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How does one explain the drop starting January 2023 (esp for things like Customer Service Rep, which is an NLP-heavy task) when most corporations didnt even sta

How does one explain the drop starting January 2023 (esp for things like Customer Service Rep, which is an NLP-heavy task) when most corporations didnt even start LLM/NLP pilots until mid/late 2023? I skimmed thru the 100+ page paper but didnt see an explanation for this strange leading effect. SWE figures dropped mid-2022 (almost magically in line with interest rate hikes) and LLM-copilots werent introduced for another year. The paper notes they did an adjustment for the end of ZIRP. I dont know enough econometrics to understand whether this adjustment was sufficient, but the chart doesnt make sense since the labor efforts seem to be leading the actual technology by over a year or more. From informal surveys, LLM-copilot usage didnt become widespread until late 2023 to mid 2024, certainly not widespread enough to cause macro labor effects in mid-2022.

thrawa8387336 1y ago
Coordination, plain and simple.
- TuringNYC 1y ago
  Could you please explain more. Very interested in anything that explains the massive hole in the timeline.
  - thrawa8387336 1y ago
    This is a second hand anecdote but someone commented here or on X, that basically he was on a cruise and overheard two heads of HR of 2 big Co's talking to each other about shenanigans. Would not be the craziest considering that AI has to make a ROI. Even if it's not up there yet to do so organically. If you annihilate the entry labor market, then after some time, you have no choice but to use AI because there is no one remaining with the skills. AI is lower than entry level -> No one is hiring new grads -> There is no new talent being developed -> use AI for everything!
    - cactusplant7374 1y ago
      > This is a second hand anecdote but someone commented here or on X, that basically he was on a cruise and overheard two heads of HR of 2 big Co's talking to each other about shenanigans. I have no idea what this means.
      - tejohnso 1y ago
        It's describing the setting for a conspiracy theory. Multiple (in this case 2) people (in this case powerful ones) getting together and deciding that a certain outcome would be mutually beneficial. And the second paragraph details the conspiracy is to work together to remove a certain type of employee in large numbers, so that AI tools have to be used in order to make up for that loss.
        thrawa8387336 1y ago
        Pretty much, though I would not say they go together. 2nd paragraph is just a separate conjecture. Personally, don't need that much evidence; are we old enough to remember the hiring gentleman's agreement in big tech? Let's also not forget one of the main functions of HR, as an industry, these days: friction. You think salaries (and inflation) wouldn't go up if hiring managers had more freedom?
        xenobeb 1y ago
        You say this as if humans do not collude all the time. The pejorative idea of a "Conspiracy theory" is such a great modern tool for those who want to collude to hide their collusion in plain view. Somehow it has become a heuristic that if caste in, the collusion is instantly dismissed as fiction. Even better that the person who thinks collusion is happening must have a lower IQ than those who don't. How convenient for those who are colluding.
      - deleted 1y ago
        [deleted]
    - delfinom 1y ago
      Until you run out of people using AI in the first place lol
  - johnsmith1840 1y ago
    Openai also invented time travel to coordinate with companies. Nothing to do with thr mass exodus and offshoring of US jobs. The BPO industry is GROWING the opposite of standard AI understanding ideas. Also call center is a good one I was doing research myself and call center jobs overseas have GROWN pretty rapidly over time these jobs are moving not vanishing.
    - reliabilityguy 1y ago
      Yep. For some reason everyone assumes that jobs in the US live in a closed system. In reality, things that can be moved abroad to save 20% of costs will be moved this way or the other. I don’t know why everyone remembers how the manufacturing went to China, and at the same time forgets about it when we are talking about office jobs.
  - gmunny 1y ago
    [dead]
- reliabilityguy 1y ago
  Coordination of…?
  - thrawa8387336 1y ago
    Think Trust as in anti-trust
    - reliabilityguy 1y ago
      What?
      - thrawa8387336 1y ago
        Coordination as in a trust or cartel
FloorEgg 1y ago
M2 Money supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL I sense some conflation of causation/correlation at hand.
- camilomatajira 1y ago
  Completely agree with you. You can't be an economist and criticize current monetary policy. You will be labeled a crackpot, ostracized and have difficulty with grants. Grants from who? The same institution you'll be critizing in the first place.
fuzzfactor 1y ago
The economy is destroying the jobs and AI is just the raven on the shoulder of a stumbling bull . . .
- safety-space 1y ago
  yes, this is it
- fsckboy 1y ago
  >The economy is destroying the jobs the economy actually creates all the jobs ever since hunt and gather. the buggy whip jobs did eventually dry up, but the economy continues to create other jobs, paid for by ever increasing surpluses.
  - dragonwriter 1y ago
    > the economy actually creates all the jobs ever since hunt and gather. The economy neither creates nor destroys jobs. The economy is the aggregate of the jobs.
deelowe 1y ago
I personally sat in meetings in 2022 where we adjusted staffing projections in anticipation of AI efficiency. Sure some of it was "overhiring," but the reality was that those staffing goals were pre-ai. Once they were updated, that's when the layoffs started because management didn't want anyone who didn't have an AI or big data background.
- MontyCarloHall 1y ago
