Disentangling Tech Hiring Headwinds

The report analyzes the drivers behind the tech sector's hiring slowdown since 2022, attributing it primarily to post-pandemic overhiring corrections rather than AI efficiencies or interest rate headwinds.

Key Takeaways

• 1.Little evidence exists that higher interest rates have driven the slowdown in tech hiring.
• 2.AI has slowed hiring, but its impact is relatively small, explaining only about 0.5pp of the 5pp/year slowdown.
• 3.Pandemic-era headcount normalization is the largest identified factor, explaining up to 2pp of the hiring slowdown.

Table of Contents

• The Overall Tech Sector Hiring Slowdown and Identification Challenge
• Interest Rate Effects Appear Minimal
• Small Overall Impact, but Some Evidence AI Layoffs Are Credible
• Post-Pandemic Overhiring Normalization Creates a Moderate Drag
• Interpreting Impacts on Overall Tech Labor Market

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