Ask HN: Plans for Weathering the Tech Recession? | Hacker News Reader

Ask HN: Plans for Weathering the Tech Recession?

39 pointsthrowawaybbq187 comments

Regardless of whether we end up being a technical recession or not, tech companies are clearly shedding jobs. It seems to be messed up with all the big names announcing layoffs or hiring freezes. Apart from startups, who is hiring in tech?

I read anecdotally that consulting firms are hiring. Seems yucky but a job's a job.

Any sectors that are immune? layoffs.fyi paints a scary picture.

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One thing we must make clear is, is there actually a recession? Many companies are firing, but they've fired much fewer than they've hired in the past few years. Many companies are still hiring now. I don't think there is a recession, much as people might be scared that there is.

People being scared that there's a recession is what causes the recession

What evidence would falsify that hypothesis?

If all the CEOs believe there will be a recession, and the Federal Reserve has stated that unemployment is one of their goals, it's hard to see how we're not going to have a recession that gets willed in to existence.

All the CEOs? I highly doubt that. CEOs might also say whatever is convenient to their hiring practices, it doesn't mean anything about a recession.

“Duffman says a lot of things!”

"Dana Peterson, chief economist at the Conference Board, told CNBC this week that 98% of the CEOs it surveyed are preparing for a recession, up from 95% earlier this year. She explained that Federal Reserve's interest rate hikes are a major factor."

Slightly hyperbolic, but only slightly.

Traditionally, even when unemployment was high, tech wasn’t affected a lot.

Unemployment is the lowest it has been since the fifties. So it has to increase a lot before it gets to levels traditionally associated with recessions.

Unemployment numbers don’t include people who are not of retired age but have chosen to stop looking for work

The share of prime working aged men who aren’t working and not looking for work is historically high.

> The share of prime working aged men who aren’t working and not looking for work is historically high.

It will also remain high due to structural socioeconomics, somewhat similar to Japan’s Hikikomori.

The share of men under 50 in the work force is higher now than it was pre pandemic.

No it’s not. Overall labor force participation rate is still under pre pandemic levels. Where did you get that?

https://fred.stlouisfed.org/series/CIVPART

I got it from the stlouisfed too, but can't find it now. Your link certainly doesn't disprove my assertion, since yours is for all Americans, not the under 50's.

To me it seems like a lot of smoke, but not much of a fire, and I believe it's instigated by the fed, who want inflation down, and are wrongheadedly trying to induce a recession to do so; they basically said so directly.

There is no recession in the US, yet. Even though people have been pretending for more than a year that there is one.

Q1 and Q2 Real GDP growth was negative, so the recession technically already happened.

Unless we want to restart the "NBER decides what a recession is" gaslighting.

What's your source for the Real GDP numbers?

Employment is doing very well, though.

https://www.bea.gov/data/gdp/gross-domestic-product

Thanks. In the meantime, I also found https://fred.stlouisfed.org/series/gdpc1

Tons of companies are hiring. Just the largest ones are using this news cycle as an excuse to trim the fat.

If you’re interested in top-10 tech companies, just know it’ll be difficult to find a job. Otherwise there are still tech companies posting high profits out there.

I've seen so many jobs posted for months but never filled. I even had someone tell me they really wanted me to apply but they weren't sure when their hiring freeze would be finished.

I think it was Tim Bray who said (paraphrasing) that the people with the most successful careers in tech move to government work during recessions where they specify the standards and projects that they will then have consulting jobs on once the recession is over.

It might not have been Bray but it was someone in the XML world circa 2006.

It almost feels like: the more you/we talk about a recession, the more likely/grave it will be. It's got a high potential to be a self-fulfilling prophecy, as recessions often are fear-driven.

Actually, governments printing money causes inflation and the only way out of inflation is a recession. Trying to talk your way out of a recession will not help. I would say that the world is heading for a period of constrained spending, less easy money but technology spending will probably stay strong.

What makes you think that the only way out of inflation is a recession?

Inflation is definitionally a lack of demand for cash. Recession is the name we give to a period with rapidly increasing demand for cash.

Where do you get those definitions from?

Inflation is the loss of purchasing power of the currency that results in an increase general and sustainable prices.

And Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

From https://www.insee.fr/en/metadonnees/definition/c1473 Match much more the common definition.

It might have a relation to cash demand in certain contexts, but the link is not definitional : inflation and recession are defined by symptoms, not causes.

Those formulations are indeed more common, but also equivalent to the ones I gave:

- "Loss of purchasing power" is a fancy way of saying "people don't want your money as much as they used to", i.e. low demand for cash.

- Similarly, "economic decline during which trade and industrial activity are reduce" are complicated words for "people more and more prefer to hold on to the money they have rather than exchange it for other stuff", i.e. increasing demand for cash.

