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In my opinion, there are multiple causes of the current tech job market situation: 1) Rapid rise in interest rates .. affects funding available to startups as

In my opinion, there are multiple causes of the current tech job market situation: 1) Rapid rise in interest rates .. affects funding available to startups as well as makes corporate R&D more expensive relative to the payoff 2) Overhiring during covid likely led to a degradation in standards and a pile up of warm bodies at the largest firms (I say likely because I don't think my org was able to hire on net. We kept getting outbid for candidates and lost people to attrition). Even if this is a perception in the leadership and not a reality, it will lead to a cull. 3) Consumer demand for consumer electronics, computer gear and generally Internet services has fallen compared to the covid bubble. A lot of weird things were going on with respect to both increase demand and constrain supply back in those days. Whiplash effect in supply chains is being studied by academics today. 4) Changes in the US tax code for how software dev costs are attributed. I don't fully understand this but seems pretty plausible. 5) I think the leaders don't see how AI can make them money yet ... the obvious thing is it can reduce costs by trying out AI in their processes. This is all very expensive so perhaps the layoffs creates room for investments in the that direction. All of these are significant headwinds. Am I missing any?

__loam 3y ago
I think 5 is pretty spurious at this point. I don't think any serious businesses are trying to replace most of their devs with ai yet. Otherwise you got a lot of the reasons. I think there's a few more. There's probably pressure being placed on leadership at a lot of companies by VCs, investors, and shareholders to trim the fat. That's why I think a lot of these layoffs seem pretty random, with situations like people's manager having no idea their direct reports were getting let go. The layoffs are coming from a fairly high level in these organizations. You mentioned this but this has a lot to do with the perception of the money people more than it has to do with reality, imo. That's why you can have extremely profitable companies like Google firing 10% of their workforce. Hugely destructive imo. Additionally, January is the end of the fiscal year. Companies want to make cuts to their budget before February. I've been seeing a lot of action in terms of recruiting outreach however. There seem to be a lot of very small startups getting created with a different financial attitude, eg trying to focus more on balancing profitability with growth. Rough time to be a late stage start up that just spent the last 8-10 years collecting debt and losing money on every new user. Supposedly the fed is going to cut rates at some point this year, so maybe that changes the calculus here eventually.
- kj800x 3y ago
  When my company did layoffs last year, neither my manager, or my manager's manager, or my manager's manager's manager knew before the moment we all knew if we were staying or not. You had to go up to the VP level to find anyone who was involved in planning the layoffs. When the VP has about a thousand engineers recursively reporting up to them, how are they supposed to be able to decide who stays and who goes. We were told that the layoffs weren't performance related, but at that level of distance what useful signals are there outside of the performance rating?
  - __loam 3y ago
    Maybe they used a dartboard.
mdorazio 3y ago
I'll posit an unpopular one. Elon's mass-firing at Twitter showed CEOs that many tech companies really are overstaffed and can get away with far fewer employees (Twitter's troubles now are due to dumb policy decisions, not their tech stack falling off a cliff).
- mynameishere 3y ago
  dumb policy decisions Musk took a baby step in the direction of free speech, and immediately the order went out for major corporations to stage an advertising boycott.
  - phlipski 3y ago
    Order's from who? Certainly Musk re-platforming hate speech (and lies) in the form of Alex Jones and re-tweeting antisemitic posts had NOTHING to do with corporations wanting to flee right?
  - piva00 3y ago
    Sure, the same free speech that Musk extended to people he didn't like, like the guy tracking his plane? Gimme a break...
  - king_magic 3y ago
    This is pretty intellectually dishonest. Doubt the ad boycott wouldn't have been nearly as large - or maybe even happened at all - if it weren't for Musk letting Nazis have a field day on Twitter again.
    - gitfan86 3y ago
      That is a very naive understanding of power dynamics in the legacy media.
  - giraffe_lady 3y ago
    There are literally nazis advertising on twitter right now, today, january 24 2024. https://twitter.com/DefundIsraelNow/status/1750172690785427740 https://twitter.com/DefundIsraelNow/status/17501726907854277... Whatever this is in the direction of it certainly isn't a baby step.
gitfan86 3y ago
DEI and diversity hiring incentives are much less popular due to Harvard's statements on free speech and also the supreme Court decision regarding the legality of not hiring white/Asian people due to their race.
robofanatic 3y ago
> 4) Changes in the US tax code for how software dev costs are attributed. I don't fully understand this but seems pretty plausible. Can you elaborate on this point? Does this mean companies can’t afford software developers?
- 535188B17C93743 3y ago
  I think companies used to be able to deduct "R&D time" which was a very vague definition for programmers and the IRS has tightened that up. https://www.eisneramper.com/insights/tax/impact-174-software-1023/ https://www.eisneramper.com/insights/tax/impact-174-software...
  - steveBK123 3y ago
    yup I used to have to fill out timesheets in some places to quantify the % of work that was R&D
- dustincoates 3y ago
  https://blog.pragmaticengineer.com/section-174/ https://blog.pragmaticengineer.com/section-174/ In short, you used to be able to deduct the entirety of an SWE R&D costs in the year it was paid, but now you must amortize it, like you would with machinery. That means that some companies are incurring "gains" that must be taxed, whereas before they wouldn't for that year.
steveBK123 3y ago
Nail on head, and if I had to stack rank the highest to lowest contribution I would say: 1, 2, 4, 3, 5 Rates rule everything around you. Macro. Hiring standards absolutely went out the door. I remember being on interview panels in 2020-2021 and it was - more open roles, less candidates per role, higher fill rate per role, fewer interview rounds per role. Tax code seems to be a big factor and being called out by journalists in the know. It's also telling that FAANGs are winding down / shrinking their more "moonshot" and "researchy" areas that have no real products or high staff to actual product ratios. I think 3&5 are much lesser impact but certainly there.
- johnnyanmac 3y ago
  >Hiring standards absolutely went out the door. I remember being on interview panels in 2020-2021 and it was - more open roles, less candidates per role, higher fill rate per role, fewer interview rounds per role. I sure wish I had that experience. I went some 6 rounds at my pre-COVID job and when layoffs hits I was 4 rounds in with 3 other companies before I accepted my next job (which was 3 rounds, but I had a referral from a very early employee) now I'm laid off again and it's still 4-5 rounds, but less vibes on if that even leads to an offer. I went 5 rounds with one studio and then they ghosted me for 3 months. Unthinkable in 2022.
oarla 3y ago
One additional reason according to me, pressure from investors to show growth post COVID. COVID time period saw rapid market expansion for a lot of tech companies, which was not sustainable. Now that things are getting back to pre-covid times, market is also shrinking. But investors want to see growth and what better way than to reduce cost and show growth than by laying off employees.

