AI’s Impact on the Job Market: Software Roles at Risk

As AI tools become more common in people’s everyday work, researchers are looking to uncover its effects on the job market—especially for early career workers.

A paper from the Stanford Digital Economy Lab, part of the Stanford Institute for Human-Centered AI, has now found early evidence that employment has taken a hit for young workers in the occupations that use generative AI the most. Since the widespread adoption of AI tools began in late 2022, a split has appeared, and early-career software engineers are among the hardest hit.

The researchers used data from the largest payroll provider in the United States, Automatic Data Processing (ADP), to gain up-to-date employment and earning data for millions of workers across industries, locations, and age groups. While other data may take months to come out, the researchers published their findings in late August with data through July.

Although there has been a rise in demand for AI skills in the job market, generative AI tools are getting much better at doing some of the same tasks typically associated with early-career workers. What AI tools don’t have is the experiential knowledge gained through years in the workforce, which makes more senior positions less vulnerable.

These charts show how employment over time compares among early career, developing, and senior workers (all occupations). Each age group is divided into five groups, based on AI exposure, and normalized to 1 in October 2022—roughly when popular generative AI tools became available to the public.

The trend may be a harbinger for more widespread changes, and the researchers plan to continue tracking the data. “It could be that there are reversals in these employment declines. It could be that other age groups become more or less exposed [to generative AI] and have differing patterns in their employment trends. So we’re going to continue to track this and see what happens,” says Bharat Chandar, one of the paper’s authors and a postdoctoral fellow at the Stanford Digital Economy Lab. In the most AI “exposed” jobs, AI tools can assist with or perform more of the work people do on a daily basis.

So, what does this mean for engineers?

With the rise of AI coding tools, software engineers have been the subject of a lot of discussion—both in the media and research. “There have been conflicting stories about whether that job is being impacted by AI, especially for entry level workers,” says Chandar. He and his colleagues wanted to find data on what’s happening now.

Since late 2022, early-career software engineers (between 22 and 30 years old) have experienced a decline in employment. At the same time, mid-level and senior employment has remained stable or grown. This is happening across the most AI-exposed jobs, and software engineering is a prime example.

Since late 2022, employment for early-career software developers has dropped. Employment for other age groups, however, has seen modest growth.

Chandar cautions that,…