AI coding tools push startups to hire fewer juniors

Startups are increasingly using AI coding tools to build more with fewer people, and that shift is starting to reshape who gets hired. At Giftory, CEO Eric Lauer told AFP he is no longer prioritizing fresh graduates for engineering roles. Instead, he wants experienced developers he describes as architects—people who understand established workflows and can use AI tools to multiply their output.

Lauer said candidates with little practical experience are now “a lot less appealing” for a company like his. The logic is straightforward: tools such as Anthropic’s Claude Code and OpenAI’s Codex let small teams write, test, and fix software from simple text prompts, turning programmers into something closer to project managers.

The shift is already visible in startup data. According to The Pragmatic Engineer, 75% of developers at small startups surveyed said they use Claude Code. Y Combinator Managing Partner Jared Friedman said a quarter of startups in the accelerator’s Winter 2025 batch were built on code that was 95% AI-generated.

For founders, the economics are hard to ignore. Lauer said Giftory’s roughly 30 employees each get a premium AI subscription costing about $200 a month, compared with an average salary of $100,000 a year. He called that cheap enough to make offshoring “uncompetitive.” Haitham Mengad, co-founder of Stems Labs, told AFP he has taken a similar approach, focusing on doing more with a lean team. At Espresa, vice president of customer success Lindsay Euller said AI use is saving her team “millions of dollars a year.”

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The gains for startups come with a clear trade-off for early-career workers. A Stanford Digital Economy Lab study based on payroll data from millions of U.S. workers found employment among 22- to 25-year-olds in occupations most exposed to AI, including software development, fell nearly 20% from a late 2022 peak.

Separate research from Harvard covering around 62 million U.S. workers across 285,000 firms found that junior employment at companies adopting generative AI fell roughly 9% relative to nonadopters within six quarters, even as senior employment continued to rise.

Ian Amit, CEO of cybersecurity startup Gomboc AI, said he is hearing about companies interviewing widely but hesitating to make offers.

“I think there’s a lot of hesitation in hiring right now.”

Not everyone thinks this is sustainable. Amazon Web Services CEO Matt Garman has called the idea of replacing junior developers with AI “one of the dumbest things I’ve ever heard,” warning that the industry could cut off its own pipeline of future leaders. Even so, computer science enrollment is already slipping, dropping 6% across the University of California system and falling at two-thirds of computing programs nationwide, according to the Computing Research Association.

For now, Lauer said the choice inside fast-growing startups remains the same: add more resources, or add more people. In many cases, AFP reports, the answer is still more AI and fewer hires.