In financial markets, liquidity changes everything. Once-illiquid assets become tradable. New players flood in. Old hierarchies collapse. Value flows faster and differently.
The same thing is now happening to technical skill.
Where expertise was once scarce and slowly accumulated, AI is injecting liquidity into the skill market. Execution is faster. Access is broader. Barriers are lower. Like in finance, this shift is reshaping the middle of the market in ways that are often painful and confusing.
This is not the end of software jobs. It is a repricing. Those who understand the dynamics of liquidity, and how unevenly it spreads, can not only navigate this change they can succeed because of it rather than get displaced by it.
The Skill Market Before AI
Historically, software development was built on a steep skill curve. It took years to develop the knowledge required to write performant, secure, maintainable code. Organizations reflected this with layered teams: junior developers handled simple tickets, mid-tier engineers carried the delivery load, and senior engineers architected and reviewed.
This mirrored an illiquid market:
- Knowledge was siloed, often in the heads of senior devs or buried in internal wikis.
- Feedback loops were slow, with code reviews, QA gates, and manual debugging.
- Skill mobility was constrained, so career progression followed a fixed ladder over time.
In this world, mid-tier developers were essential. They were the throughput engine of most teams. Not yet strategic, but experienced enough to be autonomous. Scarcity of skill ensured their value.
AI Changes the Market: Injecting Skill Liquidity
Then came the shift: GitHub Copilot, ChatGPT, Claude, Gemini, Cursor, Windsurf, and others.
These tools do more than suggest code. They:
- Fill in syntax and structural gaps.
- Scaffold infrastructure and documentation.
- Explain APIs and recommend architectural patterns.
- Automatically refactor and write tests.
They reduce the friction of execution. GitHub’s research shows developers using Copilot complete tasks up to 55 percent faster (GitHub, 2022). Similar gains are reported elsewhere.
They make skill more accessible, especially to those who lacked it previously:
- Junior developers can now produce meaningful output faster than ever before.
- Non-traditional developers can enter workflows that were once gated.
- Senior developers can expand their span of control and iterate more broadly.
In market terms, AI liquifies skill:
- The bid-ask spread between junior and mid-level capability narrows, that is, the gap between what juniors can do and what mids were once needed for shrinks.
- Skill becomes less bound by time-in-seat or institutional memory.
- More participants can engage productively in the software creation economy. While adoption varies, large tech firms often lead, while smaller companies or legacy-heavy sectors like banking and healthcare face higher integration hurdles, the trend toward skill liquidity is clear.
This shift is not happening evenly. That is where the real opportunity lies.
The arbitrage today is not just in the tools themselves, the chance to capitalize on gaps in how quickly teams adopt AI. It is in the opportunity spread: the gap between what AI makes possible and who is effectively using it.
Just like in markets, early adopters of new liquidity mechanisms gain a structural advantage. Teams that build AI-augmented workflows, shared prompt libraries, and internal copilots are operating on a different cost and speed curve than those still relying on traditional experience-based workflows.
This gap will not last forever. But while it exists, it offers meaningful leverage for individuals, teams, and organizations.
Importantly, AI tools amplify productivity differently across experience levels:
- Juniors gain access to knowledge and patterns previously acquired only through years of experience, helping them produce higher-quality work faster.
- Senior developers, with their deeper context and better judgment, often extract even greater value from these tools, using them to implement complex solutions, explore multiple approaches simultaneously, and extend their architectural vision across more projects.
- Both ends of the spectrum see productivity gains, but in different ways, juniors become more capable, while seniors become even more leveraged.
This amplification effect creates acute pressure on the middle tier, caught between increasingly capable juniors and hyper-productive seniors.
Why the Middle Tier Feels the Squeeze
There is also a practical reason: cost control.
As AI raises the baseline productivity of junior developers, companies see an opportunity to rebalance toward lower-compensated talent. Where a mid-level or senior engineer was once needed to maintain velocity and quality, AI makes it possible for a well-supported junior to do more.
Companies are increasingly betting that AI tools plus cheaper talent are more efficient than maintaining traditional team structures. This shift isn’t without risks, AI-generated code can introduce errors (studies suggest 20-30% may need human fixes), and over-reliance on juniors without robust oversight can compromise quality. Experienced developers remain critical to guide and refine these workflows. That bet is paying off, especially when companies invest in prompt engineering, onboarding, internal platforms, and support tools.
