You didn’t think we’d skip over this topic, did you?
The software job market right now feels like we’re living in Cinderella. Cinderella had an evil stepmother, and she came with two stepsisters who made Cinderella’s life miserable. Since both sisters were equally awful, they lost their individuality (not to mention that bizarre Cinderella 2 where they tried to give each one a backstory, which turned out to be a huge mistake… how do I even know that?). Anyway, in this case, the evil stepmother would be the never-ending rounds of layoffs, while the two stepsisters are the lack of job offers (we talked about that last week) and the shrinking salaries in the few jobs that are available. Lovely situation, right?
That analogy was pointless, wasn’t it? But hey, they say it’s good for giving the reader some context, setting the scene, you know?
The bright side, though, is that while the job market seems to be sinking into a depression, the People and HR reps at companies are focused on what really matters.
“Booo! Rodrigo, you’re such a buzzkill! Can’t people just have fun in peace?” Yeah, sure, people can have fun. But context matters, right? You can have a beer whenever you want, but maybe cracking open a cold one with friends at a concentration camp isn’t exactly the best idea. Too far? Maybe. To see if I crossed the line, let’s check how bad the situation actually is.
Up until 2022, everything was love, butterflies, parties, unnecessary trips, hallway romances, weekend getaways to Las Leñas (yes, Martín, I’m looking at you), expenses here, expenses there, and of course, sky-high salaries. Tech wages were outpacing every other occupation across all percentiles. For example, the median wage (50th percentile) for tech jobs was around $84,284, compared to a median wage of $44,432 for the entire U.S. labor force. Not too shabby. The folks at CompTIA did a comparative analysis, which I’m shamelessly stealing and turning into a pretty chart because, well, it just looks nice that way.
It’s good to be king. Or it was. Because everything changed in that fateful 2023, and this beautifully traumatic 2024.
First, the jobs started disappearing. Developer employment grew from January 2018 to November 2019, and then began to nosedive. Despite some temporary increases in August 2021 and October 2022, the developer employment index has been on a steady decline since 2020.
Then came the salaries. Software engineer paychecks are taking a hit, dropping by 9%–15%, something we haven’t seen in over 20 years. Even the best engineers from big-name tech firms are now accepting offers up to 30% lower, or they’re struggling to land a job at all.
In the U.S., the average tech salary barely increased from $111,348 to $111,193—hardly the 2.3% increase seen in 2022. The hardest hit were cloud architects/engineers with a drop of 15.8%, and product managers, down 6.7%.
According to TopCV’s latest annual report, while software job salaries remain high, they’ve taken a noticeable dip from the peak levels seen in 2022.
And it’s not just salaries taking a hit—companies are also trimming down the equity portion of compensation packages. According to the 2023 Annual Equity report from Carta (the platform that knows all the dirty details from thousands of U.S. startups), the average equity offered to new hires has shrunk by over a third. Because, you know, why stop at just cutting salaries when you can cut equity too?
But hey, who needs better salaries when inflation is totally under control, right? Wrong.
“When adjusting for inflation, Hired’s data tells a brutal story — U.S. salaries have sunk to their lowest point in five years, dropping 9% from $141,000 to $129,000 between 2022 and mid-2023,” according to a report by ZDNet. So much for that “inflation’s not a problem” narrative.
The good folks over at Stack Overflow released their annual developer salary survey. Back-end developers took a $9K hit on their median salary, while blockchain developers saw their paychecks slashed by double.
In the middle of a hiring freeze, new job openings are as rare as a unicorn, which leaves employees with even fewer options. Companies might hit pause on hiring or just shuffle internal candidates around, further shrinking the chance of any salary bump. According to Business Insider, some companies even used layoffs as an opportunity to trim down the salary packages for new hires.
But hey, this isn’t just a “told you so” kind of post (well, not just). I’m also going to break down a little bit of the what and why behind all this. In short, of course. I’m not trying to write a research paper here.
So many devs. So. Many.