  Gen-AI was still extremely niche in 2022; ChatGPT didn't come out until the end of the year, on 30 November, and it was pretty much just a toy curiosity until mid-2023 when GPT-4 came out. I am very surprised that leadership at your company was seriously discussing the business impact of AI that early on.
  - deelowe 1y ago
    Chat gpt wasn't considered a toy... Not sure where you got that. We were interested in what openai was going from very early given the founders' history.
    - tick_tock_tick 1y ago
      I mean very good job staying on-top of new tech but you're not actually trying to imply your not the anomaly in that regard right?
      - lovich 1y ago
        He was certainly on top of new technology movement but signs were there the whole time. I wasn’t aware of ChatGPT in 2022 but I was aware that we could not keep data scientists hired long term because several faangs like meta were just dropping 100% increases in salary as the opener to our people for some mega project related to machine learning based on the skill set of the people being hired
        deelowe 1y ago
advael 1y ago
The 2022 drop for SWE is easy for me to explain, and it's not on these analysts' list of factors (though I'm not an economic quant, I don't know how you could really control for it): In 2017, a tax bill was passed that cut a particular tax incentive in 2022 in an effort to be counted as "revenue neutral" despite being otherwise a massive tax cut overall. The incentive in question was a writeoff for "Research and development". This means that in 2022, it got effectively much more expensive to hire anyone who falls under that category, including developers not directly necessary for the day-to-day function of a business (hell, one might argue they would have counted anyway) and scientists of most kinds. That this hit big firms, which have a higher relative amount of R&D efforts going at a given time, first makes a lot of sense. For customer service, my explanation is that companies literally do not care about customer service. Automated phone trees, outsourced call centers whose reps have no real power to help a customer, and poorly-made websites have been frustrating people for decades, but businesses never seem to try to compete on doing better at it. It's a cheap win with investors who want to hear about AI initiatives to lay off yet even more of this department, because it doesn't matter if the quality of service declines, there are no market or regulatory forces that are punishing this well enough to ever expect firms to stop breaking it, let alone fix it
- TuringNYC 1y ago
  Love this note. For those interested, this is the Tax Cuts and Jobs Act (TCJA) of 2017 Section 179. For a software engineering business, the Tax Cuts and Jobs Act (TCJA) of 2017 significantly impacted how software costs can be expensed under Section 179. While Section 179 previously allowed for the immediate expensing of many software purchases, TCJA reforms restricted this deduction primarily to "off-the-shelf" software. Custom-developed software and internal development costs are no longer eligible for Section 179 expensing and must now be capitalized and amortized. Under the TCJA, Section 179 cannot be used for software that a company develops for itself. This includes the direct costs for the engineers, programmers, and other personnel involved in the development process. The report not addressing this elephant in the room is a disappointing.
  - kevindamm 1y ago
choilive 1y ago
I had the same thoughts, there are clearly indicators that the weakness in the labor market started happening before LLMs and AI took over popular discourse. All the more reason to believe that while correlated, LLMs are certainly not the largest contributor, or even the cause of the job market weakness for young people. The more likely and simple explanation is that there are cracks forming in the economy not just in the US but globally; youth employment is struggling virtually everywhere. Can only speculate on the reasons, but delayed effects from questionable monetary and fiscal policy choices, increasing wealth gaps, tariffs, geopolitics, etc. have certainly not helped.
- 0xDEAFBEAD 1y ago
  >youth employment is struggling virtually everywhere. Interesting point. With Baby Boomers retiring everywhere and fertility falling everywhere, one would expect fierce competition for young workers.
  - lisbbb 1y ago
    The Boomers are largely gone now from tech. One former manager of mine was 65 when I left, she retired a year later at 66, gone. Unfortunately, most of the roles those people held were not back-filled. The roles vanished, too. Anecdata: I spent quite a bit of time driving around office parks in Eagan, MN. Most of them are dead--really, really dead. Vacant offices everywhere, the hotel that used to cater to business travelers is shuttered and the parking lot looks like a jungle. I can't peg exactly when all this took place because I haven't worked in that area in several years, but probably the effects of 2020, the remote work culture, and now the layoff hangover. I see a lot of people in their 50s and 60s working retail jobs right now. They often look like folks who would have been working in an office someplace.
carabiner 1y ago
2 things can be true. I was applying for jobs in 2022 and we all knew that the market was crap then because of overhiring during pandemic.
- com2kid 1y ago
  Tech companies pumped massive money into coding boot camps, overproduced coders, market crashes, salaries go down (or at least stagnate). My understanding is the same thing recently happened to pharmacists.
  - red-iron-pine 1y ago
    seeing the same in IT security / cyber. so, so many jr hires with no-name online degrees.
kraig911 1y ago
in addition to this detail I might add I can't remember the last time I had a customer service call that took place with someone stateside. It's easy to point to AI when offshoring for favorable interest rates is really the reason.
- _mu 1y ago
