It's a tough time to be a tech graduate - AI and layoffs have made it a competitive job market

• Tech graduates, once near-guaranteed a role, a facing a tough job market.
• The rise of AI, offshoring, and tech layoffs are making roles more competitive.
• Remote work is also making it harder for companies to train graduates, causing some to invest elsewhere.

When Alex Diaz decided to major in computer science, he was looking for job security.

"I chose computer science for insurance," Diaz, a recent University of Maryland graduate, told BI. "I thought if I graduate, I'm sure to find a job because every industry needs a computer scientist nowadays."

Four years down the line, Diaz isn't feeling so confident.

"I've been applying for hundreds of positions — positions I believe I'm qualified for — but I'm just not getting a response," he said. "I think many people are having similar experiences in their job search."

Diaz graduated with a 3.83 GPA from the University of Maryland  this summer, and while he's only technically been out of work for three months, he says the real story is more complicated.

"I've been trying to find a job since my senior year of college," he said. "The idea is we are supposed to graduate with a job, which means I'm really a year behind."

"All tech grads are having a tough time right now. I'm of the opinion that if you don't have a referral, it's almost impossible to find a job," he added.

While the US job market is improving, experts say tech graduates are still struggling — and will continue to fora while.

James O'Brien, a computer science professor at the University of California, Berkeley, told BI that he's observed a shrinking in the tech job market that he doesn't expect to ever improve.

A tech degree used to guarantee graduates at least one great job offer, but now many students are struggling to find work, he said.

O'Brien puts a lot of the blame on AI and its effect on the labor market, especially lower-level jobs. "Even at the higher level, it makes people more efficient, so you tend to need fewer people," he said.

"It's like a perfect storm of this new technology, offshoring, and remote employment," he said. "I think our students are aware that the job market is changing."

Research from ADP, a payroll services company, has found that hiring for some tech jobs is declining, especially for software developers and engineers.

ADP tracked employees at 6,500 companies, including over 75,000 software developers, from January 2018 and January 2024.

The research found that while developer employment increased from January 2018 to November 2019, it has been falling ever since. The research found employment of software developers dropped sharply in January 2022 and, despite some fluctuation, has been falling since 2020.

It's harder because people used to think that getting a tech degree would definitely get you a job. According to data from the Federal Reserve released in February 2024, computer science graduates have an unemployment rate of 4.3%, higher than philosophy graduates.

"Hiring has definitely slowed this year," Kory Kantenga, LinkedIn's head of economics for the Americas, told BI. "Interest rates started coming up, and hiring started slowing down, and hiring has been on this gradual slowdown since about spring 2022."

He said industries like tech, which have benefited from years of very slow interest rates, were the most heavily impacted by the economic shift.

"Slowdowns hit entry-level workers the hardest, and it takes a while for them to recover," he said. "If companies are thinking about cost cutting, they're just going to leverage experienced workers to do some of the entry-level work until they can get some more entry-level workers in the door."

Alec Wolyniec, a software developer with five years of experience, said he's noticed a sharp difference in opportunities over the last few years.

He said interviewing in 2020 as a junior engineer was significantly easier than interviewing in 2024 as a mid-level candidate. He meant that finding a job as a junior engineer in 2020 was easier than finding a job as a mid-level candidate in 2024, due to market changes. In 2020, the tech job market was still growing, and many companies were hiring, especially for entry-level positions. By 2024, there are more experienced tech workers in the job market. This is partly due to layoffs in big tech companies, which put many skilled professionals back into the job search.

Wolyniec graduated from Emory University in 2017 with a degree in computer science — and he's seen job opportunities dry up ever since.

"While I enjoyed computer science I did it more as a practical thing because I felt it would be a solid career path," he said. "Now I end up joking about what my degree is even worth."

Wolyniec said by 2023, it had become dramatically harder to get a job in tech. He said he started to hear nothing back from jobs he applied to.

"That was kind of a shock," he said. "I also wasn't getting messages from recruiters on LinkedIn most weeks like I was before."

After two years of brutal tech layoffs, demand for tech workers has still not returned to pre-pandemic levels.

According to LinkedIn data, the number of applicants per single job listed on the site in the technology, information, and media industry has increased from five to seven over the last two years.

While hiring in the tech sector has stabilize since last summer, it has still not returned to pre-pandemic levels, per LinkedIn. According to data provided by the job site, there has been a 19% decrease in hiring for "information technology" roles since the summer of 2018.

The tech industry has also been experiencing record layoffs, which have flooded the market with more qualified employees searching for new roles.

In 2022, the tech industry laid off 263,000 workers, a record number of layoffs for the sector. The cuts kept coming in 2023, with another 262,735 workers laid off by the end of the year, according to Layoffs. fyi.

Layoffs appear to be slowing but are still high for the traditionally stable sector. According to the layoff tracker, as of October 2024, 457 tech companies had laid off 139,534 workers this year.

Alex Hernandez, a tech recruiter and former Twitter employee, attributes the decline in job opportunities to increased automation, a reevaluation of workforce needs post-pandemic, and tech companies' emphasis on efficiency.

He told Business Insider that while data science and AI jobs are increasing, other tech jobs are decreasing.

"The many layoffs in tech, especially in 2023, have caused big changes in the job market. At first, these layoffs put a lot of experienced workers back into the job market, making it harder to get open positions. However, these layoffs have also caused companies to reassess their hiring strategies, focusing on roles with immediate return on investment," Hernandez added.

Some think the recent rise in AI is also playing a role in entry-level employment.

"Many tasks that used to require junior developers or data analysts are being automated, meaning that entry-level roles are becoming more technical and demanding," Hernandez said.

While some grads say they are worried about the effect AI automation might be having on their employment options, the data still isn't clear on how many entry-level jobs are actually being eaten by the new tech.

"It's certainly possible that AI could be playing a role in what's happening in the labor market, but I think it's too soon to make that call," Kantenga said. "But there just isn't a lot of bites right now to say that AI is eliminating roles for entry-level workers."

Changes in the way we work may also be making things difficult for new graduates.

LinkedIn's research found that 73% of Gen Z professionals globally feel overwhelmed by the rapid pace of workplace changes, and 55% of Gen Z workers are worried about being left behind because of how quickly their jobs and work are changing.

Chris Abbass, CEO and founder of tech recruiting platform Talentful, says the rise of remote work is also making it more difficult for companies to train graduate employees.

"Since a lot of companies have moved to WFH, it's increasingly difficult to get new graduates with no work experience to ramp up and be productive in a new role," he said.

"Graduates need a lot of coaching and training for the first three to six months in a role, and this is very hard remotely. Companies are not investing in other ways to do this and are opting to avoid the risk and go with experienced hires," he added.