- Employment of software developers has declined from pre-pandemic levels.
- It may take even longer to land a high-paying tech job.
- Glassdoor’s Daniel Chao said it may be hard for experienced developers to “find a well-paying job.”
You can’t just write a few lines of code to solve this problem.
A new report from ADP Research Institute says employment of software developers has been declining since January 2018. Other data suggests the U.S. labor market is not as robust as it was a few years ago, resulting in fewer opportunities for software development and technology jobs.
“The tech job market has clearly slowed since the end of 2022, cooling after several years of a hiring boom during the pandemic recovery,” Glassdoor chief economist Daniel Chao said in a statement. “Rising interest rates, an end to pandemic-era trends, and an overall economic slowdown are reducing demand for tech workers.”
“That said, technology employment is down less than 2% from its December 2022 peak and is still 21% higher than in March 2020,” Zhao said.
Nella Richardson, chief economist at ADP, told Business Insider that while software developer is not an “obsolete occupation,” it is likely that it will become a “highly efficient occupation” and fewer workers will be needed, meaning jobs may take longer to fill.
“Younger technical workers in the industry may not be able to get hired right out of college or learn quickly in their first job, or they may have to struggle a little bit more and become a little more of a normal labor market when it comes to new hires,” she said.
The shift in software developer employment can be attributed in part to shifts in consumer spending during the pandemic. “Software developer hiring slowed in 2020 but has since rebounded several times. I think this reflects how the pandemic has really spurred an increase in digital service delivery,” Richardson said.
The job search platform Indeed has “Software development demand is unlikely to recover anytime soon in 2021 or 2022,” Nick Bunker, director of North American economic research at Indeed Hiring Lab, told BI.
Still, Bunker said demand for these jobs is healthy, and they remain high-paying: The median annual salary for software developers is $132,270, according to the Bureau of Labor Statistics.
“The weakness in software development job openings may well be a cyclical or short-term phenomenon,” Bunker said. “Interest rates may just still be very high, and a lot of employers may just be being very cautious about hiring because a lot of companies overhired in ’21, so they may just be holding off now.”
Challenges for experienced workers and recent graduates seeking higher-paying jobs
Zhao also noted “weak” sentiment in the technology sector, which he said could be because “tech employers offered high salaries to entry-level software developers, leading to a large number of fresh graduates competing to enter the technology industry over the past decade.”
“Even for experienced software developers at the top of the market, the issue may not be the difficulty of finding a job per se, but rather the difficulty of finding a job that pays as much as their previous job,” Zhao said. “For software developers who were among the top earners just a few years ago, accepting a pay cut is a tough ask.”
Data from Handshake, a platform that helps students find jobs, suggests demand for software developers and engineers is cooling.
“Comparing the period June 2023 to May 2024 to the previous year, there was a 29% decrease in software developer/engineer jobs created on the Handshake network,” Randy Tarnowski, senior manager of research and education insights at Handshake, said in a statement.
Tarnowski said software engineering jobs “represented the majority of applications from graduating computer science majors in the Class of 2024,” but the percentage of applicants was down a few percentage points from the Class of 2023.
“Computer science majors in the class of 2024 are increasingly applying for roles such as data science, analyst, computer hardware, information security, computer systems engineering and financial/investment analyst, rather than software engineering roles,” Tarnowski said.
Bunker suggested people making job decisions in a strong but sluggish job market think about the long-term outlook rather than simply considering what current demand is like.
That means the industry may not be as “glamorous” or as well-paying as it once was, but Bunker added, “while some of these jobs may have lost some of their luster, they still offer good pay and good long-term prospects.”
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