__loam 3y ago

I think 5 is pretty spurious at this point. I don't think any serious businesses are trying to replace most of their devs with ai yet. Otherwise you got a lot of the reasons. I think there's a few more. There's probably pressure being placed on leadership at a lot of companies by VCs, investors, and shareholders to trim the fat. That's why I think a lot of these layoffs seem pretty random, with situations like people's manager having no idea their direct reports were getting let go. The layoffs are coming from a fairly high level in these organizations. You mentioned this but this has a lot to do with the perception of the money people more than it has to do with reality, imo. That's why you can have extremely profitable companies like Google firing 10% of their workforce. Hugely destructive imo. Additionally, January is the end of the fiscal year. Companies want to make cuts to their budget before February. I've been seeing a lot of action in terms of recruiting outreach however. There seem to be a lot of very small startups getting created with a different financial attitude, eg trying to focus more on balancing profitability with growth. Rough time to be a late stage start up that just spent the last 8-10 years collecting debt and losing money on every new user. Supposedly the fed is going to cut rates at some point this year, so maybe that changes the calculus here eventually.

kj800x 3y ago
When my company did layoffs last year, neither my manager, or my manager's manager, or my manager's manager's manager knew before the moment we all knew if we were staying or not. You had to go up to the VP level to find anyone who was involved in planning the layoffs. When the VP has about a thousand engineers recursively reporting up to them, how are they supposed to be able to decide who stays and who goes. We were told that the layoffs weren't performance related, but at that level of distance what useful signals are there outside of the performance rating?
- __loam 3y ago
  Maybe they used a dartboard.

