When Zach Pretzell was laid off from his software engineering role at a space technology company at the end of 2023, he didn’t expect to still be on the job hunt eight months later.
Despite applying to dozens of open positions in the alleged tech capital of the world, with what he thought were strong credentials, he failed to attract a single job offer.
“I was so demoralized,” said Pretzell, who chose a career in tech for its stability. “I’d see other software engineers making $200,000. Meanwhile, I had the skills but couldn’t land a similar position.”
Thousands in the Bay Area are grappling with the same difficult dynamics. Before mass layoffs in Big Tech started in earnest three years ago, low interest rates meant venture capitalists sprayed money at companies, in hopes that IPOs would generate returns, and they grew, grew, grew.
Then, when the pandemic hit, changes in lifestyle drove booms in ecommerce, telework, and social media. Until recently, there were abundant jobs in tech. If you hit a wall at your company, the competition was probably hiring.
Today, the mood is quite different. There are an increasing number of people stuck in job-search purgatory, anxious that their severance will run out. Meanwhile, artificial intelligence is transforming the job market, driving employers large and small to reconsider which technical tasks require a human to perform them and forcing workers to look for opportunities beyond tech.
Marc Benioff has stated publicly that Salesforce does not plan to hire engineers this year due to AI. Other companies appear to be on a similar course. Mark Zuckerberg has said AI could soon replace the work of midlevel software engineers at Meta who make mid-six-figure salaries, and Alphabet CEO Sundar Pichai said in October that AI was writing more than 25% of new code at Google.
With both entry-level and managerial jobs under pressure, tech workers are losing confidence in their career prospects, said Daniel Zhao, Glassdoor’s lead economist. Its surveys show that employee confidence in the information sector, which has historically outpaced the overall job market, fell below 50% for the first time in 2023 and has hovered around that mark ever since.
Feeding that anxiety, more tech workers are falling down the corporate ladder — 18% report that their pay declined in 2024, versus 11% in 2019. Managers are especially feeling a burn, with 32% reporting they switched to an individual contributor role last year, versus 28% in 2019.
“Management jobs are getting pressure on both ends,” Zhao said. “Those in need of a job are increasingly settling for a pay cut and reduced role, while those who remain at big firms are being tasked with implementing directives from the top about getting more done with less.”
Pretzell, after struggling for months with the “brutal and lonely process” of job hunting, started a support group with friends and acquaintances. The group met regularly at his home in NoPa to lend encouragement, help with applications, and prepare for interviews.
Even though unemployment numbers were low — hovering at 5%, as opposed to double digits seen in the Great Recession — it seemed to Pretzell like everything felt “more squeezed.”
A few weeks ago, he found a new role. But he’s no longer a software engineer; instead, he’ll be a sales rep for a small AI agents startup.
“My friends who previously had cushy, easy jobs are now working more than 10-hour days,” Pretzell said. “People are being pushed harder to keep what they have.”
The not-so-Magnificent 7
After the dot-com bust, it took more than a decade for employment in the technology sector to return to its previous levels, according to data from the Bureau of Labor Statistics and Glassdoor.
In comparison to that historical nadir, the larger tech job market is still in a broad cycle of growth. According to labor analytics firm Lightcast, the number of unique job postings for software developers in San Francisco remains higher than it was in the early days of the pandemic, meaning workers are not short of prospects. But where those prospects are located may be unexpected.
“Other industries need tech workers too,” said Rachel Sederberg, director of research at Lightcast. Outside the information and professional service sectors, manufacturing, retail, finance, transportation, and healthcare have all seen upticks in postings for tech jobs.
“I would encourage workers to broaden their view when looking for a new job,” she said.
But worker sentiments are often more intuitive than quantifiable. A feeling that the industry is stuck in the doldrums is pervasive as AI slowly but surely upends the labor market.
James O’Brien has been teaching computer science at UC Berkeley for more than two decades. Before Big Tech layoffs became a regular occurrence, many of his students would bag multiple job offers from the region’s most prestigious companies, stopping by his office to deliberate about which one to accept.
Today, O’Brien said, while his students are still able to land jobs, they are often not from companies at the top of their wish lists. He counsels them to widen their search to non-tech companies looking for technical talent and apply to positions outside the Bay Area to avoid being a small fish in an overcrowded pool of engineers.
“Apply to your second- and third-choice companies,” he tells students. “Don’t assume you’re going to get a job at Apple.”
The new job market is also changing O’Brien’s curriculum. After students have mastered computer science fundamentals, he encourages them to use AI coding tools as frequently as possible so they can “benefit rather than be run over by them.”
AI coding editors like Cursor and Windsurf can generate original code from natural language prompts, supercharging software engineers’ productivity and spurring tales of “tiny team” success. With a few engineers able to do the work of sophisticated large teams, there’s a feeling that engineering jobs are being eliminated as AI is more widely adopted.
As for the management class under duress? If the industry is so bent on rejecting managers, it’s time for them to get back in “founder mode,” said Lexi Lewtan, CEO at Leopard.FYI, a professional network for women and nonbinary software engineers.
Julia Hu opted to start an AI brand strategy firm with a friend after getting laid off as director of software engineering at Eventbrite in 2023.
“I had some time on my hands, so I should probably ramp up my skill set,” Hu said of pausing her job search after six months. Hu’s been working on her startup for almost a year and says her knowledge of how to deliver an AI product has grown exponentially.
Now, she’s restarting her job search and using her experience as an AI founder to her advantage. “It’s definitely nice to have on my résumé,” she said. “It opens up more of the job market for me.”
Even though tech overall is still in growth mode, the sputtering of the job market isn’t trivial. Zhao from Glassdoor notes that it might get worse before it gets better, especially with federal government workers unexpectedly entering the job market.
“When you have over 100,000 computer science graduates coming out of school and hitting a brick wall, they have a right to feel that the industry is not living up to its promise,” Zhao said. “Tech, especially in the Bay Area, had been attractive because it promised accessible, high-paying jobs. Now companies are not hiring or are only backfilling turnover.”
Therefore, it’s important to remember that the economy is bigger than the “Magnificent Seven,” he said.
“If those are the only headlines you’re reading, it doesn’t tell the whole story of the economy,” Zhao said. “Workers tend to underestimate how applicable and transferable their skills are.”