Are software jobs set to grow or shrink?

There seem to be two views of what will happen with engineers' jobs given the new efficiencies from using advanced AI coding tools (Cursor, Claude Code, etc).

The first view is partial rebound. Fewer engineers will be needed in total: if engineers are 20% more effective per hour, there will be some downsizing of the total engineering bill. Perhaps not the whole 20%, but at least a bit. In economic terms, this means assuming a demand price elasticity of less than 1. That's the conservative, default position: this is the typical response to most efficiency increases.

The alternative view is backfire, a positive thing regardless of its ominous name. It seems to be held by many VCs, founders, and generally people close to technology, and claims that more engineers are needed. This is because even though 20% fewer engineers may be needed to build the same thing, decreasing price increases demand for software so much that it more than compensates for the efficiency increase. This means an assumption of >1 elasticity and is often referred to as the Jevons paradox.

Economists typically analyze this at the level of the whole economy, and I don't have a clear understanding which way it is at that level. But for an engineer like me and you, we want to know which one holds true at a particular company and even department and team. It might be the one you're working at, or one you're interviewing at. If AI coding tools keep improving rapidly, you probably would prefer somewhere with a backfire scenario.

What would each one look like, from the inside?

Partial rebound:

• You talk a lot about efficiency, costs, doing more with less.
• You are not hiring, or are even reducing team size.
• Your job is more about maintaining existing capabilities, not adding new ones.

Backfire:

• You talk a lot about speed, revenue growth.
• You continue hiring, even with every engineer more productive.
• You have many ideas for how to move meaningful business metrics, and how the scope of your team needs to grow.

The second one looks a lot like a startup with product-market fit, or generally confidence that extra work will drive extra value. The first one is a more stable, keep-the-lights-on situation.

I obviously prefer to be in the backfire situation, not for the job security but more for the vibe and energy and opportunity. But even if you didn't before, you might now