IMO it's far too early for "AI" to have had a meaningful effect on Software company hiring. A more plausible explanation for me is that between roughly 2012 and 2022, there was a tremendous increase in the supply of SWE talent (via undergraduate CS programs massively increasing enrollment, boot camps, immigration, etc), fueled primarily by ZIRP. On the demand side, ZIRPy VC funding primarily went to bullshit Crypto and (to a lesser extent) bullshit Metaverse companies, most of which have not panned out, meaning there is a dearth of late stage and newly public companies to hire said talent.
I agree with all of this, coupled with a decent amount of layoffs from the Mag7s, though I'm not sure how distributed those were in California, necessarily.
And old unicorns like airbnb and uber now having to compete with traditional hotels and taxis again.
I think Elon's takeover of twitter set something of a precedent too: if he could reduce headcount as much as he did and still have a functioning product, then why can't I?
BTW I also don't think it has much to do with that engineering tax deferral code change that people keep talking about. My cynical hunch is that that topic keeps getting seeded by the billionaires who have the most to gain by reversing it, and hey maybe they'll hire an extra engineer or two afterward just to be good sports, but it's not going to reverse any major employment trends.
It doesn't have to be either-or. I think there are a bunch of factors all contributing to the current state of developer job market:
1. Rise of remote work: sure, it was there in some form. But prior to 2020, state of the remote work tools was abysmal. The prevalent culture was also about hiring the whole teams. After covid, remote work tools are far better. And companies learned to onboard one new remote hire at a time which over time is now allowing them to replace US workers with cheap overseas ones at a manageable pace.
2. end of cheap money - if the risk free rate is 4-5%, the demand from risky ventures like software startups is going to go up. So funding has dried up at the margins.
3. rise in the discount rate - related to the previous point, the discount rate one applies to investments have gone up. That means startups valued at 1B are now valued only at a few hundred millions. So to avoid down or flat rounds, startups have to cut costs drastically and show profitability to justify a higher valuation. Cue all the job cuts, belt tightening and death marches with a skeleton crew.
4. rise of AI - AI is helping with productivity of coding and non-coding tasks. It is also acting as an excuse for #3 when laying people off.
In my experience, all these are meaningful factors for the abysmal state of the developer market.
Definitely agree that it's not mutually exclusive, however I think 4 is likely orders of magnitude less impactful than the others...so far. Which isn't to say the effects won't start to magnify soon.
I think most of the trends we are seeing started around 2022, but if AI delivers on its promise things may accelerate in the coming years.
That's a poster child of a casualty of ZIRP. Hard to imagine an industry any longer duration and hungry for cheap risk.
I'm not sure about the thesis that this is primarily fallout from free money and suppressed interest rates though. That was really a '22 story, and even with long and variable lags, that element has been in play for a while now.
Oversupply of talent definitely sounds like a good argument though. I'll posit there has been some disruption by recent developments in the industry. Also, while metaverse and crypto startups may be passe, the AI scene has disgusting amounts of hype and money, and crypto ain't dead either, which brings me back to the earlier point that I do think some disruption is there to fill the gap in the narrative.
Zero Interest Rate (monetary) Policy targets short-term interest rates at or near 0% to stimulate economic growth via extremely cheap borrowing, to encourage spending / investing / risk-taking
My anecdata - the large tech company I work for has practically stopped hiring. I went from conducting interviews practically every week in the first quarter to none at all on the post 3 months. Even during the layoffs on 2022 they were still hiring for some positions, so I conducted around 1-2 interviews a month.
I'm literally one of the last software engineers my company (in the Bay area) ever hired. I've been here for 2 years and only 1 engineer joined since then, meanwhile dozens left.
Same in mine - started off as 800, had a salary freeze for a year, had a hiring freeze for now 2 years and after layoffs and people leaving we’re now at 480
What if this turns into rust belt but for software? Once high paying jobs gone with AI, politicians trying to please grumpy software developers promising them to open a software shop and create jobs. Mostly college drop-outs, voting for a certain party that promises to take on AI :)
Half kidding of course, but AFAIK many industries went through such a transformation and today most social and political issues stem from those areas that once were affluent lost their industries. Why not the software too?
