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I know this doesn't make things better, but it bears repeating: much as the media would like it to be, this is not caused by AI. Two major things happened in 20

I know this doesn't make things better, but it bears repeating: much as the media would like it to be, this is not caused by AI. Two major things happened in 2022 that everyone knew would cause this if they stuck around: * The Section 174 changes went into effect, requiring all software to be expensed as R&D, which means it can't be deducted from profits directly and instead has to be amortized over 5 years [0]. * Interest rates went back up starting in Feb 2022 and continuing through Aug 2023. This chart [1] is a near-perfect mirror of the job trends. I know this doesn't help anyone who's struggling right now, but it does serve to emphasize that this didn't just happen, and it wasn't the result of technological advances making us obsolete. Federal policy was set up to encourage an enormous amount of investment into software development, and it's now... not. Turns out politics matters. [0] https://news.ycombinator.com/item?id=34627712 https://news.ycombinator.com/item?id=34627712 [1] https://fred.stlouisfed.org/graph/?g=1DfOX https://fred.stlouisfed.org/graph/?g=1DfOX

Sytten 2y ago
I really don't understand why nobody is talking about it anymore. It's a big deal for startups.
- harimau777 2y ago
  What would be the point? Politics is hopelessly broken so even if people did talk about it there is nothing that we can do about it.
guyfromfargo 2y ago
Thank you for posting this! I can’t believe section 174 is not more well known. I run a small software company and hiring an engineer is literally 5X more expensive as hiring a marketing or support person in a post section 174 world.
la64710 2y ago
Yes but there is also another force that I see playing out now. With two decades of continuous training companies have grown an army of people overseas who can do any software or IT jobs at a level good enough to really be competitive to domestic workers. Offshore locations today are not the same it was twenty years ago both from quality and quantity perspective. No point in staying blind to this phenomenon.
- aprilthird2021 2y ago
  I think the most competition to domestic workers is offshore workers working in their same timezone. Hiring within the country of the company is a bit of a prestige move a more profitable / affluent company can do to afford political power. Similar to German car manufacturing
aprilthird2021 2y ago
If anything, AI hype is actually helping keep many of us employed. And if/when it bursts, there will be more layoffs. Interest rates have an effect, but we also couldn't have survived with NZIR and Federal money printing like during COVID.
- meragrin_ 2y ago
  > If anything, AI hype is actually helping keep many of us employed. AI is also going to keep many of us unemployed. I'm running a small version of Deepseek R1 locally and it does an extremely good job of predicting of where I'm going in a number of situations. I went to pull out some code into another function. As soon as I finished typing the name of the new function, it immediately suggested the exact code I was planning to move into the new function. All I had to do was hit tab. I didn't have to do the copy and paste myself. This was thirty lines of code and it chose the correct starting line and ending line.
  - aprilthird2021 2y ago
    Yeah, I'm not worried about that. I don't get paid by the line of code, and an auto complete that can make me faster will only help me, tbh.
baggy_trough 2y ago
> requiring all software to be expensed as R&D This is false. You don't have to expense maintenance as R&D.
meragrin_ 2y ago
> * The Section 174 changes went into effect, requiring all software to be expensed as R&D, which means it can't be deducted from profits directly and instead has to be amortized over 5 years [0]. I get the short term initial issue. I don't see why it would be an issue to stick current level of staffing until it normalizes 5 years later. I'm not sure this was ever a major issue. It just seems like a convenient excuse to cover up something else. Interest rates are obviously definitely an issue. > this is not caused by AI. It may not be caused by AI, but it is going to affect hiring numbers from now on.
- rtpg 2y ago
  I feel like the 174 issues might be more painful for smaller teams? Like if almost all your costs are in salaries, and you bring in a new person, suddenly you're booking profits despite not having cash profits? That was my understanding, at least. That R&D salaries make this all weird.
- pllbnk 2y ago
  We will see by how much. I seriously doubt it improves productivity by a huge margin; if I had to guess, it would be in the ballpark of 10-20%. In the end, it's not the main driver for hiring or lack thereof. Companies that will need to get stuff done and that will be able to make enough money will hire as much as they need to get it done.
- lolinder 2y ago
  The Section 174 changes are terrible for startups, but yes, they're only inconvenient for established companies. Many startups won't even last long enough to amortize all of their dev expenses, especially if they owe taxes on "profits" earned during those first few years. The whole startup ecosystem (which is what this set of job listings is largely measuring) relied on being unprofitable and therefore untaxable. > It may not be caused by AI, but it is going to affect hiring numbers from now on. That remains to be seen. I can say with high confidence that we did not have tech that was capable of reducing the need for engineers from 2022 to 2024. It's hard to predict the future.
  - 2y ago

