2025 salary and career trends for SWEs: What’s changing and how to stay ahead

The job market is shifting yet again, and hiring strategies continue to evolve. At Formation, we’ve seen these changes firsthand, helping engineers navigate a more competitive hiring landscape.

If you plan to switch jobs in 2025, here’s what you need to know.

The rebranding of layoffs: What it means for job seekers

Tech layoffs have dominated the news, but not all layoffs are what they seem.

In the past, performance-based firings were handled quietly, and companies used performance improvement plans (PIPs) or low ratings to phase out underperforming employees. These cuts weren’t considered layoffs and rarely made headlines.

Now, that’s changing. Many companies are rebranding performance-based firings as public layoffs — not because more people are losing jobs, but because it plays well with investors. Cost-cutting efforts signal operational discipline, which can boost stock prices.

This trend took off when Meta framed its workforce reductions as part of a "Year of Efficiency." Investors responded positively, and other companies followed suit.

The good news is that despite the headlines, companies are still hiring. These layoffs don’t mean a complete hiring freeze — it just means companies are being more selective about who they bring on board.

At Formation, we continue to see engineers land high-paying roles. However, hiring teams are prioritizing lean, high-performing teams over mass hiring. The bar is higher, and top engineers land the best roles.

What’s happening with salaries?

Salaries have remained stable overall, but the way companies approach pay negotiations has changed.

Previously, engineers could negotiate for higher salaries without competing offers. Even if they were interviewing elsewhere, companies were often willing to increase offers based on perceived demand. That’s no longer the case.

Now, employers expect verified competing offers before adjusting pay. Without one, the negotiations are tougher.

What this means for job seekers:

• Get competing offers when you can — they give you real leverage in negotiations.
• Expect companies to hold firm — they won’t adjust offers based on interview performance alone.
• Look at total compensation — evaluate base salary, stock, and bonuses together.

Cash vs. equity: What candidates want has changed

Stock-based compensation used to be a major draw for startup employees, but candidates now favor guaranteed cash.

At Formation, we’ve seen engineers choose cash-heavy offers at established firms over stock-heavy packages at late-stage startups. Even at well-regarded private companies, candidates hesitate to trust stock-based compensation without clear liquidity paths.

Candidates are looking beyond compensation and focusing on long-term stability. Companies with strong reputations for career growth and stability attract top talent, while those with unclear compensation structures struggle to close offers.

Big tech still pays the most

Despite industry shifts, the highest-paying jobs remain in big tech and high-margin companies. While AI companies are growing, they haven’t overtaken traditional top payers like Google, Meta, or hedge funds. 

That said, we're seeing a lot of interest at OpenAI, Anthropic, and some of the leading AI-focused tech companies, which are emerging as strong contenders in compensation.

AI hype ≠ AI hiring

Many companies position themselves as AI-driven, but they aren’t necessarily hiring AI specialists. Instead, they expect generalist engineers to use AI tools effectively to improve productivity.

At Formation, we’ve seen engineers land roles at AI-heavy companies — even if they don’t have deep AI experience. The technology is still relatively new and ever-changing. Hiring teams aren’t demanding AI expertise but do expect engineers to integrate AI into their workflows.

And while AI-specific roles aren’t taking off yet, AI-adjacent roles are emerging. We anticipate that professionals in fields like accounting, data analysis, and operations will increasingly need to use AI tools to automate repetitive tasks and enhance efficiency.

What this means for job seekers:

• You don’t need deep AI knowledge, but you should know how to use AI tools.
• AI is becoming an expected part of engineering workflows.
• Non-engineering roles will also see AI integration, creating new job types and opportunities.

The growing gap between junior and senior engineers

The hiring market strongly favors mid-level and senior engineers. Companies want candidates who can contribute immediately, reducing the need for training and onboarding.

New grads without elite academic backgrounds or extensive internship experience are struggling more than ever. Hiring teams are primarily recruiting from top CS programs where students have already completed multiple internships.

We’ve also seen a steep drop in opportunities for bootcamp grads. While bootcamps used to provide a viable pathway into software engineering, demand for self-taught or bootcamp-trained engineers has declined sharply.

What this means for junior engineers:

• Internships matter — start early.
• Bootcamps alone aren’t enough — additional experience is necessary. Consider volunteering, doing freelance work, or contributing to an open source project so you can talk about real-world applications on your resume and in interviews
• Career progression matters — consider sticking with your first job longer.

How to stay ahead in 2025

With hiring becoming more selective and negotiations tightening, preparation is more critical than ever. The best opportunities will go to candidates who approach the job search with a clear plan, strong skills, and a strategic mindset. 

Here’s how to make sure you stand out:

• Start preparing before you need a job. Don’t wait until you’re actively job searching to sharpen your skills. Companies are hiring fewer people, and the bar remains high.
• Plan ahead and apply to multiple roles at once. Hiring timelines are longer, and competition is tougher. 
• Leverage structured interview prep. Engineers who are well-prepared with robust interview prep tend to perform better in high-stakes interviews.
• Keep detailed notes on each company and role so you can tailor responses and follow up effectively.
• Competing offers are now essential. Companies are much less likely to budge without them.
• Follow industry trends. While companies aren’t prioritizing AI-specific hires yet, they expect engineers to effectively integrate AI tools into workflows.
• Focus on earning promotions. Employers favor candidates with a clear career trajectory. If you’re early in your career, focus on moving up and taking on impactful projects before switching jobs.

Get holistic interview prep with Formation

The Formation Fellowship gives mid-level and senior engineering job seekers everything they need to land their dream roles—including personalized skill brush-ups, resume help, unlimited mock interviews with experienced software engineers and hiring managers from top-tier tech companies, career and negotiation support, and more. 

If you’re having trouble navigating your job search on your own, apply here and get unconditional support from a team of engineering mentors, technical recruiters, career coaches, and more.