It's precisely this. Trump is allowing one of the last vestiges of the American middle class to be outsourced to India. Just like Clinton allowed the same to happen with factory jobs to China.
As a person of color this is even more detestable.
The rust belt can't really fall back on tourism like California can. Worst case scenario all software jobs evaporate and it becomes Florida with better weather
LA has a highly diverse economy, it’s really only the Bay Area that has diversification issues.
The rust belt actually does quite well with tourism, though my research for responding to your comment seems to indicate to me that tourism is important everywhere.
I’m over in the rust belt and all I hear about California these days is it’s full of homeless people and crime that goes unchecked. It’s not looking as appealing as a vacation destination as it did 20 years ago. Maybe this perception doesn’t match the reality you see living there, but when it comes to attracting tourists, perception is everything.
There are plenty of dying places in the desert and on the beach tourists can visit, it's just the "dying places" part that makes them aversive to tourism.
Haha so true. Though I feel for this to happen the cost of building software products has to be high. With manufacturing your average mechanical eng grad cannot build something and sell (factories' costs etc) out the gate.
With software any body can build and put something out there (ignoring quality and tech debt and taste etc). Where software might go the way of manufacturing is when price of ai actually reflects hardware costs (my estimates of the realistic Claude max pricing at cost is between 7-10k and month). Now put together other structures that will come up to "industrialize" ai+software software may not have easy entries sadly.
I've lost consulting work because I'm a lot more expensive than $20 a month. I've literally had clients say, "yeah, I would have called you, but I was able to figure out that bug with ChatGPT."
Sure, in total probably there will be even more and better jobs. Just like with the auto industry or the other industries that turned from producing stuff into designing stuff and telling to Chinese to produce it like this.
AI has already replaced thousands of jobs. Plenty of stories about that appear on HN. Plenty of anecdotes from people who have lost work or clients to AI. People here have stated their intention to fire their entire workforce and replace them with AI as soon as possible. AI companies have put up billboards saying "stop hiring humans." A single Google search would disabuse you of this notion.
I don't understand being this willfully naive, especially if you support AI, because using it to replace jobs is the entire selling point. No company wants AI for any other reason, and every company wants AI.
Of course there will be. There will be instances where a company has 4 people working in a role but with AI 2 people can do the same job and they can therefore let 2 people go. (and then there will be other places where even more jobs are created because of AI).
"Jobs going away due to AI" really tracks two different outcomes:
- The type of job is eliminated due to AI
- The amount of people doing a type of job is substantially reduced because AI increases the productivity of people in that role and companies can do the same amount of that work with less people
I think the former is extremely limited so far, but the latter is pretty substantial. I didn't downvote you, but I imagine the people that did probably did so to reject the former argument.
After reading the article it looks like the attribution is defensible:
"In contrast, professional and business services were down 7,100 jobs in July, the worst of any sector, and the tech-heavy information sector lost 1,000 jobs."
This could be many things. People could be leaving to do their own startups. The BLS counts that as a job loss thus high-velocity sectors can be reported as job loss.
BLS includes a household survey. It's not just based on payrolls. They aim to capture as much as possible about people with informal work or self-employment.
Provided folks give some context about their location, experience, search, etc the input can be helpful - averages are great but aren't super instructive about one's own odds.
Plus BLS household survey probably has some non-response bias from it re: high income, low time individuals, precisely the folks chiming in.
I have a Teamster friend here in LA, and according to him practically nothing is being filmed in this area. The major studios are opting to film either out of state (Georgia) or in Canada.
I just noticed tonight that the movie theaters in my city closed up July 27--there's already weeds growing up out front. This was a really depressing epiphany because the mall next door is basically dead, too. I feel like 2020 killed this place but it's been a delayed reaction, same as my tech career. All we have now here in the upper midwest are people wandering around wearing outfits more suited to the desert conditions of Africa and I guess they don't go to the movies, so...