But that “well-supported junior” is not automatic. It requires experienced developers to build and maintain that support system. Mentorship, internal frameworks, curated AI toolchains, and effective onboarding still depend on human judgment and care.
And while AI can augment execution, many real-world systems still depend on context-heavy problem solving, legacy code familiarity, and judgment, all of which often live with experienced, mid-level developers.
What Happens to the Middle Tier? Compression, Specialization, and Realignment
As in finance, when liquidity rises:
- Margins compress. It becomes harder to justify mid-level compensation when similar output is available elsewhere.
- Roles consolidate. Fewer people are needed to ship the same amount of code.
- Value shifts. Execution is commoditized, while orchestration, judgment, and leverage rise in importance.
- New specializations emerge. Just as electronic trading created demand for algorithmic strategists and execution specialists, AI is creating niches for prompt engineers, AI workflow designers, and domain-specific AI specialists.
This helps explain recent tech layoffs. Macroeconomic tightening and overhiring played a role, but so did something more subtle: AI-induced skill compression.
Layoffs often disproportionately affect mid-level developers:
- Juniors are cheaper, and AI makes them more effective.
- Seniors are harder to replace and more likely to direct or shape how AI is used.
- Mid-tiers, once the backbone of execution, now face pressure from both sides.
Duolingo’s restructuring, for example, eliminated many contractor-heavy roles after adopting AI for content generation (Bloomberg, 2023). IBM has projected that up to 30 percent of back-office roles may be replaced by AI over five years (IBM, 2023). These moves reflect a larger market correction.
These examples underscore how companies are re-evaluating where skill and value live, and how automation enables workforce reshaping, sometimes at surprising layers.
The middle tier does not disappear. It gets repriced and redefined. The skills that remain valuable shift away from throughput toward infrastructure, context, and enablement.
Historical Parallel: The Rise of Electronic Trading
In the 1990s and early 2000s, financial markets underwent a similar transformation. Human traders were replaced by electronic systems and algorithms.
Execution became commoditized. Speed and scale mattered more than tenure. Mid-level traders were squeezed, unless they could reinvent themselves as quant strategists, product designers, or platform builders.
Software development is now echoing that shift.
AI is the electronic trading of code. It:
- Reduces the skill premium on execution.
- Increases velocity and throughput.
- Rewards those who design, direct, or amplify workflows, not just those who carry them out.
The New Playbook: Think Like a Market Maker
If you are a developer today, the key question is no longer “How good is my code?” It is “How much leverage do I create for others and for the system?”
Here is how to thrive in this new market:
- Become a Force Multiplier
Build internal tools. Create reusable prompts. Develop standard workflows. A mid-tier developer who builds a shared test and prompt suite for new APIs can significantly reduce team ramp-up time, with some teams reporting up to 40 percent gains (e.g., internal studies at tech firms like Atlassian).
- Shift from Throughput to Leverage
Own end-to-end delivery. Understand the business context. Use AI to compress the time from problem to insight to deployment.
- Curate and Coach
AI raises the floor, but it still needs editorial control. Be the one who sets quality standards, improves outputs, and helps others adopt AI effectively.
- Build Liquidity Infrastructure
Invest in internal copilots, shared prompt repositories, and domain-specific agents. These are the new frameworks for scaling productivity.
What Leaders Should Do
Engineering leaders must reframe how they build and evaluate teams:
- Rethink composition. Combine AI-augmented juniors, orchestration-savvy mids, and high-leverage seniors.
- Promote skill liquidity. Create reusable workflows and support systems that reduce onboarding friction and accelerate feedback.
- Invest in enablement. Treat prompt ops and AI tooling as seriously as CI/CD and observability.
- Evaluate leverage, not volume. Focus on unblocked throughput, internal reuse, and enablement, not just tickets closed.
Leaders who create liquidity, not just consume it, will define the next wave of engineering excellence.
Conclusion: Orchestrators Will Win
AI has not eliminated the need for developers. It has eliminated the assumption that skill value increases linearly with time and tenure.
In financial markets, liquidity does not destroy value. It redistributes it and exposes where the leverage lives.
The same shift is happening in software. Those who thrive will be the ones who enable the flow of skill, knowledge, and value. That means orchestration, amplification, and infrastructure.
In markets, liquidity rewards the ones who create it.
In engineering, the same will now be true.