The Software Engineer Reckoning: From $300K Salaries to Mass Layoffs

Three years ago, the advice was simple: "Learn to code, you'll have a career for life."

Think back to that Thanksgiving conversation with a guidance counselor. The push was clear—go into technology, coding is safe, become an engineer.

That advice is no longer true. And the numbers prove it.

The Brutal Statistics

The software engineering job market has undergone one of the most dramatic reversals in modern employment history:

These aren't projections. This is happening right now.

The Boom and Bust

To understand where we are, you need to understand where we came from.

The Pandemic Hiring Frenzy (2020-2022)

During the pandemic, tech companies went on an unprecedented hiring spree. By mid-2022, job postings peaked at 350% of February 2020 levels. Companies couldn't hire engineers fast enough.

As James shared on the podcast: "I was doing a lot of hiring during the pandemic, like 2021 time frame, and I had college grads applying for engineering roles asking for $300K salaries without batting an eye—and expecting it. And at that point in time, they were getting that money."

Entry-level engineers were routinely getting $200K+ offers. The market was that hot.

The Correction (2023-2025)

Then everything reversed:

• 2022: Tech layoffs began, with an estimated 263,000 employees laid off globally
• 2023: A record 429,608 tech layoffs, with 167,600 in Q1 alone
• 2024: 151,484 more layoffs across 542 companies
• 2025: 122,000+ layoffs across 257 companies

The job posting slowdown hit software development harder than any other sector. While overall job postings across Indeed are 10% higher than 2020, software developer postings are down 33%.

Why AI Changed Everything

The timing isn't coincidental. ChatGPT launched in late 2022, right when the correction began.

Companies Are Replacing Juniors with AI

The data is stark:

• 66% of global enterprises plan to cut entry-level hiring due to AI adoption (IDC/Deel Survey)
• 71% of organizations report growing difficulties recruiting and training future leaders due to loss of entry-level learning pathways
• 69% say there are now fewer career development opportunities for junior employees

As one hiring manager put it: companies are evaluating whether AI can handle a function before approving new hires. With AI-powered coding agents available at a fraction of the cost of human labor, the economic calculus stacks against rookie developers.

The Apprenticeship Is Dying

Here's what keeps us up at night: if we stop making junior developers, how are we ever going to make senior developers?

A comment on one of our videos nailed it: "The apprenticeship is going away."

And with that, you lose both:

• The apprentices (no entry-level opportunities)
• The masters (no pipeline to create experts)

If you have AI producing "journeyman quality" work, companies don't feel they need apprentices anymore. And because that pipeline dries up, the masters slowly vanish over time.

This applies to any industry—not just software engineering.

James's Firsthand Experience

"I'm getting pings constantly. While we were doing the last podcast, my phone was lighting up. I have friends I've worked with, people I've hired in the past pinging me saying 'Hey, I need help.' Engineers—really talented people."

"It's as bad as it sounds, and it's not going to get better."

The contrast with 2021 is brutal. Back then, engineers were fielding multiple offers and negotiating $300K packages fresh out of college. Now, highly experienced engineers are struggling to find any opportunities.

The Pattern Everyone Should Watch

Here's why this matters even if you're not a software engineer: what happened to developers is likely coming to other fields.

The pattern:

1. Overhiring — Companies bring on more people than needed
2. Higher salaries — Competition drives compensation up
3. New technology emerges — AI offers efficiency gains
4. Pendulum swings — Layoffs, efficiency pushes, profitability focus
5. Tables turn — The job market inverts completely

Software engineers and technologists are the "tip of the spear." We've reinvented ourselves more times than we can count at this point. But this pattern is just beginning for other industries.

If it works well enough on the company side, expect them to do it over and over again for other roles, functions, and industries.

The Skill Atrophy Problem

There's another concern: developers using AI tools are losing skills.

One study found a 17% loss in skills among developers who became dependent on AI coding tools like Claude Code over time. They become less effective at their core job.

But here's the counterpoint: do you need to know all those things anymore?

The analogy we use: how many of you are out there building your own cabinetry or your own houses? Some of you can do that, but you don't need to anymore. Having everyone maintain that skill set to survive isn't necessary.

It's okay for some technical knowledge to be lost—as long as you understand the general principles behind it. At least for now.

What Actually Matters Now

For software engineers (and anyone watching this pattern unfold), here's what we're seeing work:

1. Understand the New Reality

The era of "hire first, figure it out later" from the 2010s is over. Companies now want engineers who demonstrate:

• Direct Impact — Ability to work on projects that generate revenue or cut costs quickly
• Adaptability — Willingness to learn new technologies and methodologies
• Business Insight — Understanding how code aligns with business objectives

2. AI Fluency Is Now Table Stakes

About 36% of programmers learned to code specifically for AI in the last year. 44% learned using AI-enabled tools like Copilot or Claude Code (up from 37% the year before).

You're expected to be "AI-aware"—comfortable using AI tools to accelerate work, but also able to explain every line of code you ship.

3. Higher-Order Thinking Matters More

Job responsibilities are shifting. For recent graduates pursuing software engineering roles, "they're not necessarily just coding" anymore.

There's now much higher-order thinking required:

• Knowledge of the software development life cycle
• Working with other parties
• Understanding user and client demands
• Evaluating AI output and knowing when to override it

4. The Pipeline Problem Creates Opportunity

Here's an interesting insight: if companies stop hiring juniors, they'll eventually have no senior developers. Some forward-thinking companies recognize this and are maintaining their early-career pipelines.

McKinsey, for example, announced plans for 12% more hiring in 2026 compared to 2025, specifically to staff their strategy and operations practices.

The companies that invest in talent development now will have a competitive advantage later.

The Honest Truth

We made What About AI our full-time job because we believe this is exactly what's going to happen across industries. We're trying to prepare everyone for that.

If you're a software engineer feeling worried about your job, know this:

• It's happening now
• It's real
• But technologists have been through this before

We've reinvented ourselves more times than we can count. This is an acceleration of a pattern that's happened throughout our careers.

The key is understanding where things are headed and positioning yourself accordingly—before the wave hits your role, your function, or your industry.

Get the Full Guide

We've created a comprehensive "Software Engineer Reckoning Survival Guide" with:

• Complete data and statistics with sources
• Action checklist for current engineers
• New grad / entry-level pivot strategies
• Skills assessment framework
• Interview preparation for the new reality

Download the Free Guide →

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Sources

• AEI - Are Software Jobs Collapsing?
• Visual Capitalist - Decline of U.S. Software Developer Jobs
• IEEE Spectrum - AI Shifts Expectations for Entry Level Jobs
• MEV - Software Developer Job Market Outlook August 2025
• Greenhouse - 2025 AI in Hiring Report
• HR Dive - Companies Plan to Replace Entry Roles with AI
• IntuitionLabs - AI's Impact on Graduate Jobs
• Statista - Tech Layoffs by Quarter
• NerdWallet - Tech Layoffs Declined in 2025
• Pragmatic Engineer - Software Engineer Jobs Five-Year Low
• Stack Overflow - AI vs Gen Z
• Final Round AI - Software Engineering Job Market 2026
• Codesmith - Tech Layoffs 2025, Software Engineering Jobs & AI Impact
• Crunchbase - Tech Layoffs