Time to start holding businesses accountable for pushing the cheaper labor option. Many of those on visas are biased toward those from their own cultural heritage as well.
With respect to chronology and cause/effect, I'd point out that provision took effect in January 2022, so it's been of-concern for a while.
It was put into law in 2017 with the Republican TCJA, but section 174 was time-delayed, part of a general trick of having all of the tax-cuts and spending immediately, with any budget "balancing" items deferred as long as possible.
I was laid off this year and also saw a massive uptick in offers in July. Based in Colorado, but was looking nation wide and I got more interest out of SF than the rest of the country combined.
Sounds like you're one of the lucky ones. In my experience, remote tech jobs have largely moved to India. It's like pulling teeth at my company to get them to offer a remote job in a NA timezone (US or Canada).
anecdata: I run a saas product and my primary customers are recruiters, after the BBB I have had more daily signups and new subscribers than previous months.
Partially! The text of the OBBBA actually made permanent the section of the tax code that treats software development as research and amortizes accordingly. However, because nothing can just be straightforward, it also allows domestic research expenses to be deducted immediately instead of amortized.
Definitely a much better tax situation but also not one we would've been in if not for the TCJA, and we still have an exposed oblique (the removal of the domestic research exclusion) that could put us back in the same spot unless the software development as research section is removed.
less recruiter activity than a few months ago, cleared one interview gauntlet just to have the role change due to a new lead hire, otherwise getting followups for screens but hit or miss on the tech assessments. might have to spend more time practicing. 10 yoe, SFBA.
sorry to hear that, keep it up, it was absolutely demoralizing for me during those 10 months I started to believe I was actually losing my mind after a literal 20 year history in startups/tech.
But my colleagues are all younger than me - they are hiring people out of college too, so you can make it just keep pushing
I'm not looking for work, but have a LinkedIn that I honestly forgot about until the end of July. It'd been so long since I got even recruiterspam I forgot about it. And out of nowhere, 2 or 3 target recruiter messages.
Why didn't the Biden admin "fix" the rule before it took effect in Jan 2022? They passed several bills, they could've have included the repeal. It took effect on the democrats watch, because of their inaction.
Edit: Republican Marco Rubio introduced a clean bill to repeal the changes in 2023.
H1-b s are small compared to the offshoring of jobs. Have you seen the office sizes of every big and medium technology company in India and other countries? They employ thousands of programmers there. There is a much greater number of jobs that you don’t even see that’s get done from overseas. This invisible layer is much bigger than the annual 65k h1b jobs.
I suspect this will become a key issue in Newsom's brand of center-left Democratic politics. It greatly affects both urban and college educated workforces - i.e the Democratic base. Canada took the lead here a few years ago under Trudeau's administration.
Might be a case of those who are permanently out of the workforce because they couldn't find work are not counted in unemployment statistics, along with flight and deaths of despair.
Careful. Coronado, Miramar, Camp Pendleton, Twentynine Palms, Edwards, Mcclellan, Vandenburg, Travis, etc. How many bases do you think there are in Iowa?
Readit News
I think Elon's takeover of twitter set something of a precedent too: if he could reduce headcount as much as he did and still have a functioning product, then why can't I?
BTW I also don't think it has much to do with that engineering tax deferral code change that people keep talking about. My cynical hunch is that that topic keeps getting seeded by the billionaires who have the most to gain by reversing it, and hey maybe they'll hire an extra engineer or two afterward just to be good sports, but it's not going to reverse any major employment trends.
1. Rise of remote work: sure, it was there in some form. But prior to 2020, state of the remote work tools was abysmal. The prevalent culture was also about hiring the whole teams. After covid, remote work tools are far better. And companies learned to onboard one new remote hire at a time which over time is now allowing them to replace US workers with cheap overseas ones at a manageable pace.