  I'm surprised more folks aren't live to this -- AI is just the scapegoat. The jobs are moving to where labor is cheaper.
  - 0xDEAFBEAD 1y ago
    I remember the outsourcing meme was huge in the early 2000s. "Don't study CS, you'll get outsourced." Why is it only happening now? It's far from a new idea.
    - iszomer 1y ago
      The exaggerated state of the national security narrative.
    - red-iron-pine 1y ago
      > Why is it only happening now? because 2020-2022 COVID happened and forced everything remote. world didn't end. the offshoring boom was the 90s and 2000s, and generally ended not amazing, but now a new generation of leadership saw it could be done, and done better -- video calls to the other side of the globe work far better than in 2004, speaking from experience.
- greenavocado 1y ago
  Two data points from last month: American Express And a large bank headquartered in Virginia I think USAA but that was two years ago
- lurking_swe 1y ago
  I just had one on saturday actually, was a pleasant surprise! I called bank of america’s credit card line and asked for a support agent. A friendly lady answered, she had a southern accent. :)
danans 1y ago
> SWE figures dropped mid-2022 (almost magically in line with interest rate hikes) and LLM-copilots werent introduced for another year It was pretty clear by late 2022 that AI assisted coding was going to transform how software development was done. I remember having conversations with colleagues at that time about how SWE might transform into an architecture and systems design role, with transformer models filling in implementations. If it was clear to workers like us, it was pretty clear to the c-suite. Not that it was the only reason for mass layoffs, but it was a strong contributor to the rationale. Many large companies were placing a bet that there were turbulent times ahead, and were lightening their load preemptively.
giantg2 1y ago
My company had multiple call center modernizing projects going on starting around 2021, including many NLP based routing and task upgrades.
klik99 1y ago
Exactly this - I've said it before and will say it again - new technologies emerge in response to trends, often to accelerate existing trends and does not create them. I see a few explanations for what you're saying, and those might be true, but I strongly believe part of it is investment (particularly VC, less so PE) has hit diminishing returns in tech and which means less subsidized "disruption", which means less money to hire people. AI becoming hugely popular right when this was happening is not a coincidence. And it's not just startups, less investment in startups also mean less clients for AWS and Azure. A16Z / Sand Hill switching to AI is not them just chasing the latest trend, it's a bid to reduce cost on people, which is the most expensive part of a tech company, as the only way to extend their unicorn-focused investment strategy.
- fithisux 1y ago
  Like the drug dealers. They just supply what people want and follow the trends.
cyanydeez 1y ago
I think it's lipstick on a pig. We've seen tech companies collude before, and I'm guessing they're doing it again, trying to drive down the price of talent and make their employees less demanding.
jordanb 1y ago
Yeah my company started stepping up outsourcing in 2023. We also started some AI projects. The AI projects haven't made much progress but the outsourcing is at an extremely advanced stage.
blindriver 1y ago
Why can't it be both?
atleastoptimal 1y ago
It is possible that multiple trends are coalescing 1. layoffs after web3 hiring spree 2. End of Zirp However I think now, in 2025 is it impossible to reasonably claim AI isn't making an impact in hiring. Those who disagree on here seem to be insistent on some notion that AI has no benefits whatsoever, thus could never cause job loss.
MontyCarloHall 1y ago
>The paper notes they did an adjustment for the end of ZIRP. I dont know enough econometrics to understand whether this adjustment was sufficient Looking at the paper [0], they attempted to do it by regressing the number of jobs y_{c,q,t} at company c, time t, and "AI exposure quintile" q, with separate parameters jointly controlling for company/quintile (a), company/time (b) and quintile/time (g). This is in Equation 4.1, page 15, which I have simplified here: log(y_{c,q,t}) ~ a_{c,q} + b_{c,t} + g_{q,t} Any time-dependent effects (e.g. end of ZIRP/Section 174) that would equally affect all jobs at the company irrespective of how much AI exposure they have should be absorbed into b. They normalized g with respect to October 2022 and quintile 1 (least AI exposure), and plotted the results for each age group and quintile (Figure 9, page 20). There is a pronounced decline that only starts in mid-2024 for quintiles 3, 4, and 5 in the youngest age group. The plots shown in the article are misleading, and are likely primarily a reflection of ZIRP, as you say. The real meat of the paper is Figure 9. A potential flaw of this method is that ZIRP/Section 174 may have disproportionately affected junior positions with high AI exposure, e.g. software engineers. This would not be accounted for in b and would thus be reflected in g. It would be interesting to repeat this analysis excluding software engineers and other employees subject to Section 174. [0] https://digitaleconomy.stanford.edu/wp-content/uploads/2025/08/Canaries_BrynjolfssonChandarChen.pdf https://digitaleconomy.stanford.edu/wp-content/uploads/2025/...
wisty 1y ago
Chat gpt 3 was 2020, even if the technology wasn't mature the hype was there informing investment and hiring decisions. There was also other factors, there were covid booms, covid busts, overcorrections, Elon shoes you can cut by 90% and still keep a product running (kind of) and with X taking the flack other people followed suit without being as loud. There is a fairly major war in Europe ....
- rs186 1y ago
  You are confusing GPT models and ChatGPT.
  - wisty 1y ago
