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We have a lot of tech workers here. What's your read on the current and future tech job market, specifically for SWEs? Now that the ZIRP money faucets have turned off, will there be permanently reduced demand for SWEs? What impact will AI have? What have you seen at your own company in terms of layoffs and hiring patterns?
I get the feeling it's not great right now. My job still seems to be fine, but I have several friends in different companies recently laid off and having trouble finding new jobs, which seems unusual IME.
I don't have any sources or proof or anything, but my feeling is that the field has been bloated for a while for various reasons, including startups powered by loose VC money and tech majors hiring heavily and paying big salaries in hopes of someone building something great. I think this may be an overdue contraction that isn't going away. I think the longer-term outcome is something like the bottom 20% or so finding other lines of work, much less demand for things like bootcamps, and the rest continuing to have steady employment, albeit at somewhat lower salaries closer to being inline with other types of engineers.
My current employer did do some layoffs a few months ago. Pretty small numbers for the most part. Everyone they let go that I personally knew of was pretty low on the list of overall productivity. Doesn't feel like anything to worry about.
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One thing no one has mentioned yet...
As an unintended consequence of the Trump tax cuts, there was a change in how software developments salaries must be expensed. Before, the entire value of a software dev's salary could be written off immediately. Now, the salary must be amortized over 5 years.
So, let's say you start a software company. Your first year, you pay $1 million in salaries and sell $500,000 in licenses. Not only did you lose $500,000 in cash but you have a paper "profit" of $300,000 which you now must pay taxes on.
This heavily penalizes startups and makes software devs just less valuable generally. In some ways though, it levels the playing field with brick and mortar businesses who often face similarly outrageous taxes on phantom profits.
Everyone expected this to be fixed by now as it was an unintended consequence. But the Democrats love taxes and control the government so we appear to be stuck with it for now.
That's actually really interesting, is there a name for the loophole?
I don't think so, this is all new since last year.
It's not really a loophole since the government is taxing profits that don't exist. What's the opposite of a loophole? A gotcha, perhaps?
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"Section 174"
https://blog.pragmaticengineer.com/section-174/
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I'm not entirely convinced that this is inappropriate. If you pay $1 million as a one time investment to develop a software, and then sell $500,000 in licenses every year for five years, you get a profit of 2.5 - 1 = 1.5 million. Over five years that's 300,000 profit per year. Similar to if a factory bought 5 years worth of materials up front for $1 million and then spent five years producing and selling stuff for $500,000 per year. I assume that's the logic behind this regulation. Now I understand it's not realistic for a startup company to have literally no costs during that five year period, presumably they'd be doing tech support and adding new features and whatnot, but it's probably less than what their initial costs.
Further, shouldn't this actually help them pay less taxes in the long run? Unless I'm misunderstanding how corporate taxes work (which is very possible) a corporation that reports a $500k loss followed by 4 years of 500k gain is going to pay taxes on 2 mil, while a corporation with amortized costs that reports five years of 300k profit is going to pay taxes on 1.5 mil (their actual profits).
I get that it'll hurt more the first year. And if a company does actually have constant software costs every year then this will hurt the first few years before the amortization has a chance to reach equilibrium. But for companies that invest in software inconsistently as upgrades it makes sense to treat them the same way as any other infrastructure investment, which I believe are similarly amortized.
Yes, the new regulations put software on the same footing as brick and mortar. It's extremely painful for brick and mortar too since it penalizes any capital investment. This is likely a contributing factor to why no one builds anything any more.
No. They will pay tax on 1.5 million. Losses offset future gains for tax purposes.
Exactly. This rewards incumbents at the expense of startups. It's bad for that reason alone.
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The market currently is godwaful.
When I was looking for my first job, things were good enough that you had recruiters advertising for jobs in batches. You would see things like "5x Node Developer" or "3x Python Developer" and substantially more jobs overall. You even saw junior jobs. None of that is true anymore. Jobs are much rarer across the board, almost always advertised at mid-senior or above. In the two months I've been following the market so far, I've seen about 3 junior jobs total. Granted, employers were already phasing out junior/graduate positions in favour of outsourcing or talent poaching pre covid, but recent events have expedited that massively.
Part of the cause is that, as one of few industries still permitted to operate the Covid Response, all spending and attention went into tech, leading to a bloated sector extremely vulnerable to cutting off free money. My job was made possible only by magic investor money, the company did not make a profit for the entire time I was there. I cannot yet say whether this trend is permanent or will be better when the line go up types decide to lower interest rates. I fucking hope not. Making a computer do my bidding is the only thing I'm any good at ;_;
I do not think AI will have a substantial impact as other factors. I tried tools like Copilot back when they were first coming out. They were useful extremely intelligent, auto-completes but didn't replace the two important parts of software development: paring down what it is you need to make to a deliverable and saying no to things that aren't worth doing. I think its impact will still be noticable and people who don't integrate tools into their work will be outcompeted by people who do.
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I think that the ZIRP economy has not inflated the need for SWEs but the capacity for tech companies to magazine away tons of SWEs and having them essentially do no productive work.
The end of ZIRP will not mean SWEs will go without work but that some of them will filter out into the real economy, where there is both a need for them and where they can do real material good.
There will be some readjustment of compensation downwards and overall compensation will still be good but not astronomic.
AI as it exists today will increase productivity some but that will mostly just mean that more work is possible to do profitably, not unemployment.
As someone whose IT work has been all in the "real economy", this is something I'm eager to see. Non-IT fields have a decade of catch-up to do technology wise, maybe more, and the devs in those companies right now mostly specialize in CRUD apps and are not equipped to do that catch up. Some fresh blood coming in from the frontlines will help a lot.
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I'll go first. I work as an SRE. As far as predictions go, I'm not connected enough to make a strong one. ChatGPT handles mundane chores I would have handed off to newbies in the past, so that probably reduces the demand for junior devs. Certainly my dept has been pushing me to hire intermediate/senior even though the salary we're offering is kind of insulting.
Increased interest rates mean that borrowed money has to produce more, so there are likely fewer "throw shit at the wall" projects to staff now and thus less demand for SWE headcount.
My previous company had several rounds of layoffs, and I jumped ship in between one of the rounds when I saw the writing on the wall. My current company is trying to hire, but the strong dollar makes it really hard to attract folks, and the domestic (Japanese) market is mediocre. At the same time, hiring managers at other places seem really picky, so maybe my company is just doing a poor job attracting people. I also feel like I'm seeing even more Indian applicant/recruiter spam than usual.
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