2. end of cheap money - if the risk free rate is 4-5%, the demand from risky ventures like software startups is going to go up. So funding has dried up at the margins.
3. rise in the discount rate - related to the previous point, the discount rate one applies to investments have gone up. That means startups valued at 1B are now valued only at a few hundred millions. So to avoid down or flat rounds, startups have to cut costs drastically and show profitability to justify a higher valuation. Cue all the job cuts, belt tightening and death marches with a skeleton crew.
4. rise of AI - AI is helping with productivity of coding and non-coding tasks. It is also acting as an excuse for #3 when laying people off.
In my experience, all these are meaningful factors for the abysmal state of the developer market.
I think most of the trends we are seeing started around 2022, but if AI delivers on its promise things may accelerate in the coming years.
I'm not sure about the thesis that this is primarily fallout from free money and suppressed interest rates though. That was really a '22 story, and even with long and variable lags, that element has been in play for a while now.
Oversupply of talent definitely sounds like a good argument though. I'll posit there has been some disruption by recent developments in the industry. Also, while metaverse and crypto startups may be passe, the AI scene has disgusting amounts of hype and money, and crypto ain't dead either, which brings me back to the earlier point that I do think some disruption is there to fill the gap in the narrative.
Half kidding of course, but AFAIK many industries went through such a transformation and today most social and political issues stem from those areas that once were affluent lost their industries. Why not the software too?
As a person of color this is even more detestable.
The rust belt actually does quite well with tourism, though my research for responding to your comment seems to indicate to me that tourism is important everywhere.
Dead Comment
With software any body can build and put something out there (ignoring quality and tech debt and taste etc). Where software might go the way of manufacturing is when price of ai actually reflects hardware costs (my estimates of the realistic Claude max pricing at cost is between 7-10k and month). Now put together other structures that will come up to "industrialize" ai+software software may not have easy entries sadly.
We're rewriting the belt.
Would it be any worse than the Dot-com bust?
* https://en.wikipedia.org/wiki/Dot-com_bubble
I don't understand being this willfully naive, especially if you support AI, because using it to replace jobs is the entire selling point. No company wants AI for any other reason, and every company wants AI.
- The type of job is eliminated due to AI
- The amount of people doing a type of job is substantially reduced because AI increases the productivity of people in that role and companies can do the same amount of that work with less people
I think the former is extremely limited so far, but the latter is pretty substantial. I didn't downvote you, but I imagine the people that did probably did so to reject the former argument.
Dead Comment
"In contrast, professional and business services were down 7,100 jobs in July, the worst of any sector, and the tech-heavy information sector lost 1,000 jobs."
This could be many things. People could be leaving to do their own startups. The BLS counts that as a job loss thus high-velocity sectors can be reported as job loss.
Plus BLS household survey probably has some non-response bias from it re: high income, low time individuals, precisely the folks chiming in.
Deleted Comment
I think it's the BBB that fixed the tax code issue - just a guess.
It was put into law in 2017 with the Republican TCJA, but section 174 was time-delayed, part of a general trick of having all of the tax-cuts and spending immediately, with any budget "balancing" items deferred as long as possible.
That's when the layoff spree started!
Definitely a much better tax situation but also not one we would've been in if not for the TCJA, and we still have an exposed oblique (the removal of the domestic research exclusion) that could put us back in the same spot unless the software development as research section is removed.
But my colleagues are all younger than me - they are hiring people out of college too, so you can make it just keep pushing
Hopefully things are looking up for the market.
But not a surprise based on your history here on HN.
Edit: Republican Marco Rubio introduced a clean bill to repeal the changes in 2023.
https://www.congress.gov/bill/118th-congress/senate-bill/282...
The Democrat controlled Senate blocked it from coming to a vote.
Why does HN always blame only Republicans for this change?
You can keep your current H1-Bs, but no more for you for 5 years if you do a layoff.
Farming, healthcare, autos, etc are almost completely subsidized by the government.