    Oh yep. Still, even fine tuned gpt2 was an eye opener. And 2022 (chatgpt) fits time wise- the hype came before mature solutions.
    - rs186 1y ago
      My understanding is that before Nov 2022, GPT models are obsecure, technical NLP stuff that most people don't understand or care about. ChatGPT is the first real product that is accessible and useful to everybody.
- datameta 1y ago
  GPT3 drove the AI Dungeon explosion iirc
Den_VR 1y ago
I remember years of a no-backfill policy at Devon on a promises of automation. Since 2017 at least. The “desirable job market” for young people has been challenging well before LLM became popular. Want a dead end entry level job in food service earning $20/hour? No problem.
thr0w 1y ago
I do consulting, I'm constantly scouting clients. Right around November 2022 something very stark happened. I went from fighting off prospects with a stick, to crickets, almost over night. I deal mostly with startups and mid-size companies, nobody with insider knowledge or cutting edge interests. I can tell you that GPT was not heavily on anyone I dealt with's radar as an opportunity to reduce costs. Some sort of cultural zeitgeist occurred, but in terms of symptoms I saw with my own eyes, I think ZIRP ending (projects getting axed) and layoffs starting (projects getting filled within ~24 hours) were huge drivers. I have no proof.
- k_roy 1y ago
  I think part of that is a bit of a collapose of traditional consulting. There's been a huge transition into the boutique firms now.
  - speakspokespok 1y ago
    Where do you think the market is going in regards to boutique firms? I've heard it mentioned but I'm not sure what counts as boutique and what that signifies for the next few years.
    - k_roy 1y ago
      So if we are talking about "traditional consulting", that usually means MBB/Big Three The value they add is their corpus of previous work to lean on and sell. And anybody at the firm can reference that. But it's always almost the junior level consultants doing the work, and a bunch of c-suites trying to manage it and sell it. So when you work with a firm like this, you are going to get a team who has managed a similar project as yours, but it usually ends up being generic and trying to repeat past successes. I really think that's where some of the boutique firms are being different. Instead of just saying "here is our Lean Six Sigma team", they can say "we've got these four people who are perfect for technical implementation, and here is a project manager who has done almost exactly this before, and here is a RevOps person who has worked in your actual industry". Maybe someone is an expert on some super obscure domain. They might not qualify for a full time consultant position at a big 3 firm, can suddenly be pulled in on projects that are their specialty. Mostly these boutique firms can put together a more highly specialized and focused team than the prebuilt teams at a place like Bain or McKinsey.
deleted 1y ago
[deleted]
mertleee 1y ago
H1B visas are clearly a massive factor. Well before AI.
- valianteffort 1y ago
  AI is barely a blip on why the job market is dead for entry level, and dying all the way up the ladder. Every one of my engineer friends says the same thing. "My team is 80% indians" and more than half are not qualified for the job they have. The whole thing is a fucking scam for them, every company, top to bottom. Recruiters, hiring managers, referrals, CEO's. All one thing in common. I'll take my downvotes, I don't care, everyone here knows I'm right. And those with their head up their ass can enjoy getting replaced and spending years looking for another role.
  - shoobiedoo 1y ago
    If people don't wake up to this fact, things are going to get very ugly very quickly. They already are in the retail sector.
  - typewithrhythm 1y ago
    Appointing indian leadership is the single biggest sign of moving to an extraction phase for a company. The idea is they think the current value of the institution and IP is higher than their ability to innovate, so the try to outsource and reduce labour cost as much as possible intending to do the bare minimum maintenance for as long as possible. This gets compounded by every layer trying to get the most out of the company as fast as possible, hiring in a way that has no long term outlook.
  - the_real_cher 1y ago
    Upvoting! This is 100% the reason, saying its A.I. is gas lighting
PeterStuer 1y ago
SWE, i know some worfloe digitalisation projects that had been in the planning for a very long time, budgetted as multiple person tear efforts, that due to pandemic nescessity were exected by a team of 3 over a long weekend in 2020. This did not go unnoticed, neither by customers nor swe providers.
Natsu 1y ago
This reminds me of the part of The Book of Why by Judea Pearl discussing how do calculus and the causal revolution came about with the simple insight that effects come before causes and so do calculus was invented to keep track of that in the math, rather than obscuring that with statistical relations that worked in either direction.
csomar 1y ago
The drop started from mid-2022 and 2023 and there is a single cause: Russian assets freeze. This led to governments around the world moving their assets from West/AngloSaxon countries. This lack of liquidity put the West in a “hang in there” situation. Economically, it showed up as raising interest rates and politically where things move slower, the emergence of a new coalition. It’s really as simple as that. But people would like to believe that West GDP is higher than global south GDP by xxx amounts and so all of this couldn’t be possible. If you want an insight inside their heads, there is a Biden speech after the assets freeze where he declares that the Russian economy/country will collapse in a few weeks under the measures. None of this materialized and their bet have failed which is why Trump is trying to pull the US out of the mess. Of course all of this is my personal opinion. So take it from the grain in my bag of salt.