The reason I phrased it the way I did is that it helps highlight how a recession is the way out of inflation.

> Recession is the name we give to a period with rapidly increasing demand for cash.

Huh? If demand for cash rises a lot, but we are printing lots of money, too, to satisfy that demand; and everything else stays stable, by your definition you would call that a recession?

It is a well known model, not my "thoughts" really.

People don’t like hearing the obvious. Also one correction, governments printing money IS inflation. They inflate the money supply. Banks can also create additional inflation, but that power is granted by governments usually.

Usually when significant inflation is created prices go up across the board (what we are seeing now) or prices stay relatively still, when they would have normally gone down due to more efficient production (2010s).

"government printing money IS inflation" is not true. Government printing money is one way of possibly generating inflation. There are other ways: scarcity of goods and services through the lack of productivity is another example.

You can look up the old definition of inflation (since recently they have changed it to be more confusing), which comes from the word inflate. Refers to inflating the money supply. Printing money is inflating the money supply.

Scarcity of goods or services a will cause those respective prices to go up, but not broad price increases, which is often the cause of inflation.

This is untrue, for example for energy or rent: if energy prices or rent increase, almost everything will also suffer from increased prices, as energy and rent go into almost every product of a modern economy.

I would say that energy and rent are not very correlated, so if both are increasing rapidly at the same time, it is probably because of inflation.

And which one of my statements is not true? Definition of inflation or that scarcity of a product will cause that product to become more expensive?

Inflation can also happen when companies across the board decide that, despite record profits, they can all raise prices.

You mean companies can create cartels and raise prices together? Yes, that can happen, but firstly, that is not inflation (no increase in money supply happened), and secondly most non-government cartels are not very stable. They leave opportunities for competition to take their business.

This is very debatable, and easily disproven - the past decade has seen enormous amounts of money printed, especially but not only in Europe, yet inflation has only started once goods and energy have become scarce. The textbook explanation you have in mind is, if not disproven, severely incomplete.

We have had massive Chinese growth for the last 50+- years which has kept inflation mostly under control with consumer countries implementing quantitative easing (printing money). Anyway just wait and see what happens, I hope I am wrong.

To me it seems like recessions are usually related to macroeconomic conditions, or the debt/business cycle. Often bad public policy, either fiscal or monetary, has a large role.

But maybe you can give an example of one that resulted simply from fear or self fulfilling prophecy?

Policy, decisions, are all made by people, who read the news. I'd say this can easily lead to a self fulfilling prophecy: if you expect the economy to go bad, you don't hire or even fire people. If enough businesses do this, lots of people have less money to spend, etc etc.

I jut wonder why the economy goes through such cycles and how to break that cycle.

“wonder why the economy goes through such cycles”

Ray Dalio has written some very easy to digest books on the debt cycle. That’s not the full picture but a good start. There’s an entire field of study around all this stuff and economists never agree completely —if they did they would have no job- but as I understand it sentiment is a predictor of recession but it tends to lag other things like interest rates and gas prices.

> I jut wonder why the economy goes through such cycles and how to break that cycle.

You answered your own question there. If funding and policy is made by humans, they'll be influenced by others and if everyone starts hiring or firing, pretty soon you'll have a bubble or a recession, respectively. The only way to stop that is to not have humans make decisions.

Computer for eg high-frequency trading are still 'reading'/interpreting the news, so even computers have this issue.

Where does the policy originate? If from e.g. polls, then the policy is directly influenced by opinion which often comes from hearing other opinions.

The most important macroeconomic policy wrt recessions is monetary and they look at prices, the CPI and things that signal a hot (too strong) economy. If they paid attention to consumer sentiment, whether or not people expected a recession, they would not hike rates or would actually cut them. It’s more complicated than I can lay out in a short post, so I would just ask you or the parent poster to provide an example of a recession that was driven by sentiment alone. I can’t think of any.

First, to answer your question, the best plan is to stash away tons of liquid capital. In this environment, cash.

Secondly, I don't think we need to worry yet. We're seeing layoffs, but layed off people getting hired very quickly.

Thirdly, in such an environment, don't be so picky. Doesn't matter if it's yucky if it pays the bills.

Lastly, quit watching layoffs.fyi. Like most media it's by design only bad news. Breathe. Everything will be ok.

> First, to answer your question, the best plan is to stash away tons of liquid capital. In this environment, cash.

USD Inflation has been pretty high recently. Perhaps keep your cash in some other currency?

What would you recommend?

Living in EU I was thinking to diversify cash to USD.

Do you recommend any other currency?

