Why Replacing Engineers With AI Tokens Is a Flawed Financial Argument

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A cost comparison circulating in corporate boardrooms pits the $250K fully-loaded annual cost of a senior US software engineer against roughly $20K in AI model token usage, making automation appear overwhelmingly cheaper. However, the analysis is misleading because the two figures measure fundamentally different things — one buys a complete professional, the other buys a portion of coding output. Writing code accounts for only 30–50% of an engineer's actual role, and AI agents currently cover an estimated 15–35% of the full job when factoring in non-coding responsibilities. AI-generated code still requires senior human review, consuming an estimated 0.3–0.5 of an engineer's time and adding $75K–$125K in human costs back into the equation. A more honest accounting shows AI tooling delivers a real but modest productivity gain of 15–35%, not a wholesale replacement of engineering headcount.

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