Tech Job Crisis Deepens: Losses Now Worse Than 2008 and 2020 Recessions

The Tech Job Market in Crisis

It's a tech bloodbath in the job market, with losses now outpacing those seen during the 2008 financial crisis and the 2020 pandemic recession.

Tech jobs are showing unprecedented weakness in the US labor market. (Tfilm/Getty Images)

Unprecedented Job Losses

Friday's shockingly weak jobs report revealed a loss of 92,000 jobs in February across the broader economy, far below the expected gain of 55,000 jobs. Economist Joseph Politano highlighted that the tech sector has experienced an especially rough couple of years, with job losses now occurring at "one of the most rapid rates of the last 20 years."

Historically, the US would typically add 100,000 to 300,000 tech jobs annually, with quick rebounds even during pullbacks. However, Politano notes this time is different: "The fact that the only thing that you can compare it to is the worst tech job recession of all time is pretty bad."

Comparing to Historical Downturns

This current downturn is already significantly worse for the tech sector than the 2020 recession, and slightly worse than 2008. The most apt comparison is to the dot-com bust, although today's situation isn't quite as dire yet.

"The length is really important here," Politano emphasized. "It's been three years of job losses. It took only about four years for recovery to start from the dot-com bust. The fact that we're now three years into this and it's actually getting worse is a really big deal."

Broader Market Weakness

It's not just tech feeling the pain. Manufacturing, which has been cooling for years, saw employment fall, as did the government sector. Healthcare, which had been propping up the job market, lost jobs in February, exacerbated by a roughly monthlong Kaiser Permanente strike.

"Everything was looking pretty weak by different industries," said Cory Stahle, an economist at the Indeed Hiring Lab.

Impact on New Graduates and STEM Workers

New college graduates who focused on STEM fields and other people seeking their first jobs could be especially hard hit by the tech hiring downturn.

"You really feel for those people who started studying computer science four or five years ago and were told that, 'Hey, this is a surefire way to get in the labor market, make a good salary,'" Stahle said. "Now we're seeing just a continuation of this trend of fewer and fewer hires being made in the tech sector."

The AI Factor

The latest job numbers don't yet reflect the sweeping layoffs from Block, which excised nearly half its workforce last week. In his announcement outlining the cuts, CEO Jack Dorsey cited AI as a reason, saying that "the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working."

Politano believes AI is likely behind at least some of the tech labor market's losses: "How much of it you want to ascribe is really hard to tell, but I don't think it's a coincidence that computer system design is one of the industries that's losing the most jobs."

While AI firms are hiring, they're bringing on far fewer employees than Big Tech behemoths. The types of jobs lost, and the timing of those losses, point to at least some impact from AI.

Looking Ahead

"We clearly haven't seen the end of this right now," Politano said of the future of the tech sector. "I expect that it will be this dribble of bad news for the near term going forward, but I just think that there's no positive evidence that we're breaking out of this post-2022 cycle that tech has been stuck in. Until you see that kind of evidence, I think there's very little chance of a reversal."