Posted by duck 9/3/2025
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.
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
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.
Of note, the OBBB reinstated the ability to deduct R&D, so businesses are no longer required to capitalize and amortize R&D expenses (including software development).
https://warrenaverett.com/insights/one-big-beautiful-bill-se...
However, that's back for tax year 2025, so why aren't we seeing the jobs come back? Maybe it really was 174 then, but AI now?
I think if your willing to go to the sf bay and work in an office there are lots of opportunities. Remote and high pay doesn't have alot of options.
My own career progress was much slower and topped out lower than (in my enlightened opinion) much less qualified folks in office.
That said, it's a tradeoff. I -still- wouldn't move to work in office knowing this. I value my family, time, and lifestyle I'm able to afford in a place I want to be more than making tons of money.
In another 10 or 20 years I'm half sure I'll run the numbers and regret that, but so far so good.
I don’t have 2 different 1 hour commute blocks on my calendar. While you’re fighting traffic, I’m working. While you’re rushing through your morning routine, I’m sitting at my computer catching up on slack. While you’re finding the meeting room, I’m reading the meeting prep material. While you’re getting distracted by Sales in your open office, I’m locked in, midway through a 2 hour coding session.
Or did they give you a title and say, great job — now we have higher expectations of you!
What you’re talking about seems like an attempt to placate rather than reward.
I did the sf thing and don't want to go back. Don't want to live in NYC or Seattle or commute over an hour from NYC suburbs.
It was only just reinstated, so it's probably too early to see the effects.
I also expect that despite the restoration of Section 174, companies realized that they not only overhired during ZIRP, but also that they don't actually need that headcount, given the outcome of Musk's Twitter layoffs. There were so many prognostications that Twitter would imminently implode after downsizing from ~8k to ~1.5k employees, and when these claims never came to pass, it was a wake-up call to the rest of the industry [0].
[0] https://www.livemint.com/companies/news/elon-musk-fired-80-p...
So there was just this general pressure from the middle up to grow instead of paying more to existing staff or finding some other way to spend the money. After all, investors generally want you to spend the money you have access to, otherwise they’ll put it to use elsewhere.
It seems that there is external pressure right now from investors, and on to executives, to push headcounts down as there is a general feeling that good companies should be able to leverage AI to become much more efficient, and higher headcounts just burn money and bog things down. Whether or not that’s true is another question, but the perception exists.
I’m not sure if this is a fundamental change in the dynamic, or just a temporary push against it that will eventually lose steam.
I feel like this should be a “both and” situation. AI is not a panacea. If your company has 10 good engineers and a ChatGPT subscription, and my company has 100 good engineers and a ChatGPT subscription, we are going to move considerably faster.
Until someone gets an exclusive contract with AGI, it doesn’t change things.
But that "everything app"? It hasn't happened. The money transfer app ("Twitter Payment Platform")? Still MIA.
Oh, they sure did: https://news.ycombinator.com/item?id=34617964
Even in that thread, a lot of people were saying "it's only been three months, give it a bit more time."
But more importantly, X has not released any substantially new features within the last 3 years. And I bet that it won't release anything new for a while, and anything they _do_ try to release will be laughably broken.
Besides that most basic functionality, many times notifications are not sent when the notification settings would suggest they should be. And of course, moderation has fallen by the wayside, although that's more of a policy shift than a technical failure.
(Occam says deficit of institutional capability is the most likely cause. But that could also turn into a feature.)
Just on top of my head, there's the ability to write longer texts, the AI integration (that seems fairly popular in there). There was also some revenue sharing scheme where accounts can get paid for engagement. And from the point of view of management, making it impossible to view threads without login would also be a feature (as in "something we have to deliberately implement").
It's not a lot, but I don't think the pre-Musk Twitter changed even that much in the 3 year period before the acquisition.