Yen might work as it has lost a lot of value recently due to loose fiscal policy. There’s signs that they may have to tighten but it doesn’t 100% mean that yen will go up, just a hope really.

Interestingly, Yen hasn't had much inflation. But still lost money compared to eg USD.

Inflation is high around the world. I had considered at one point getting ahead of it and putting some into other currencies, but the ones I checked inflated above USD even.

Japan has pretty low inflation.

The Yen has fallen like 30% against the dollar over the last 3 years. That would be quite the haircut...

No argument from me there. I was just making the narrow point that consumer prices in Japan have seen only modest inflation.

That's really interesting. I'd noticed a lot of countries just kind of seem to peg against the dollar and prices rise similarly.

So how does that work in Japan? I'm guessing by necessity imports have inflated. But perhaps domestic stuff has not? IE a loaf of bread is still worth X yen, even though globally X yen has become a lesser amount?

What you should be concerned about is future inflation. Past inflation is already accounted for, you can't avoid that. I think in the future, if the FED keeps its tightening policy, we are not going to see much inflation or the reverse: prices going down. We are already seeing some of that effect in the stock and crypto markets.

Yes, I was simplifying a bit, and assuming that inflation has a bit of momentum. That's not necessarily true.

Btw financial asset prices are more about NGDP growth, than about straight up inflation. Of course, NGDP growth has been too high, too.

The company I used to work for had huge layoffs. I found out about it a few weeks after the face, and by then everyone had been hired or had successfully gone independent consultant.

I wanted to help but it was too late. Felt kind of bad, then I realized that was a dumb thing to feel.

> I read anecdotally that consulting firms are hiring. Seems yucky but a job's a job.

Doubt you meant it to be friend but this is pretty insulting. I've worked in consulting for 6 years and much prefer it to the 5 years I spent in products. I get to learn at a very deep level about various production processes and the real problems that affect actual workers. I then get to collaboratively build solutions which help those people. Consulting isn't all figuring out how to upsell clients on some cloud consumption they don't need.

What sort of hours do you work? (:

My experience has been has consulting is very lucrative, very intense work, with periods of being paid to sit on a chair and do nothing because of (corporate reason if the day here).

Furthermore, you’re never “part of the team”, you’re “that extra guy who leaves in 12-18 weeks”, and although you form lots of trivial connections, you don’t stay around long enough to form deep relationships with any work colleagues.

There are also plenty of “cog in the machine” consultancy firms that just hire whatever random dickhead and give them a training course or two then fob them off to companies that need an expert in whatever the flavour of the day is. You join the ranks of consultants, you get the skeptical looks from other folk who’ve encountered clueless consultants. For better or worse, you get judged for it.

If that’s what you’re into, sure. …but it’s not a great job for everyone.

Yucky doesn’t necessarily mean “slimly sales job”; it might just mean, not a comfy 9-5 job.

Sounds better than working at a startup, where you are being underpaid with the promise of options at IPO, where you constantly finish late in the evening and are always in panic mode to get "the next big thing" done.

(My experience working at various small - medium startups for most of the past decade)

Just because you like it doesn't mean that they can't find it "yucky". It's not insulting, it's their opinion of the job. Some people find that being a doctor is "yucky" because they don't like bodily fluid. That says nothing about the job of doctor.

Anecdotally, I've done the consulting circuit and similarly respond with an instinctive "yuck".

Great point that consulting provides a window into the processes of various clients and across industry. I apologize .. did not mean to be insulting. It is not my cup of tea as I do deep tech/infra, but I appreciate how solutions are what generate value for individual firms.

Comment was really there to help kickstart discussion on what jobs/sectors/companies will continue to hire (e.g. someone posted an insight that defense demand is strong). I still have my job at a big name tech firm but I don't know how others (or myself) will be able to get a job at the same/similar brand (doing AI/infra) in the next year. As others have commented, companies benefiting from low-interest, high demand will be under belt-tightening for a while (not even sure if we will be out of this mess in a year).

It’s going to get a lot worse. We’ve only see protective layoffs so far, wait til all the tit-for-tat SaaS revenue between VC-backed firms disappears and their runways come to an abrupt stop.

So, look for jobs at companies with solutions that solve actual problems for people or companies.

What is tit for tat sass revenue?

My best guess is that it's referring to a bunch of VC-backed companies who all buy one another's products to both get a customer testimonial for their website and juice the ARR numbers. Whether that's actually happening at significant scale is conjecture; I'm just interpreting the parent comment.

IMO this recession is needed.

1. there is company bloat everywhere. Too many people going to work and 'hiding' instead of working.

2. tech is 10x better these days. You can do way more with way less.

As for weathering it, tech is still the fastest growing sector out there. It won't be hard to find a job.

