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‘It’s the beginning of a sea change’: How tech layoffs are transforming the job market

Here are some GeekWire headlines for the month.

James Carroll spent nine years working in Seattle’s tech marketing industry, rising from an individual contributor to manager. He decided this year that it was time for him to take a step back and refresh his perspective.

He was like many other people, having spent his 20s to early 30s working in the booming technology industry. It seemed that there were endless job possibilities and expansion.

Working with a career counselor, Carroll made sure his household finances were in order, and gave an ample three months’ notice at the startup where he was working. Carroll planned to spend a few months exploring other areas, such as marketing, or a new area like cybersecurity before returning to the job market.

James Carroll
James Carroll, a tech marketer has returned to work in a completely different market from when he was on sabbatical.

The reality he’s now facing is not at all what he expected.

“I might actually need to dip into that savings for a period of time, because I might be unemployed longer than I ever thought,” he said. “It just shows how quickly the market and economy and personal situations can change.”

Tech industry isn’t in decline. Thousands of layoffs in the past two months represent a small fraction of the tech sector’s growth over the past two decades. But cutbacks and hiring freezes are suddenly transforming the job market into a condition that some in the industry haven’t experienced in their careers.

Here’s how.

It has become more difficult for job applicants to find tech jobs. There have been many tech jobs that are more open than the people who can fill them. This has meant engineers and tech workers are in a strong position to negotiate pay and find work.

Although it may seem like yesterday, this was the year when Amazon and Microsoft increased compensation in an effort to maintain employees and keep up with inflation.

The past weeks have felt like another reality in comparison.

“For the first time in over a decade, the Seattle tech scene has morphed into an employer-driven market,” said Albert Squiers, managing director of the technology practice at Seattle-based recruiting firm Fuel Talent.

There are parallels to what has happened in the housing market, where the balance of power shifted rapidly from sellers to buyers, said Doug Sayed, founder and managing principal at Applied HR Strategies Inc., a compensation consulting firm based in Seattle. The position of companies looking for talent is much better.

“I think it’s the beginning of a sea change,” he said. “It has happened very quickly.”

Businesses that continue to hire tech talent have better chances of landing it. This sudden reversal might be unsettling for tech workers, but it’s creating some relief for startups and other companies that were previously competing against the likes of Meta, Amazon, Twitter, and Microsoft for key hires.

“Based on conversations I’m having, there are still many companies with big hiring plans in Q1 – they might just not be the names we are accustomed to seeing,” Squiers said.

Many of these larger corporations have stopped hiring and thousands of former employees are looking for work.

“It’s potentially a good thing for well-funded and/or profitable small- to mid-size tech [companies], that more people are coming onto the market, and more people are going to be looking for work,” Sayed said.

Even non-tech businesses are benefiting. According to Karat (a Seattle startup that assists companies with technical interviews), job offers from banks and other large enterprises are more commonly accepted than from startups.

For some workers, the pay components will be different. There has yet to be any wholesale decline in tech wages, but those who go to from tech giants to smaller startups shouldn’t expect the same level of pay, in general, Sayed said.

Changes in the components of compensation are also possible for employees who move from public companies that offer equity compensation to startups that only offer stock options and no cash out.

You are filling more openings. In recent years, most companies aspired to a 60% close rate, representing the percentage of candidates who accept job offers, said Jeffrey Spector, Karat’s president and co-founder.

Karat’s close rate of 70% for the top candidates is 70% over the past quarters thanks to offers it receives from companies.

“Candidates are still finding jobs, but they’re not as likely to be receiving multiple competing offers as they were a year ago, which does give smaller companies more opportunities to hire top candidates,” Spector said.

‘You’re going to start seeing individuals with the right level of experience apply.’

Sandy Matus Textio

There has been a noticeable increase in the quality and experience of applicants on the job market. Karat states that after a year in declines, the percentage of engineering applicants who can meet the standards for hiring is increasing and now stands at 25%. Spector said this “indicates a very strong labor pool.”

As little as three months ago, companies were seeing an uptick in job candidates but weren’t consistently getting applications from people with the right experience. This is expected to change, according to Sandy Matus (chief people officer, Textio), a Seattle startup that detects biases in workplace communication.

“You’re going to start seeing individuals with the right level of experience apply,” Matus said.

Increased experience could mean that there are fewer options available for those who want to explore new markets.. “It may be a hard time to jump into a new field,” Matus said. “It’s not impossible, but it may be harder as you’re competing with people that have experience in that area.”

Remote working opens up new possibilities. Recruiters say they’re seeing more Seattle-based engineers join companies headquartered out of state, without relocating. In past recessions, this was more of an exception than the norm.

The sudden job losses represent a small portion of long-term growth … so far. Employment in Washington state’s information industry, which includes many tech jobs, dropped by 5,900 jobs or more than 3% in mid-October, compared with the prior month, according to data from the state Employment Security Department.

In raw numbers, it’s the biggest overall monthly decline in the history of the state’s information sector, according to ESD data. And it doesn’t include several high-profile layoffs announced in late October and early November, said Anneliese Vance-Sherman, regional labor economist with the Employment Security Department.

employment
At the top of the chart, you can see the decline in 5,900 information industry jobs as of mid October. Source: Washington State Employment Security Department.

However, it’s against a backdrop of massive growth over the past two decades.

“From my perspective it remains to be seen if this is a blip or a game-changer, but there are still some great opportunities out there, and we live and work in a community with great technical talent,” said veteran technical recruiter Jason Greer, managing director of GeekWork.

At the same time, he said, there’s also “a thread of hope, if not optimism.”

“Readers I’m speaking with believe we’ll bounce back, and I cannot recall a single one who is looking to leave the Greater Seattle area,” he said.

The expectations and timelines of job seekers have been adjusted to accommodate their long-term goals.. Carroll, 35, spent nearly eight years at Tableau Software, through the Seattle-based data visualization company’s acquisition by Salesforce, before working for a year as director of field and digital marketing for startup Heap Analytics.

As he prepared for his sabbatical earlier this year, Carroll considered making a “hard pivot” in his career. Carroll considered the possibility of pursuing the certification and training required to become a cybersecurity analyst. This was something that he has always wanted. He has since decided that he’s not ready to make that move.

One complicating factor: his partner works at Amazon, and while she hasn’t been impacted by the layoffs announced last week, the situation has created an extra degree of uncertainty in their household.

Carroll has been actively looking for his next marketing job for the past four weeks. He reached out to his networks, sought advice from mentors and explored openings at companies still hiring.

The sudden silence of recruiters is unnerving after years when engineers and other tech professionals could count on being contacted repeatedly by companies to convince them to switch jobs.

He’s keeping an upbeat outlook through it all.

“I’m not super pessimistic, which is good,” he said, “but I think I’m much more realistic now that it’s not going to be as easy finding a job as I thought would have been two or three months ago.”

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