[1] - https://archive.is/evLAL (WSJ archive)
[*] This one I believe - https://commoncog.com/cash-flow-games/
Also plenty of racists and homophobes, more than I see just about anywhere else on the internet. And more wild, rabid hate surrounding trans people than I see anywhere outside of narrow, festering cesspools in wastelands like 4chan.
although I think entry level is still in shambles, for now
Note that the reversal only applies to American software jobs, not offshore ones. So maybe tech hiring is going to pick up again soon. Those changes should've been reversed before they took effect in 2022 by the govt at the time.
Once Trump won and was in place for 2025, they defused it so that (they hoped) the economy would pick up.
Huge amounts of coordinated lobbying by the tech industry concentrated on three topics (crypto, section 179, ai deregulation)
I was working in Europe for a big American company, which will remain nameless, and they started shutting down most, if not all, of their European operations.
A change in the US tax code made software development amortize over 5 years in the US and over 15 years overseas. It was later changed instant deduction in the US but still 15 years for overseas. It no longer makes sense to outsource software development in many cases.
There's also some argument that, if people cannot get customer service to "help" they stop asking for help - driving that cost down.
And not having to remedy issues in the product = no repair/replace cost
And people are then left with only a few options, one of which... buy a replacement... which in a restricted market is a WIN because more money coming in...
Also, the 2017 tax cuts and the recent bill have provided substantial tax cuts to these corporations too.
Usually this subject comes up where people (at least on HN) are telling people to mail their Congresspeople and Senators to get a bill passed to "fix" this and my question is always this:
"What tax cuts are you going to give back to pay for this?"
If we want to end this ridiculous IP transfer to Ireland and royalty payments to offshore profits to avoid taxes at the same time, I'm 100% on board with fixing the deductability of engineering salaries.
That's just not how big companies look at their budgets, it isn't all one big pool of funds coming in and going out everything has a cost center and is accounted for individually end to end. This tax change made certain jobs suddenly 20% more expensive on paper. People in corporate finance look at these numbers and make recommendations that get implemented.
Sure, but that doesn't necessarily change the marginal cost of hiring another dev if the tax incentives have worsened.
The time value of money over 5 years is significant, especially in a fast moving industry like tech. The correlation between this change passing and tech hiring dropping is strong so I'm inclined to think there's some signal there.
It's already been fixed for US workers.
The only companies this affected are those right at the margins of becoming profitable. It doesn't affect new startups and it doesn't affect established businesses. And if you are at the margins of becoming profitable you have likely accumulated more than enough tax credits for all your losses.
The changes to Section 174 is not the explanation of why software engineering jobs were lost in 2022. They were lost because every company overhired from 2020-2022 and they have to absorb it given the drop in activity once the Pandemic was over.
Historically, the R&D payroll just wiped out same year revenue and you essentially did cash accounting. After Section 174, you had to finance the R&D by borrowing or just hiring less.
It also affects wildly unprofitable companies that have burned lots of cash and never made any money.
And you do “lose” the tax credits upon acquisition - they’re not only time-shifted, they are company-shifted.
Yes, from a value perspective you do not lose the tax credits. But from a "cash" perspective, how do I pay my tax bill in years 1, 2, 3, 4?
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.
The Twitter layoffs perhaps?
So there's a bit of circular causality here. AI is a cause of the Twitter layoffs, and others are arguing that the Twitter layoffs may be a cause of other labor force shrinkage. If so then the Twitter layoffs are a costly signal that AI will impact the labor force and the shrinkage downstream of them is AI related.
The Twitter layoffs were because the company was hemorrhaging money and Musk is an egomaniac.
Can you walk me through your thought process here?
Elon talked shit online and then fought hard to wriggle out of buying Twitter after promising to pay the funny weed sex number for it.
And he fired employees because he's cheap and only keeps people who yes man him. You can read the complaint yourself:
https://int.nyt.com/data/documenttools/twitter-employee-laws...
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.
Oct 2022 recorded the lowest for S&P 500 since COVID (till now).