Sytten 2y ago

I really don't understand why nobody is talking about it anymore. It's a big deal for startups.

harimau777 2y ago
What would be the point? Politics is hopelessly broken so even if people did talk about it there is nothing that we can do about it.

guyfromfargo 2y ago

Thank you for posting this! I can’t believe section 174 is not more well known. I run a small software company and hiring an engineer is literally 5X more expensive as hiring a marketing or support person in a post section 174 world.

la64710 2y ago

Yes but there is also another force that I see playing out now. With two decades of continuous training companies have grown an army of people overseas who can do any software or IT jobs at a level good enough to really be competitive to domestic workers. Offshore locations today are not the same it was twenty years ago both from quality and quantity perspective. No point in staying blind to this phenomenon.

aprilthird2021 2y ago
I think the most competition to domestic workers is offshore workers working in their same timezone. Hiring within the country of the company is a bit of a prestige move a more profitable / affluent company can do to afford political power. Similar to German car manufacturing

aprilthird2021 2y ago

If anything, AI hype is actually helping keep many of us employed. And if/when it bursts, there will be more layoffs. Interest rates have an effect, but we also couldn't have survived with NZIR and Federal money printing like during COVID.

meragrin_ 2y ago
> If anything, AI hype is actually helping keep many of us employed. AI is also going to keep many of us unemployed. I'm running a small version of Deepseek R1 locally and it does an extremely good job of predicting of where I'm going in a number of situations. I went to pull out some code into another function. As soon as I finished typing the name of the new function, it immediately suggested the exact code I was planning to move into the new function. All I had to do was hit tab. I didn't have to do the copy and paste myself. This was thirty lines of code and it chose the correct starting line and ending line.
- aprilthird2021 2y ago
  Yeah, I'm not worried about that. I don't get paid by the line of code, and an auto complete that can make me faster will only help me, tbh.

baggy_trough 2y ago

> requiring all software to be expensed as R&D This is false. You don't have to expense maintenance as R&D.

meragrin_ 2y ago

> * The Section 174 changes went into effect, requiring all software to be expensed as R&D, which means it can't be deducted from profits directly and instead has to be amortized over 5 years [0]. I get the short term initial issue. I don't see why it would be an issue to stick current level of staffing until it normalizes 5 years later. I'm not sure this was ever a major issue. It just seems like a convenient excuse to cover up something else. Interest rates are obviously definitely an issue. > this is not caused by AI. It may not be caused by AI, but it is going to affect hiring numbers from now on.

rtpg 2y ago
I feel like the 174 issues might be more painful for smaller teams? Like if almost all your costs are in salaries, and you bring in a new person, suddenly you're booking profits despite not having cash profits? That was my understanding, at least. That R&D salaries make this all weird.
pllbnk 2y ago
We will see by how much. I seriously doubt it improves productivity by a huge margin; if I had to guess, it would be in the ballpark of 10-20%. In the end, it's not the main driver for hiring or lack thereof. Companies that will need to get stuff done and that will be able to make enough money will hire as much as they need to get it done.
lolinder 2y ago
The Section 174 changes are terrible for startups, but yes, they're only inconvenient for established companies. Many startups won't even last long enough to amortize all of their dev expenses, especially if they owe taxes on "profits" earned during those first few years. The whole startup ecosystem (which is what this set of job listings is largely measuring) relied on being unprofitable and therefore untaxable. > It may not be caused by AI, but it is going to affect hiring numbers from now on. That remains to be seen. I can say with high confidence that we did not have tech that was capable of reducing the need for engineers from 2022 to 2024. It's hard to predict the future.
- 2y ago