There was a time when life was beautiful, and people would say, “Just take a front-end course, learn two or three things about JavaScript, and you’ll be making over $2K a month in no time.” Am I exaggerating? Maybe a bit, but not by much. The barriers to landing a new job were practically nonexistent, thanks to a market that kept growing and an insatiable demand for more developers. A situation where demand far outpaced supply meant nothing but smiles for developers, designers, PMs, and other tech folks floating around a few years ago. It was also great news for professionals thinking about switching careers after hearing there was digital gold to be found. Various sources claim the number of software developers has increased by 15% to 20% since 2020. And these new job seekers aren’t coming from just one market—they’re from all over the world and don’t even need to move to do their jobs.
And everything was fun and games as long as the river kept flowing at the same pace. But what happens when supply grows and demand flatlines? In Condorito terms: Plop!
Source: Talando
The sense of an oversaturated tech job market is spreading among software engineers, and with good reason. The rise of AI, recent layoffs, increased interest in the field, and a globalized workforce are all feeding into this perception.
Overhiring vs. Stupidity
What a brilliant way to say, “We planned terribly.” Even etymologically, the word “overhiring” seems to suggest that the error was a generous act by the company, as if they just wanted to hire more people than humanly possible. A more accurate term might focus less on the hiring itself and more on the absurd, overinflated, and completely baseless growth estimates that led to it. Maybe “stupidity” would be a better fit. But that would mean placing the blame on some overly ambitious C-Level exec, and that doesn’t sit well with a generation of leaders more obsessed with cozying up to Hollywood and resolving their unresolved daddy issues by trying to be best friends with their employees than, you know, actually making money.
Not only did they keep hiring, but they also jacked up salaries by 20–30% to attract and lock down talent. Eventually, these insatiable hiring practices put them in a position where they had to lay off a ton of people and slash salaries.
I love the letter Google put out when they did their layoffs:
“Over the past two years, we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today.”
Such a poetic way to say, “Oops, we messed up.”
“Dramatic growth.” Fantastic.
“We hired for a different economic reality.” Bad economy! Bad! Go to your room!
So, lots of people + higher salaries + unmanageable fixed costs = boom.
Goodbye Juniors, Hello Senior-Only Market
Of course, the impact isn’t the same across the board. Junior and front-end roles seem to be taking the biggest hit, since there’s still a decent pool of candidates for entry-level positions. Naturally, this means salaries for these roles aren’t nearly as competitive as they used to be.
On top of that, demand for junior staff has plummeted, with the percentage of junior roles posted on Hired dropping from 45% in 2019 to just 25% in the first half of 2023.
Interestingly, individual contributor hires made up 30% more of new hires compared to 2019, yet somehow, 40% of new startup hires were still at manager level or higher. Because, you know, what’s a startup without an overabundance of managers?
Meta even went so far as to eliminate the Technical Program Manager role, hinting they want to cut anything that smells like red tape. Not good.
What now?
This isn’t about some invisible hand of the market. There’s no ebb and flow, no seasons of growth and decline here. What we have is bad planning—both from hiring companies and those “training” the workforce.
Need something to hold onto? Recruiters are noting a serious shortage of high-demand skills, especially in areas like cybersecurity, cloud computing, data, and AI. Reports mention that Bloomberg’s newsroom claims IT managers, information security analysts, web developers, and database admins have the best job security in tech, although they didn’t offer any hard data to back it up.
I hope all these puzzle pieces paint some sort of optimistic picture. There are signs of where to go—lower salary expectations, keep hyper-specializing in this high-seniority market, and keep an eye on AI. There are lifelines, and we just have to hold on until the shaking stops. If it ever does. Some voices out there are a bit more hopeful. A new Korn Ferry study that does a deep dive country by country says the problem isn’t that robots are taking all the jobs—it’s that there aren’t enough humans to fill them. In fact, by 2030, the study predicts a global talent shortage of over 85 million people.
So, if like Cinderella, our job market has two evil stepsisters whispering in our ears, “There are fewer jobs,” and “The offers are for lower pay,” then who’s going to be our Prince Charming?
In the meantime, dear People and HR folks, maybe try dancing a little less. This isn’t a party; we’re trying to run a business here.