COVID assistance was over. Vaccination reached a critical majority. On Sep 2022, Biden declared "COVID-19 pandemic was over" [1].
Businesses got a reality check.
1: https://en.wikipedia.org/wiki/COVID-19_pandemic_in_the_Unite...
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.
Interesting point. With Baby Boomers retiring everywhere and fertility falling everywhere, one would expect fierce competition for young workers.
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.
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/...
Most people didn't start taking ChatGPT/gen-AI seriously until mid-2023, when GPT-4 became widely used.
[0] https://miro.medium.com/v2/resize:fit:1400/format:webp/1*yJs...
[1] https://pbs.twimg.com/media/Fpl09fAakAE1cFW?format=jpg&name=...
Some of the highlights include:
* Building a Virtual Machine Inside ChatGPT https://news.ycombinator.com/item?id=33847479 (Dec 3, 2022; 2029 points; 919 comments)
* Disputing a Parking Fine with ChatGPT https://news.ycombinator.com/item?id=33937753 (Dec 10, 2022; 606 points; 348 comments)
* ChatGPT passes the 2022 AP Computer Science A free response section https://news.ycombinator.com/item?id=33858844 (420 points; Dec 4, 2022; 455 comments)
* ChatGPT is a ‘code red’ for Google’s search business https://news.ycombinator.com/item?id=34086462 (396 points; Dec 23, 2022; 636 comments)
* Build your front end in React, then let ChatGPT be your Redux reducer https://news.ycombinator.com/item?id=34166193 (395 points; Dec 28, 2022; 142 comments)
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
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.
American Express
And a large bank headquartered in Virginia
I think USAA but that was two years ago
I called bank of america’s credit card line and asked for a support agent. A friendly lady answered, she had a southern accent. :)
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.
The economy neither creates nor destroys jobs. The economy is the aggregate of the jobs.
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.
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.
This is 100% the reason, saying its A.I. is gas lighting
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.
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.
I sense some conflation of causation/correlation at hand.
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.
They just supply what people want and follow the trends.
My understanding is the same thing recently happened to pharmacists.
so, so many jr hires with no-name online degrees.
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 ....
Still, even fine tuned gpt2 was an eye opener.
And 2022 (chatgpt) fits time wise- the hype came before mature solutions.
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.
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.
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!
I have no idea what this means.
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.
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?
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.
Makes zero sense.
You completely misunderstand corporate incentives.
cf. Matt Levine's thoughts on how Blackrock optimizes whole industries beyond the company level.
have you seen the behavior of CEOs?
the market is doing it, and there is no way for a CEO, CIO, CTO, CISO, et al, to not do AI in 2025. the gains to stock price from the hype alone could be worthwhile, and even if not "everyone else was doing it"
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.
https://docs.google.com/spreadsheets/d/1z0l0rNebCTVWLk77_7HA...
We can make the model way simpler to make it clearer. Say in 2020 we hired 1000 20-24yo, 1000 25-29yo etc and then we didn't hire anyone since then. That was five years ago, so now we have 0 20-24yo, 1000 25-29yo, 1000 30-34yo etc and 1000 retirees who don't show up in the graph.
Each individual year we hired the exact same number of people in each age bracket, and yet we still end up with fewer young people total whenever hiring goes down, because all the people that got hired during the big hiring spike are now older.
The ZIRP era made companies hire people as if there was no tomorrow, and companies started "poaching" engineers from others, including juniors. I saw some interns with 2 years of experience getting offers as seniors. I had friends being paid to attend boot camp.
Then everyone realized they were training junior engineers who would quickly get offers from other companies as “Senior" and leave. So companies stopped hiring them.
A technology is a tool you can adopt in your toolchain to perform at task, even if in this case it's outsourcing cognitive load. For a subscription company, well, as long as the subscription is active, you get to outsource some of the cognitive load. When Anthropic's CEO says that white color jobs will disappear, he means that he is selling Enterprise subscriptions, and that companies will inevitably buy it.
