After hiring bonanza, tech workers now grapple with layoffs and disillusionment

"I started getting nervous," Langevin said.

The pullback follows a hiring spree. In 2021, Horizonal Talent had a 78% increase in requests to fill positions, with thousands of people fast-tracked into the interview and hiring process as many companies grew their tech payroll. Meta, the parent company of Facebook, for example, grew its payroll 103% from 2019 to 2022, according to the SEC.

Many companies appear to have misjudged the sustainability of their post-pandemic staffing needs, Langevin said.

The emergence of remote work has also allowed companies to expand their hiring pool nationwide and offshore jobs to people in India, Latin America and parts of Europe. Employers can pay $40,000 to someone in India, where the going rate in the U.S. is $140,000, he said.

Meanwhile, the burgeoning field of artificial intelligence has led companies to discover "they may not need as many software engineers on their teams as previously thought," Tollefson said.

The reduction of venture capital investing is also dampening hiring, said John Tedesco, founding partner of Arena Partners, a consulting firm for software companies. With less cash being deployed, investors and funds concentrate on fewer companies, usually their high performers. Tech startups with less cash slow down hiring or lay off workers.

Meanwhile, Section 174 of the Tax Cuts and Jobs Act of 2017 removed the option for companies to deduct research and development expenditures. Beginning in 2022, instead of reporting those dollars as an expense so companies like Minneapolis-based software developer Modern Logic can hire a developer to work on a project, all costs related to R&D had to be paid off within five years.

"We got 20 percent to 30 percent more expensive, which makes it very hard for me to justify employing people in the United States," said Modern Logic CEO Dustin Bruzenak.

The current job market has made it difficult for recent college graduates with computer science degrees or those completing coding boot camps, Tollefson said. It's just as difficult, though, for industry veterans like Susan G. and Abby B., both Twin Cities technologists who were laid off and asked to not have their last names published given their job searches.

Susan works in software product management. Abby is a user-experience researcher. Susan was laid off from a tech startup in L.A. a year ago. Aside from a three-month contract this winter, she's been unemployed. Abby has been looking for a job the past 10 months.

User-experience researchers, whose jobs are primarily to study the market and determine if there's a product fit for a software or device, are one of the positions hit the most in this layoff atmosphere, she said.

"It really is (about) who you know," Susan said. "Referrals are key to even just getting a conversation with a recruiter."

Abby has seen starting salaries decrease by as much as $30 an hour.

"I totally understand market forces and everything, but my skills have not changed from two years ago," she said. "I'm still worth the money."

For years, colleges and career-development institutions encouraged people to earn certificates in software coding, web development or user-experience research. In the current environment, Abby said it's a waste of money.

"It's not ethical to recruit people into these boot camps right now," she said. "I have seven years of experience and I'm having this much trouble finding a job."