mdorazio 3y ago

I'll posit an unpopular one. Elon's mass-firing at Twitter showed CEOs that many tech companies really are overstaffed and can get away with far fewer employees (Twitter's troubles now are due to dumb policy decisions, not their tech stack falling off a cliff).

mynameishere 3y ago
dumb policy decisions Musk took a baby step in the direction of free speech, and immediately the order went out for major corporations to stage an advertising boycott.
- phlipski 3y ago
  Order's from who? Certainly Musk re-platforming hate speech (and lies) in the form of Alex Jones and re-tweeting antisemitic posts had NOTHING to do with corporations wanting to flee right?
- piva00 3y ago
  Sure, the same free speech that Musk extended to people he didn't like, like the guy tracking his plane? Gimme a break...
- king_magic 3y ago
  This is pretty intellectually dishonest. Doubt the ad boycott wouldn't have been nearly as large - or maybe even happened at all - if it weren't for Musk letting Nazis have a field day on Twitter again.
  - gitfan86 3y ago
    That is a very naive understanding of power dynamics in the legacy media.
- giraffe_lady 3y ago
  There are literally nazis advertising on twitter right now, today, january 24 2024. https://twitter.com/DefundIsraelNow/status/1750172690785427740 https://twitter.com/DefundIsraelNow/status/17501726907854277... Whatever this is in the direction of it certainly isn't a baby step.

gitfan86 3y ago

DEI and diversity hiring incentives are much less popular due to Harvard's statements on free speech and also the supreme Court decision regarding the legality of not hiring white/Asian people due to their race.

robofanatic 3y ago

> 4) Changes in the US tax code for how software dev costs are attributed. I don't fully understand this but seems pretty plausible. Can you elaborate on this point? Does this mean companies can’t afford software developers?

535188B17C93743 3y ago
I think companies used to be able to deduct "R&D time" which was a very vague definition for programmers and the IRS has tightened that up. https://www.eisneramper.com/insights/tax/impact-174-software-1023/ https://www.eisneramper.com/insights/tax/impact-174-software...
- steveBK123 3y ago
  yup I used to have to fill out timesheets in some places to quantify the % of work that was R&D
dustincoates 3y ago
https://blog.pragmaticengineer.com/section-174/ https://blog.pragmaticengineer.com/section-174/ In short, you used to be able to deduct the entirety of an SWE R&D costs in the year it was paid, but now you must amortize it, like you would with machinery. That means that some companies are incurring "gains" that must be taxed, whereas before they wouldn't for that year.

steveBK123 3y ago

Nail on head, and if I had to stack rank the highest to lowest contribution I would say: 1, 2, 4, 3, 5 Rates rule everything around you. Macro. Hiring standards absolutely went out the door. I remember being on interview panels in 2020-2021 and it was - more open roles, less candidates per role, higher fill rate per role, fewer interview rounds per role. Tax code seems to be a big factor and being called out by journalists in the know. It's also telling that FAANGs are winding down / shrinking their more "moonshot" and "researchy" areas that have no real products or high staff to actual product ratios. I think 3&5 are much lesser impact but certainly there.

johnnyanmac 3y ago
>Hiring standards absolutely went out the door. I remember being on interview panels in 2020-2021 and it was - more open roles, less candidates per role, higher fill rate per role, fewer interview rounds per role. I sure wish I had that experience. I went some 6 rounds at my pre-COVID job and when layoffs hits I was 4 rounds in with 3 other companies before I accepted my next job (which was 3 rounds, but I had a referral from a very early employee) now I'm laid off again and it's still 4-5 rounds, but less vibes on if that even leads to an offer. I went 5 rounds with one studio and then they ghosted me for 3 months. Unthinkable in 2022.

oarla 3y ago

One additional reason according to me, pressure from investors to show growth post COVID. COVID time period saw rapid market expansion for a lot of tech companies, which was not sustainable. Now that things are getting back to pre-covid times, market is also shrinking. But investors want to see growth and what better way than to reduce cost and show growth than by laying off employees.