Newly released jobs market data paints a murky picture ahead for the tech industry, which continues to slash workers.
The unemployment rate for tech jobs has been steadily rising since May, ticking up to 4 percent in November, according to an analysis by CompTIA, a company that offers IT training and certifications. Between October and November, the number of technology workers across different industries fell 134,000, while the number of people working in the tech industry declined by more than 6,800. Tech job postings were also down by more than 31,800, the report found, citing data from the Bureau of Labor Statistics and California-based market intelligence firm Lightcast.
“The data is pretty definitive that the tech industry is struggling,” said Mark Zandi, Moody’s chief economist. “There’s a jobs recession in the industry, and it feels like that’s going to continue given the slide in postings.”
Over the last year, the tech industry has been reshaping itself amid economic uncertainty, reorganization around artificial intelligence and a push to become more cost-efficient. Big Tech companies including Amazon, Meta and Microsoft cut thousandsof workers while raking in soaring revenue and making big investments in AI. Economists said the new data signals headwinds ahead even as some tech companies continue to hire, especially for AI roles.
“For the longest time, tech was the tailwind to jobs and the broader job market,” Zandi said, adding that it’s been a source of high-paying jobs. “That tailwind has now turned into a headwind, and that headwind feels like it may just blow harder going forward.”
The U.S. economic outlook has continued to be uncertain, with the Federal Reserve cutting interest rates earlier this month for the third time this year, citing a softening labor market. The unemployment rate in the tech industry still sits below the national rate, which in November hit 4.6 percent, the highest since 2021. However, that gap has been narrowing, with tech unemployment rising faster in recent months than is the case nationally.
In the tech industry, jobs for software, cybersecurity and web development consultants have been the among the roles to get axed, according to CompTIA. This is likely because companies are spending less on tech projects, and there’s been a pullback in government contracts and the ability to sell services overseas, said Tim Herbert, chief research officer at CompTIA.
Herbert said companies struggling from a slowing economy might put tech consulting on hold, which could serve as an insight into companies in other industries. “In some cases, it can be a bellwether on how other types of companies are performing when they stop hiring tech consulting services.”
Employers are largely in “wait and see” mode when it comes to hiring given the current uncertainties surrounding the economy and impact of AI, so they’re likely to delay backfilling, Herbert said citing CompTIA’s surveys of chief information officers. But Justin Wolfers, professor of public policy and economics at the University of Michigan, said uncertainty is likely to continue in the foreseeable future.
“I’m feeling substantially more pessimistic,” Wolfers said, recalling that Federal Reserve Chair Jerome H. Powell recently suggested that federal job numbers may be overstated. “That’s pretty grim.”
Technology companies have announced more than 141,000 job cuts so far this year, representing a 17 percent increase from the same period last year, according to outplacement firm Challenger, Gray & Christmas. At the same time Big Tech companies like Google, Microsoft, Meta and Amazon have announced plans to invest up to $375 billion in AI infrastructure this year.
Though job postings declined in November, companies continued to hire, with high demand for workers in engineering and tech support. And AI is quickly becoming a requirement, with 41 percent of all active job postings representing AI roles or requiring AI skills, according to CompTIA’s analysis.
“If you have AI skills, there seems to be jobs,” Zandi said about the employment market. “But if you don’t, I think it’s going to feel like you’ve been hit by a dump truck.”
Herbert cautioned that it will be important to watch how the job numbers change over the next several months, as one month’s data may not provide a full picture.
AI will likely have a different impact depending on the sectors and jobs, Wolfers said. Coders and translators, for example, may feel the squeeze much sooner than other professions, he noted.
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