Fed Confirms What Tech Developers Have Feared for Two Years

In brief

• A Federal Reserve study found US programming job growth dropped roughly 50% after ChatGPT launched in November 2022.
• Researchers estimate roughly 500,000 developer jobs that would have otherwise existed were never filled.
• The employment gap didn't appear until mid-2024—about 18 months after ChatGPT's launch.

The Federal Reserve just put a number on something developers have been experiencing for two years.

A new study by Fed economists Leland D. Crane and Paul E. Soto found that employment growth among U.S. programmers dropped roughly 50% after ChatGPT launched in November 2022. Before that, programming-intensive jobs were growing at around 5% annually—well above the overall labor market.

Since then, growth has fallen sharply. In the sectors most concentrated with programmers, like IT services and software development, it has essentially flatlined.

This is the first Federal Reserve-level study to directly link AI adoption to a measurable, occupation-specific decline in developer hiring, pointing to AI as the cause of an occupation-specific shock.

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.