thrawa8387336 1y ago

Coordination, plain and simple.

TuringNYC 1y ago
Could you please explain more. Very interested in anything that explains the massive hole in the timeline.
- thrawa8387336 1y ago
  This is a second hand anecdote but someone commented here or on X, that basically he was on a cruise and overheard two heads of HR of 2 big Co's talking to each other about shenanigans. Would not be the craziest considering that AI has to make a ROI. Even if it's not up there yet to do so organically. If you annihilate the entry labor market, then after some time, you have no choice but to use AI because there is no one remaining with the skills. AI is lower than entry level -> No one is hiring new grads -> There is no new talent being developed -> use AI for everything!
  - cactusplant7374 1y ago
    > This is a second hand anecdote but someone commented here or on X, that basically he was on a cruise and overheard two heads of HR of 2 big Co's talking to each other about shenanigans. I have no idea what this means.
    - tejohnso 1y ago
      It's describing the setting for a conspiracy theory. Multiple (in this case 2) people (in this case powerful ones) getting together and deciding that a certain outcome would be mutually beneficial. And the second paragraph details the conspiracy is to work together to remove a certain type of employee in large numbers, so that AI tools have to be used in order to make up for that loss.
      - thrawa8387336 1y ago
        Pretty much, though I would not say they go together. 2nd paragraph is just a separate conjecture. Personally, don't need that much evidence; are we old enough to remember the hiring gentleman's agreement in big tech? Let's also not forget one of the main functions of HR, as an industry, these days: friction. You think salaries (and inflation) wouldn't go up if hiring managers had more freedom?
      - xenobeb 1y ago
        You say this as if humans do not collude all the time. The pejorative idea of a "Conspiracy theory" is such a great modern tool for those who want to collude to hide their collusion in plain view. Somehow it has become a heuristic that if caste in, the collusion is instantly dismissed as fiction. Even better that the person who thinks collusion is happening must have a lower IQ than those who don't. How convenient for those who are colluding.
    - deleted 1y ago
      [deleted]
  - delfinom 1y ago
    Until you run out of people using AI in the first place lol
- johnsmith1840 1y ago
  Openai also invented time travel to coordinate with companies. Nothing to do with thr mass exodus and offshoring of US jobs. The BPO industry is GROWING the opposite of standard AI understanding ideas. Also call center is a good one I was doing research myself and call center jobs overseas have GROWN pretty rapidly over time these jobs are moving not vanishing.
  - reliabilityguy 1y ago
    Yep. For some reason everyone assumes that jobs in the US live in a closed system. In reality, things that can be moved abroad to save 20% of costs will be moved this way or the other. I don’t know why everyone remembers how the manufacturing went to China, and at the same time forgets about it when we are talking about office jobs.
- gmunny 1y ago
  [dead]
reliabilityguy 1y ago
Coordination of…?
- thrawa8387336 1y ago
  Think Trust as in anti-trust
  - reliabilityguy 1y ago
    What?
    - thrawa8387336 1y ago
      Coordination as in a trust or cartel

FloorEgg 1y ago

M2 Money supply: https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL I sense some conflation of causation/correlation at hand.

camilomatajira 1y ago
Completely agree with you. You can't be an economist and criticize current monetary policy. You will be labeled a crackpot, ostracized and have difficulty with grants. Grants from who? The same institution you'll be critizing in the first place.

fuzzfactor 1y ago

The economy is destroying the jobs and AI is just the raven on the shoulder of a stumbling bull . . .

safety-space 1y ago
yes, this is it
fsckboy 1y ago
>The economy is destroying the jobs the economy actually creates all the jobs ever since hunt and gather. the buggy whip jobs did eventually dry up, but the economy continues to create other jobs, paid for by ever increasing surpluses.
- dragonwriter 1y ago
  > the economy actually creates all the jobs ever since hunt and gather. The economy neither creates nor destroys jobs. The economy is the aggregate of the jobs.

deelowe 1y ago

I personally sat in meetings in 2022 where we adjusted staffing projections in anticipation of AI efficiency. Sure some of it was "overhiring," but the reality was that those staffing goals were pre-ai. Once they were updated, that's when the layoffs started because management didn't want anyone who didn't have an AI or big data background.

