Despite widespread concern that tools like Cursor and Claude Code would displace Software Engineers (SWEs), demand for these roles is actually increasing. The share of new hires who are Software Engineers rose from 19.32% in Q4 2023 to 22.77% in Q3 2025, based on an analysis of hiring trends across 8,600+ companies in Pave's compensation database.
The counterintuitive finding may be explained by Jevons Paradox—an economic principle describing how increased efficiency in using a resource often leads to greater overall consumption of that resource, not less. If AI coding tools make software engineers significantly more productive, the ROI of hiring engineers goes up, which incentivizes companies to hire more of them rather than fewer. The more output each engineer can generate, the more valuable each additional hire becomes.
That said, the data points to one important nuance: while overall SWE demand is rising, companies are skewing toward hiring more senior engineers. The share of entry-level (P1) and junior (P2) SWEs across Pave's dataset fell from 19.2% to 13.9% over the same period.
The implication is that AI tools are compressing demand at the bottom of the engineering ladder while amplifying it at the top—making this less a story about displacement and more one about a fundamental reshaping of what the software engineering job market looks like.
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Rithika is a data scientist at Pave focused on compensation insights, analytics, data-storytelling, and community. Before Pave, she worked at Karat Financial building a credit card product and launching a personal finance tool for content creators.
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