Your last 2 sentences conflict with point 1 and 2.

If companies don’t need as many employees in tech where the bloat is then why would they hire them back in the same proportion with new jobs? If they hire them back in a much smaller proportion then it would be hard to find a job, no?

Tech is the fastest growing sector. More jobs created than lost due to advancements and bloat cut.

There is a whole world of employers who need tech folks who aren't google and friends.

There’s panic now. My approach is to work on my skills, maybe finish some training & certificates, finish some side project, and a couple of weeks down the road the situation will settle down.

> Apart from startups, who is hiring in tech?

Defense industry is hiring big time.

If you are a solid engineer you don't have to worry about it. Keep polishing your skills and your resume.

Are there sectors immune? Yeah.

It seems the exciting industries are falling apart, but the “old boring” industries are doing just fine.

Insurance, medical tech, government, and defense are hiring.

Come to think of it, insurance, medicine, and defense are probably the oldest industries around.

As of right now? Do nothing.

I have plenty of liquid capital to outlast a 2-3yr period of unemployment if the worst happens. Very unlikely but possible hence why I keep the cushion I have.

If however there is a big recession and a big market downturn and I'm not laid off in the process I intend to aggressively buy securities with that big cushion I built up over the last few years instead.

Not sure what else one can do when the bond market has moved so sharply of late. At this point a recession is priced in and the bond market while it's too optimistic sometimes is very rarely too pessimistic. So I would say it's coming no matter what because the forces that be have decided it will come.

There already has been a sharp downturn in the markets. Equity markets are forward looking so not sure why wait? Why not dollar cost average from here on out?

I think I'm second on the four-person list of "numbers to call when production goes down", so I'm hopeful that's all the plans I need.

I'm living off of credit cards right now. I've applied to 240 jobs and counting. If I can't make rent (should happen by the summer) because I max out my cards, I'm moving into my truck and yoloing it. I lived out of my truck by choice for a year before so it's not that bad, but still sucks to accrue debt. If I don't make it, I starve out in the cold.

Why not move into the truck or take other drastic measures like a side job now? Sounds like you have already reached a critical state.

go away

I'm going to focus on my engineering chops, finish a couple side projects, and put as much as I can in my 401k. And hopefully get my project car running.

I’m launching a job board slash professional development community soon. Join the discord in the mean time.

https://discord.gg/jFZFWBujJa.

Supposedly Cleantech/ClimateTech is hiring a lot now[1], according to some articles I saw pop up recently.

I did try to investigate Cleantech jobs last cycle, back in mid 2021, and didn't have a great experience, personally. Most of the jobs posted seemed to fall into one of two buckets:

1 - Startups that "helped companies go carbon neutral", i.e. they accept money from the business, skim some off the top (for their business), and funnel it towards various clean initiatives, then send some certificate to the company showing they've offset X amount of carbon. It just doesn't seem much different than a grift to me, and there's various issues with carbon offsets that John Oliver goes into here[2]. Also regardless of whether it's a grift or not, that sounds like totally uninteresting tech to work on.

2 - Startups that bill themselves as helping companies get more efficient, i.e. help improve their logistics or make their electric grids "smart" to save energy, etc. Problem with that is that already seems like something a company wants and tries to do anyway, and while yes in the short term it does seem like that results in wasting less energy and saves resources, in the long term, it just allows the company to ramp up further and use even more energy and resources. Like two companies with the most efficient logistics in the world are Amazon and Walmart, and that just let them become even more massive.

So wading thruogh all that to find more interesting Cleantech companies I found to be difficult. I did go forward with a few recruiters anyway, and at least with the companies I went forward with they were terrible at scheduling interviews and also seemed to top out at fairly low wages compared to other companies anyway (like I was seeing 120k at the top of the range for even architect roles, and I wasn't super keen on working for that little).

In the end the companies that extended offers were all consulting firms, so I ended up in kind of the opposite realm anyway.

But hey, clean and climate tech are apparently hiring a lot right now, so they're an option if you're worried about your job elsewhere.

Also if someone is in this field and has had a different experience than I have had, please let me know. I'd like to feel like I'm helping more than hurting for the world, just haven't found anything that sorta fits my skills (primarily web and games) that seemed worthwhile.

[1] https://techcrunch.com/2022/11/05/laid-off-climate-tech-is-l...

[2] https://www.youtube.com/watch?v=6p8zAbFKpW0

Startups are likely the most hard hit by this next recession, no matter the industry, mainly due to the higher interest rate environment clobbering discounted future cash flows of these largely money-losing startup companies. No more magical vc cash fountains to bail them out for awhile. Perhaps a bootstrapped startup with actual profits might make more sense?

Death.

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