025 and projects 10% growth for the occupation between 2025 and 2035, about 174,700 additional jobs. The median annual pay for software developers was $135,980 in May 2025. The BLS explicitly links the demand to AI: it expects strong demand because of "the continued expansion of software development for artificial intelligence (AI), Internet of Things (IoT), robotics, and other automation applications."

The picture is different for the narrower role of "computer programmer". The BLS projects a 7% decline in that occupation over the same decade (110,800 jobs in 2025), pointing to automation, AI handling repetitive coding tasks and higher-level work moving to software developers.

In Europe, the trend is still upward. Eurostat reports more than 10 million ICT specialists employed in the EU in 2025, 5.0% of total employment, up 59.4% between 2015 and 2025, against 9.8% growth in total employment.

So the headline is not "fewer developers". It is a shift away from roles that mostly turn specifications into code, and toward roles that design, integrate and own systems.

Job postings: a slow recovery led by senior and AI roles

Job postings react faster than employment statistics. According to Indeed Hiring Lab (July 2026):

• US software development postings remain 27.5% below February 2020 levels.
• They have grown by almost 15% since the launch of Claude Code in late February 2025, while overall postings fell 7% over the same period.
• 71% of the increase between May 2025 and May 2026 came from senior roles, and 37% from jobs with AI in their title.
• The share of postings that are software development jobs has been rising in most large developed economies, with the exception of Germany and France.

Earlier in 2026, Indeed found that software development postings mentioned AI 20% or more of the time, and that tech postings mentioning AI were about 45% above their February 2020 level while total tech postings were 34% below it.

Who is losing ground: early-career developers

The strongest evidence of an AI effect concerns young workers. Stanford researchers Erik Brynjolfsson, Bharat Chandar and Ruyu Chen use ADP payroll data covering millions of US workers. In their August 2026 revision, employment of workers aged 22 to 25 in AI-exposed occupations stands 19% below where it would be had it kept pace with less-exposed peers. Experienced workers show no comparable gap, and the adjustment happens mainly through fewer hires of young people rather than layoffs. The authors also state that they find "no evidence of widespread, economy-wide job displacement."

Software developers are one of the two case studies in the paper. In the November 2025 version, employment for software developers aged 22 to 25 had declined nearly 20% from its late-2022 peak by September 2025, while older age groups kept growing.

Not everyone reads the data the same way. LinkedIn's Economic Graph team (February 2026) finds that software engineering hiring has broadly tracked the tech sector and the national economy, and that changes in real interest rates account for most of the variation in software engineering hiring over the past decade. They note that entry-level hiring did not rebound at the end of 2025 and call that "concerning", but say it is not enough to conclude AI is the cause. Our article on junior developer hiring in the AI era goes deeper into this debate.

Which roles and skills are growing, and which are shrinking

Growing

• Senior engineers. They account for most of the 2025–2026 rebound in postings (Indeed).
• AI engineers. LinkedIn reports that AI engineers now account for a share of software engineering hires 14 times higher than in 2019 and 10 times higher than in 2022. Machine learning engineers roughly doubled their share since 2019.
• Cloud and data skills. The top skills among software engineers hired in 2021–2025 were Python, AWS, SQL, JavaScript and React.js, and the fastest-growing included AI, Tailwind CSS, Azure Databricks, Google BigQuery and Azure SQL (LinkedIn).
• Software jobs outside tech companies. Professional services rose from 21.2% to 28.2% of software engineering postings between December 2023 and December 2025 (LinkedIn).

Shrinking or under pressure

• Pure coding roles, as the BLS projection for computer programmers shows.
• Entry-level positions, as shown by the Stanford data and the flat entry-level hiring LinkedIn observed at the end of 2025.
• Profiles built only on basic web skills. LinkedIn notes that in 2016–2020 the top skills were JavaScript, CSS and HTML; hiring now leans toward Python, cloud and AI capabilities.

What it means if you are hiring

For a founder, these numbers translate into a few practical decisions:

1. Budget for experience. If most new demand is for senior people, that is where competition and salaries are. Our breakdown of the cost to hire a software developer shows how to compare options.
2. Hire for judgement, not typing speed. Coding assistants generate code quickly; the scarce skill is deciding what to build, reviewing it, testing it and keeping it secure. The research on AI coding assistant productivity shows gains are real but uneven, and depend on review and testing practices.
3. Don't plan to skip engineers entirely. AI app builders can get a prototype out, but security and maintenance still need someone accountable. See what vibe coding can and cannot do for an MVP.
4. Ask how candidates use AI. With a fifth or more of software postings mentioning AI, it is now normal to assess this skill. Our guide to hiring developers in 2026 covers how.
5. Look beyond a full-time hire. A small team may not need a permanent senior engineer on payroll. Compare a freelancer, an agency or a development retainer before deciding.

Frequently asked questions

Will AI replace software developers?

The data so far does not show it. The BLS still projects 10% growth in software developer jobs for 2025–2035, and the Stanford team finds no economy-wide displacement. What is shrinking is entry-level hiring and pure coding work.

Are software developer jobs growing in 2026?

Postings are recovering: Indeed measured almost 15% growth in US software development postings since early 2025, although they remain 27.5% below February 2020. Most of the new demand is for senior and AI-related roles.

Which developer skills are most in demand?

LinkedIn's 2026 data points to Python, cloud platforms (AWS, Azure, Google Cloud), SQL, React and AI-related skills. In practice, employers also look for the ability to review and test AI-generated code.

Is this a good time for a startup to hire developers?

Experienced developers are in demand, so expect competition for strong seniors. Junior candidates are easier to find, but they need mentoring and review capacity. Decide first which of those your team can actually support.

Sources

1. Software Developers, Quality Assurance Analysts, and Testers (Occupational Outlook Handbook), U.S. Bureau of Labor Statistics, 2026
2. Computer Programmers (Occupational Outlook Handbook), U.S. Bureau of Labor Statistics, 2026
3. AI and Job Postings: From Destruction to Creation?, Indeed Hiring Lab, 2026-07
4. January 2026 US Labor Market Update: Jobs Mentioning AI Are Growing Amid Broader Hiring Weakness, Indeed Hiring Lab, 2026-01
5. Canaries in the Coal Mine? Six Facts about the Recent Employment Effects of Artificial Intelligence (revised), Stanford Digital Economy Lab, 2026-08
6. Canaries in the Coal Mine? (working paper, November 2025 version), Stanford Digital Economy Lab, 2025-11
7. U.S. Software Engineer Talent Landscape, LinkedIn Economic Graph, 2026-02
8. ICT specialists in employment, Eurostat, 2026