Bad news for coders: The US is past peak software developer

“The tech job market has undeniably slowed since the end of 2022, cooling after a few years of rapid hiring during the pandemic recovery,” Daniel Zhao, Glassdoor’s lead economist, said in a written statement. “Rising interest rates, the end of pandemic-era trends and a slowing economy overall has crimped demand for tech workers.”

“That being said, employment in the tech sector has fallen less than 2% since its peak in December 2022 and is still 21% higher than March 2020,” Zhao said.

Nela Richardson, ADP’s chief economist, told Business Insider that the software developer isn’t “an out-of-date occupation,” but it could take longer to land work given it has “become a very efficient occupation” where fewer workers are likely needed.

“You may not, as a young tech worker in this industry, get recruited straight away out of university or learn straight away from your first job, or that there may have to be a little bit more grinding, a little bit more of a normal labor market in terms of new hires,” she said.

The change in software developer employment could partly be attributed to changes in consumer spending during the pandemic. “There was a slowdown in software developer hires in 2020, and then we had a couple bounce backs, and I think that’s reflective of how the pandemic really spurred this increase into digital service offerings,” Richardson said.

Job-search platform Indeed has its own running index of job postings for the software development sector. Nick Bunker, economic research director for North America at the Indeed Hiring Lab, told BI, “it’s unlikely we’ll see levels of demand like we saw in ’21, in ’22 for software development anytime soon.”

Still, Bunker said demand for these jobs is healthy, and these are still well-paying gigs. According to the Bureau of Labor Statistics, the median annual wage for software developers was $132,270.

“The depressed state of postings for software development jobs could be a possibly cyclical story or short-term story,” Bunker said. “Maybe this is just interest rates are still very high, and a lot of employers are looking to be very cautious when it comes to hiring because a lot of those firms overhired in ’21, and maybe they’re just being very patient now.”

Challenges for experienced workers seeking a better-paying gig and for new graduates

Zhao also noted “weak” sentiment in the tech sector and noted this could be because “waves of new graduates have been racing to enter the tech industry over the last decade as tech employers have offered high pay for newly minted software developers.”

Zhao said, “even for experienced software developers at the top of the market, the issue may not be difficulty finding a job at all, but rather difficulty finding a job that pays as well as their previous one. Swallowing a pay cut is a tough ask for software developers who were earning top dollar just a few years ago.”

Data from Handshake, a platform where students can look for work, suggests a cooler demand for software developers or engineers.

“There was a 29% decline in software developer/engineer jobs created” on the Handshake network when comparing the period between June 2023 and May 2024 to the year before, Randy Tarnowski, senior manager of research and education insights at Handshake, said in a statement.

Tarnowski said that software engineering roles “received a large share of 2024 computer science graduates’ applications,” but the share of applications has fallen by a few percentage points from the class of 2023.

“Instead of software engineering roles, the class of 2024 computer science grads are submitting more of their applications to other roles, including data science and analysts, computer hardware, information security, computer systems engineering, and financial and investment analysts roles,” Tarnowski said.

For people making job decisions amid the strong but cooler job market, Bunker suggested thinking about long-term prospects instead of simply how demand is looking at the moment.

That is, a sector might not be “as flashy” or offer as great of compensation as it had been. However, Bunker added some of the “shine might have come off some of these jobs, but they’re still well paying and have a good long-term outlook.”

Have you made a career change from or to software development or another tech job? Reach out to this reporter to share at mhoff@businessinsider.com.