The only thing that could stop this commodification is some sort of vendor lock-in, but that looks to be technically challenging.
Companies just can't seem to stay focused on their own core competencies after a few decades. On the other hand, even when open projects "die" they can be resurrected ad infinitum.
Just my gut feeling but it seems like closed wins out big in the short term, but open wins in the end. Not applicable to everything I know.
It starts with the kids saying I hate Windows. Then the adults. Then finally the grandmas. Windows will be evaporating marketshare for decades, like a long-half life on an unstable isotope.
And the data for the two decades before that obviously needs to be tossed out because of the one-off nature of the dot-com boom, the dot-com crash, 9/11, and so on.
And before that... point is, you don't get clean data in economics. There's always something big going on, there are no double-blind trials to run, etc. It's called the dismal science for a reason. But that doesn't make it useless.
There will always be something going on, but there won't always be this specific thing going on, and if 100% of your data comes from during one specific crisis (nonetheless multiple concurrent crises), then it is 100% useless. Even with longer periods of data, reconcilliation with longer trends is technically challenging. We've had enough recessions to correct for them in our data, but until we've had a half dozen global pandemics you can't use pandemic data in your analysis.
So my advice to high school kids of 2025: right now is the perfect time to enrol in CS. 5 years from now, the AI hype will be over, and employers will be short on grads.
alterative view: the AI hype is real, AI takes over, and no one has any jobs anyway
also a thought: in 5 years the boomers will be retiring in droves as will the first series of GenX and the market, in most fields, should be opening up anyway
It's fun to play with, but LLMs can't reason and are fundamentally unreliable. They cannot be made reliable.
The actual market uses for large quantities of human-like text is, like, autocomplete and spam.
I use copilot as fancy autocomplete and like it, but ~all claims that it will replace SWEs are by people selling AI or people who fundamentally do not understand what SWEs actually do.
It'll probably replace some offshoring, ironically lol
how is that different from the previous decade(s)? How often do you invert a redblack tree in your daily programming/engineering job?
A CS degree is a degree for thinking computationally, using mathematics as a basis. It's got some science too (aka, use evidence and falsifiability to work out truths and not rely on pure intuition). It's got some critical thinking attached, if your university is any good at making undergraduate courses.
A CS degree is not a boot camp, nor is it meant to make you ready for a job. While i did learn how to use git at uni, it was never required nor asked - it was purely my own curiosity, which a CS degree is meant to foster.
You might think you’re disagreeing with the parent comment but in fact you’re disagreeing with the top level comment.
"AI" dives in and disrupts and then it turns out that AI isn't too I. The disrupt phase where HR dumps staff based on dubious promises and directions from above takes a few months. The gradual re-hiring takes way longer than the dumping phase and will not trigger thresholds.
I've spent quite a while with "AI". LLMs do have a use but dumping staff is not one of the best ideas I've seen. I get that a management team are looking for trimmings but AI isn't the I they are looking for.
In my opinion (MD of a small IT focused company) LLMs are a better slide rule. I have several slide rules and calculators and obviously a shit load of computers. Mind you my slide rules can't access the internet, on the other hand my slide rules always work, without internets or power.
There is a lot of low-level drudgery work which is currently outsourced or assigned to non-employees (mostly young) in most companies. For example, the IT support and maintenance is mostly done outside of the West. This works requires a lot of back and forth. Don't think AI taking over this area.
Also, some work is assigned to young workers to spread the accountability and risk ownership. Not sure if you can hold AI as accountable as humans.
Also, young workers are generally preferred for their agility, flexibility and ability to work hard. There were easier to exploit and if they were unmarried, they won't mind giving all of their time and attention to work for less pay. I used to work in teams that stayed overnight at office to complete projects. Young people are also very cohesive and they team up well.
So, looking at the situation purely from a knowledge perspective may not give the full picture.