MontyCarloHall 1y ago
Gen-AI was still extremely niche in 2022; ChatGPT didn't come out until the end of the year, on 30 November, and it was pretty much just a toy curiosity until mid-2023 when GPT-4 came out. I am very surprised that leadership at your company was seriously discussing the business impact of AI that early on.
- deelowe 1y ago
  Chat gpt wasn't considered a toy... Not sure where you got that. We were interested in what openai was going from very early given the founders' history.
  - tick_tock_tick 1y ago
    I mean very good job staying on-top of new tech but you're not actually trying to imply your not the anomaly in that regard right?
    - lovich 1y ago
      He was certainly on top of new technology movement but signs were there the whole time. I wasn’t aware of ChatGPT in 2022 but I was aware that we could not keep data scientists hired long term because several faangs like meta were just dropping 100% increases in salary as the opener to our people for some mega project related to machine learning based on the skill set of the people being hired
      - deelowe 1y ago

advael 1y ago

The 2022 drop for SWE is easy for me to explain, and it's not on these analysts' list of factors (though I'm not an economic quant, I don't know how you could really control for it): In 2017, a tax bill was passed that cut a particular tax incentive in 2022 in an effort to be counted as "revenue neutral" despite being otherwise a massive tax cut overall. The incentive in question was a writeoff for "Research and development". This means that in 2022, it got effectively much more expensive to hire anyone who falls under that category, including developers not directly necessary for the day-to-day function of a business (hell, one might argue they would have counted anyway) and scientists of most kinds. That this hit big firms, which have a higher relative amount of R&D efforts going at a given time, first makes a lot of sense. For customer service, my explanation is that companies literally do not care about customer service. Automated phone trees, outsourced call centers whose reps have no real power to help a customer, and poorly-made websites have been frustrating people for decades, but businesses never seem to try to compete on doing better at it. It's a cheap win with investors who want to hear about AI initiatives to lay off yet even more of this department, because it doesn't matter if the quality of service declines, there are no market or regulatory forces that are punishing this well enough to ever expect firms to stop breaking it, let alone fix it

TuringNYC 1y ago
Love this note. For those interested, this is the Tax Cuts and Jobs Act (TCJA) of 2017 Section 179. For a software engineering business, the Tax Cuts and Jobs Act (TCJA) of 2017 significantly impacted how software costs can be expensed under Section 179. While Section 179 previously allowed for the immediate expensing of many software purchases, TCJA reforms restricted this deduction primarily to "off-the-shelf" software. Custom-developed software and internal development costs are no longer eligible for Section 179 expensing and must now be capitalized and amortized. Under the TCJA, Section 179 cannot be used for software that a company develops for itself. This includes the direct costs for the engineers, programmers, and other personnel involved in the development process. The report not addressing this elephant in the room is a disappointing.
- kevindamm 1y ago

choilive 1y ago

I had the same thoughts, there are clearly indicators that the weakness in the labor market started happening before LLMs and AI took over popular discourse. All the more reason to believe that while correlated, LLMs are certainly not the largest contributor, or even the cause of the job market weakness for young people. The more likely and simple explanation is that there are cracks forming in the economy not just in the US but globally; youth employment is struggling virtually everywhere. Can only speculate on the reasons, but delayed effects from questionable monetary and fiscal policy choices, increasing wealth gaps, tariffs, geopolitics, etc. have certainly not helped.

0xDEAFBEAD 1y ago
>youth employment is struggling virtually everywhere. Interesting point. With Baby Boomers retiring everywhere and fertility falling everywhere, one would expect fierce competition for young workers.
- lisbbb 1y ago
  The Boomers are largely gone now from tech. One former manager of mine was 65 when I left, she retired a year later at 66, gone. Unfortunately, most of the roles those people held were not back-filled. The roles vanished, too. Anecdata: I spent quite a bit of time driving around office parks in Eagan, MN. Most of them are dead--really, really dead. Vacant offices everywhere, the hotel that used to cater to business travelers is shuttered and the parking lot looks like a jungle. I can't peg exactly when all this took place because I haven't worked in that area in several years, but probably the effects of 2020, the remote work culture, and now the layoff hangover. I see a lot of people in their 50s and 60s working retail jobs right now. They often look like folks who would have been working in an office someplace.

carabiner 1y ago

2 things can be true. I was applying for jobs in 2022 and we all knew that the market was crap then because of overhiring during pandemic.

com2kid 1y ago
Tech companies pumped massive money into coding boot camps, overproduced coders, market crashes, salaries go down (or at least stagnate). My understanding is the same thing recently happened to pharmacists.
- red-iron-pine 1y ago
  seeing the same in IT security / cyber. so, so many jr hires with no-name online degrees.

kraig911 1y ago

in addition to this detail I might add I can't remember the last time I had a customer service call that took place with someone stateside. It's easy to point to AI when offshoring for favorable interest rates is really the reason.

