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Comment by MentallyRetired | Hacker News Reader

I think this tech downturn is all a collusion amongst tech leaders to bring down software developer salaries. How are so many places hiring yet so many are laying off thousands, and most of them in tech/development? Even the places laying people off are still hiring those positions.

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Well, to give you my POV - my company is still hiring because the business fundamentals are still strong. We're making money and using that money to pay people. But I have friends in network who had to lay off because they were hiring against VC cash instead of revenue, with the expectation of raising another round later. But they now don't expect to be able to raise that next round so easily so they have to slow their burn rates.

Money WAS cheap and easy for a while, and with everyone trying to use that money to grow, you could throw cash around easy to hire/poach/etc. and had to compete heavily for talent. Now you can't, money is much more expensive and tougher to get and you have to be more deliberate.

> Money WAS cheap and easy for a while, and with everyone trying to use that money to grow, you could throw cash around easy to hire/poach/etc. and had to compete heavily for talent. Now you can't, money is much more expensive and tougher to get and you have to be more deliberate.

Why it changed? What happened?

A combination of fiscal policy (money is literally expensive at the moment, as central banks raise interest rates to combat inflation) and fear (a lot of people have been expecting a recession any day now for the last year, though it keeps getting postponed, and may yet be the recession that never was; while a good few countries dipped briefly into technical recession this year, fear of another proper global recession does seem to be abating a bit).

The over-simplified answer is "The fed started upping interest rates, after having held them ridiculously low for about a decade."

There's arguably more to it than that, but when people talk about "cheap money" they mostly mean "low interest rates". If you just Google terms like "end of cheap money" you'll find lots of discussion on all of this.

Some examples:

https://www.ft.com/content/6d312b6c-9f74-4816-ad7e-7e797c5e0...

https://www.bloomberg.com/news/newsletters/2022-11-30/what-s...

https://fortune.com/2022/12/28/investing-outlook-2023-fed-in...

https://www.reuters.com/breakingviews/end-cheap-money-reveal...

and so on.

basically the mechanism that the Fed uses to keep interest rates low involves creating a lot of new money and using that to buy bonds from other people, manipulating the market for bonds (high priced bonds = low interest rates).

Most of those bonds were government treasuries, but other bonds were corporate bonds - sheets of paper that say I'll pay you back in 10 years - and sold directly to the fed for newly created money. so the corporation printed money and got newly created money in exchange. they just have to pay it back in 10 years at like 2% interest a year. Many of those corporate issuers parked that money in private equity firms, or were private equity firms themselves, if they weren't directly hiring employees for pet projects - the private equity firm would be investing in newly formed pet projects.

All of that has stopped now, as the fed stopped buying bonds and doing the most to get interest rates high. Doing everything except selling the bonds they bought.

What you call "collusion" is what economists call "the market". Collusion doesn't even make sense here when it's so broad based. I could entertain collusion if it were a relatively small number of companies, e.g. in the Apple/Google etc. anti-poaching case. But here tons of companies had layoffs, and it's not hard to see why:

1. There was a ton of over hiring done during the pandemic. I don't think anyone really denies this. We were getting close to the "anyone that can fog a mirror" bar that I last saw during the .com boom.

2. Most people don't understand how the raise in interest rates makes it much more difficult to defend additional headcount even for companies that are hugely profitable. I won't go into the full economic theory, but the short of it is that when cash now earns ~5%, the bar for what new projects need to earn also shoots up. Obviously when cash was earning nothing people were much more willing to make highly speculative investments.

There is no collusion, and I think a lot of folks who didn't start in the job market until after the Great Recession never saw a downturn.

In a note of optimism, I'd argue that I heard all the exact same things during the .com crash, e.g. "they're going to ship all our jobs to India." Yet software dev salaries absolutely exploded in the past 2 decades since. I've talked to some folks who have already seen a marked improvement in the job market over the past month or so - not stellar by any means, but not as awful as it was earlier in the year. In other words, I'm really confident "this too shall pass."

More like everyone realized that they can trim down to improve margins without taking a lot of flack.

Both

Yep, fire the devs after they've built the software. Fire them because the software is already built. Slowly your software grinds to a halt and dies because you release features too slow or your software starts to become very bad.

By the time that happens the person who gets to tout the savings on their resume has already leveraged that for a salary bump somewhere else.

It's an unfortunate reality that if you're employed (not a founder) and you think more than a year or so out, you are going to be outcompeted by people who optimize for short term gain and leave before the bill comes due.

And some of the fired devs go to work for the competitor or start their own business. This is a natural lifecycle of software. Slowly rot and let others grow.

sounds good, that's Future CEO's problem to solve. Who may or may not be current CEO. Current CEO gets a nice small bump in stocks and a good resume to jump off with.

Tech leaders colluding with the government by abusing the H1B program and ultra-lax enforcement of anti-trust laws to absolutely crater tech salaries has been the name of the game for 15+ years.

The number of H1B visas in relationship to the entire market is just a drop in the bucket.

600k H1B workers is quite a lot.

The overall quality of an individual employee has declined considerably. Mass hiring and layoffs are to an extent part of a more elaborate hiring process. Right now market dynamics are making this possible but as things tighten up there will be salary depression and more intern type roles coming back as the "hiring" process gets extended where previously it was compressed.

How would such a joint-coordinated effort work? Is such collusion possible at this scale?

I don't think its collusion but its possible when one major tech company does it the others think its safe to do it too. But I also think many of these companies over-hired during the pandemic and even with the layoffs have more employees that pre pandemic.

Well, one arm of it is the H1-b program.

People are spending less time on social media so web marketing spend is down. Businesses are focusing on event based marketing. Web marketing is a very large part of the demand for front end. That's not collusion, it's basic economics.

not really

it turns out you need half the people to do the same job

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