The Federal Reserve just put a number on something developers have been experiencing for two years.
Since then, growth has fallen sharply. In the sectors most concentrated with programmers, like IT services and software development, it has essentially flatlined.
The tech sector took a beating in 2022 from interest rate hikes, the end of the pandemic digital boom, and the crypto crash. Skeptics have always argued that those factors alone explain the developer slowdown.
Crane and Soto addressed that directly. They built a counterfactual—how many programmers would exist if their share within each industry had stayed constant—and found programmer employment still falling by about 3% per year even after stripping out those effects. Non-AI-exposed occupations showed no comparable dip.
Stretched over three years, the gap amounts to roughly 500,000 jobs that would likely have existed without the rise of large language models. The authors strongly caution against reading this as a direct count of lost jobs. Many affected workers probably found work in adjacent fields, and the study doesn't capture broader macroeconomic feedback. But the signal is there.
The employment gap didn't open until mid-2024, roughly 18 months after ChatGPT launched. The researchers suggest companies needed time to see LLM capabilities improve enough to trust them before pulling back on headcount. Whether that reflects actual productivity gains or just the expectation of them, the data doesn't resolve.
“If A.I. disproportionately affects junior positions, it could have lasting consequences for the college wage premium, upward mobility and income disparities,” Harvard researchers wrote.
The Fed researchers don't frame the findings as catastrophic. Wages for programmers haven't declined—the effect has shown up in headcount, not pay. Job postings stabilized in 2024 and have ticked slightly upward since. The authors note that cheaper AI-assisted programming could open new markets and grow total demand for developer labor over the long run.
Crane and Soto describe their work as "only a first step." The study was published as a preliminary designation, meaning it hasn't completed the full Fed review process. But it's the first step produced inside the Federal Reserve, with the methodology and institutional weight that carries.