_mu 1y ago
I'm surprised more folks aren't live to this -- AI is just the scapegoat. The jobs are moving to where labor is cheaper.
- 0xDEAFBEAD 1y ago
  I remember the outsourcing meme was huge in the early 2000s. "Don't study CS, you'll get outsourced." Why is it only happening now? It's far from a new idea.
  - iszomer 1y ago
    The exaggerated state of the national security narrative.
  - red-iron-pine 1y ago
    > Why is it only happening now? because 2020-2022 COVID happened and forced everything remote. world didn't end. the offshoring boom was the 90s and 2000s, and generally ended not amazing, but now a new generation of leadership saw it could be done, and done better -- video calls to the other side of the globe work far better than in 2004, speaking from experience.
greenavocado 1y ago
Two data points from last month: American Express And a large bank headquartered in Virginia I think USAA but that was two years ago
lurking_swe 1y ago
I just had one on saturday actually, was a pleasant surprise! I called bank of america’s credit card line and asked for a support agent. A friendly lady answered, she had a southern accent. :)

danans 1y ago

> SWE figures dropped mid-2022 (almost magically in line with interest rate hikes) and LLM-copilots werent introduced for another year It was pretty clear by late 2022 that AI assisted coding was going to transform how software development was done. I remember having conversations with colleagues at that time about how SWE might transform into an architecture and systems design role, with transformer models filling in implementations. If it was clear to workers like us, it was pretty clear to the c-suite. Not that it was the only reason for mass layoffs, but it was a strong contributor to the rationale. Many large companies were placing a bet that there were turbulent times ahead, and were lightening their load preemptively.

giantg2 1y ago

My company had multiple call center modernizing projects going on starting around 2021, including many NLP based routing and task upgrades.

klik99 1y ago

Exactly this - I've said it before and will say it again - new technologies emerge in response to trends, often to accelerate existing trends and does not create them. I see a few explanations for what you're saying, and those might be true, but I strongly believe part of it is investment (particularly VC, less so PE) has hit diminishing returns in tech and which means less subsidized "disruption", which means less money to hire people. AI becoming hugely popular right when this was happening is not a coincidence. And it's not just startups, less investment in startups also mean less clients for AWS and Azure. A16Z / Sand Hill switching to AI is not them just chasing the latest trend, it's a bid to reduce cost on people, which is the most expensive part of a tech company, as the only way to extend their unicorn-focused investment strategy.

fithisux 1y ago
Like the drug dealers. They just supply what people want and follow the trends.

cyanydeez 1y ago

I think it's lipstick on a pig. We've seen tech companies collude before, and I'm guessing they're doing it again, trying to drive down the price of talent and make their employees less demanding.

jordanb 1y ago

Yeah my company started stepping up outsourcing in 2023. We also started some AI projects. The AI projects haven't made much progress but the outsourcing is at an extremely advanced stage.

blindriver 1y ago

Why can't it be both?

atleastoptimal 1y ago

It is possible that multiple trends are coalescing 1. layoffs after web3 hiring spree 2. End of Zirp However I think now, in 2025 is it impossible to reasonably claim AI isn't making an impact in hiring. Those who disagree on here seem to be insistent on some notion that AI has no benefits whatsoever, thus could never cause job loss.

MontyCarloHall 1y ago

>The paper notes they did an adjustment for the end of ZIRP. I dont know enough econometrics to understand whether this adjustment was sufficient Looking at the paper [0], they attempted to do it by regressing the number of jobs y_{c,q,t} at company c, time t, and "AI exposure quintile" q, with separate parameters jointly controlling for company/quintile (a), company/time (b) and quintile/time (g). This is in Equation 4.1, page 15, which I have simplified here: log(y_{c,q,t}) ~ a_{c,q} + b_{c,t} + g_{q,t} Any time-dependent effects (e.g. end of ZIRP/Section 174) that would equally affect all jobs at the company irrespective of how much AI exposure they have should be absorbed into b. They normalized g with respect to October 2022 and quintile 1 (least AI exposure), and plotted the results for each age group and quintile (Figure 9, page 20). There is a pronounced decline that only starts in mid-2024 for quintiles 3, 4, and 5 in the youngest age group. The plots shown in the article are misleading, and are likely primarily a reflection of ZIRP, as you say. The real meat of the paper is Figure 9. A potential flaw of this method is that ZIRP/Section 174 may have disproportionately affected junior positions with high AI exposure, e.g. software engineers. This would not be accounted for in b and would thus be reflected in g. It would be interesting to repeat this analysis excluding software engineers and other employees subject to Section 174. [0] https://digitaleconomy.stanford.edu/wp-content/uploads/2025/08/Canaries_BrynjolfssonChandarChen.pdf https://digitaleconomy.stanford.edu/wp-content/uploads/2025/...

wisty 1y ago

Chat gpt 3 was 2020, even if the technology wasn't mature the hype was there informing investment and hiring decisions. There was also other factors, there were covid booms, covid busts, overcorrections, Elon shoes you can cut by 90% and still keep a product running (kind of) and with X taking the flack other people followed suit without being as loud. There is a fairly major war in Europe ....

rs186 1y ago
You are confusing GPT models and ChatGPT.
- wisty 1y ago
  Oh yep. Still, even fine tuned gpt2 was an eye opener. And 2022 (chatgpt) fits time wise- the hype came before mature solutions.
  - rs186 1y ago
    My understanding is that before Nov 2022, GPT models are obsecure, technical NLP stuff that most people don't understand or care about. ChatGPT is the first real product that is accessible and useful to everybody.
datameta 1y ago
GPT3 drove the AI Dungeon explosion iirc

Den_VR 1y ago

I remember years of a no-backfill policy at Devon on a promises of automation. Since 2017 at least. The “desirable job market” for young people has been challenging well before LLM became popular. Want a dead end entry level job in food service earning $20/hour? No problem.

thr0w 1y ago

I do consulting, I'm constantly scouting clients. Right around November 2022 something very stark happened. I went from fighting off prospects with a stick, to crickets, almost over night. I deal mostly with startups and mid-size companies, nobody with insider knowledge or cutting edge interests. I can tell you that GPT was not heavily on anyone I dealt with's radar as an opportunity to reduce costs. Some sort of cultural zeitgeist occurred, but in terms of symptoms I saw with my own eyes, I think ZIRP ending (projects getting axed) and layoffs starting (projects getting filled within ~24 hours) were huge drivers. I have no proof.

k_roy 1y ago
I think part of that is a bit of a collapose of traditional consulting. There's been a huge transition into the boutique firms now.
- speakspokespok 1y ago
  Where do you think the market is going in regards to boutique firms? I've heard it mentioned but I'm not sure what counts as boutique and what that signifies for the next few years.
  - k_roy 1y ago
    So if we are talking about "traditional consulting", that usually means MBB/Big Three The value they add is their corpus of previous work to lean on and sell. And anybody at the firm can reference that. But it's always almost the junior level consultants doing the work, and a bunch of c-suites trying to manage it and sell it. So when you work with a firm like this, you are going to get a team who has managed a similar project as yours, but it usually ends up being generic and trying to repeat past successes. I really think that's where some of the boutique firms are being different. Instead of just saying "here is our Lean Six Sigma team", they can say "we've got these four people who are perfect for technical implementation, and here is a project manager who has done almost exactly this before, and here is a RevOps person who has worked in your actual industry". Maybe someone is an expert on some super obscure domain. They might not qualify for a full time consultant position at a big 3 firm, can suddenly be pulled in on projects that are their specialty. Mostly these boutique firms can put together a more highly specialized and focused team than the prebuilt teams at a place like Bain or McKinsey.

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mertleee 1y ago

H1B visas are clearly a massive factor. Well before AI.

valianteffort 1y ago
AI is barely a blip on why the job market is dead for entry level, and dying all the way up the ladder. Every one of my engineer friends says the same thing. "My team is 80% indians" and more than half are not qualified for the job they have. The whole thing is a fucking scam for them, every company, top to bottom. Recruiters, hiring managers, referrals, CEO's. All one thing in common. I'll take my downvotes, I don't care, everyone here knows I'm right. And those with their head up their ass can enjoy getting replaced and spending years looking for another role.
- shoobiedoo 1y ago
  If people don't wake up to this fact, things are going to get very ugly very quickly. They already are in the retail sector.
- typewithrhythm 1y ago
  Appointing indian leadership is the single biggest sign of moving to an extraction phase for a company. The idea is they think the current value of the institution and IP is higher than their ability to innovate, so the try to outsource and reduce labour cost as much as possible intending to do the bare minimum maintenance for as long as possible. This gets compounded by every layer trying to get the most out of the company as fast as possible, hiring in a way that has no long term outlook.
- the_real_cher 1y ago
  Upvoting! This is 100% the reason, saying its A.I. is gas lighting

PeterStuer 1y ago

SWE, i know some worfloe digitalisation projects that had been in the planning for a very long time, budgetted as multiple person tear efforts, that due to pandemic nescessity were exected by a team of 3 over a long weekend in 2020. This did not go unnoticed, neither by customers nor swe providers.

Natsu 1y ago

This reminds me of the part of The Book of Why by Judea Pearl discussing how do calculus and the causal revolution came about with the simple insight that effects come before causes and so do calculus was invented to keep track of that in the math, rather than obscuring that with statistical relations that worked in either direction.

csomar 1y ago

The drop started from mid-2022 and 2023 and there is a single cause: Russian assets freeze. This led to governments around the world moving their assets from West/AngloSaxon countries. This lack of liquidity put the West in a “hang in there” situation. Economically, it showed up as raising interest rates and politically where things move slower, the emergence of a new coalition. It’s really as simple as that. But people would like to believe that West GDP is higher than global south GDP by xxx amounts and so all of this couldn’t be possible. If you want an insight inside their heads, there is a Biden speech after the assets freeze where he declares that the Russian economy/country will collapse in a few weeks under the measures. None of this materialized and their bet have failed which is why Trump is trying to pull the US out of the mess. Of course all of this is my personal opinion. So take it from the grain in my bag of salt.