The information technology job market, once seen as one of the most reliable paths to opportunity, is shrinking. Recent figures show a drop in unemployment for IT professionals, yet the overall trend points to fewer jobs, more layoffs, and a workforce being reshaped by automation and artificial intelligence.
On the surface, the latest data looks promising. The unemployment rate for IT workers fell to 4.5% in August, down from 5.5% in July. According to Janco Associates, the number of unemployed IT professionals fell from 140,000 to 118,000 in just one month. But analysts warn that this is misleading.
Victor Janulaitis, CEO of Janco, said, “Companies aren’t hiring tech workers at the same pace they used to.” He explained that while there is still strong demand for people with AI skills, there is “greater reluctance to hire people with general IT skills.”
Revisions from the Bureau of Labor Statistics revealed even deeper problems. May’s job growth was lowered by 125,000 positions, while June was reduced by 133,000. After adjustments, the IT sector had lost 26,500 jobs year-to-date by July, including 10,300 in that month alone. Janulaitis called the revisions “not acceptable from any organization” and said the changes showed “poor data capture, poor infrastructure, incompetence, or political gerrymandering.”
Layoffs and Shrinking Demand
The layoffs have been widespread. Microsoft, Amazon Web Services, Intel, Tesla, Google, Facebook, and Amazon all cut staff. In 2023, more than 270,000 IT workers were laid off by 2,000 companies. Another 152,000 jobs were lost in 2024 as 546 companies continued to trim payrolls. Intel alone announced it would cut 5,000 workers, while Microsoft opened its fiscal year with another wave of dismissals.
Even as the unemployment rate declined in August, the number of available jobs shrank. CompTIA reported 446,763 active postings for tech positions in August, down 2.6% from July. In contrast, postings that required AI skills surged, climbing 94% compared to a year earlier.
AI and the Hollowing Out of Entry-Level Roles
Artificial intelligence is widely seen as one of the leading drivers of this shift. Companies are increasingly relying on AI to handle the type of work once done by entry-level employees. A professor at UC Berkeley, James O’Brien, said, “Right now, the only type of employee anybody’s interested in hiring is a relatively heavyweight senior person who is very technical.”
In the past, startups would often hire one senior engineer and two or three junior coders to assist. O’Brien explained why this has changed: “They ask, ‘Why hire an undergraduate when AI is cheaper and quicker?’” While AI-generated code is not flawless, he noted that the iterative process to improve it takes only minutes, compared to the days it might take a junior programmer.
Salesforce and Shopify have openly said they plan to meet their growth needs “with code rather than humans.” The result has been a collapse in opportunities for early career workers. Before the pandemic, new graduates accounted for 15 percent of hires at Big Tech companies. Today, that figure is just 7 percent. SignalFire, a venture capital firm, reported that hiring of new graduates at the 15 largest tech companies has fallen by more than 50 percent since 2019.
Heather Doshay, head of talent at SignalFire, put it bluntly: “Times have changed, and lean is in. Companies are prioritizing experienced hires over junior talent, and we’re seeing smaller funding rounds, shrinking teams, fewer new grad programs, and the rise of AI all contributing to this downturn.”
Economic Uncertainty and Outsourcing Add Pressure
While AI is transforming the workforce, other forces are also at play. Outsourcing continues to erode traditional IT roles, especially in payroll and accounts payable. Small and medium-sized businesses, usually the engines of IT hiring, have slowed recruitment. Janulaitis observed that these firms “typically drive broad-based IT hiring,” so their hesitancy has ripple effects across the industry.
Economic uncertainty has also taken its toll. One chief information officer, Keith Golden of professional services firm RGP, explained, “My current focus is ensuring success for initiatives we have already in-flight. That means limited hiring, as needed, for those efforts.” Many CIOs are scaling back, citing limited gains from AI projects that were supposed to deliver big savings but have yet to show significant results.
Workers and Graduates Feel the Squeeze
For recent graduates, the landscape is grim. Johnn Cabacungan, a 21-year-old Berkeley graduate, described the atmosphere: “I’m scared, to be honest. I’ve had trouble finding a job. Most people are having trouble.” Another student, Billy Meneses from Stanford, summed up the mood: “I don’t think college is going to guarantee you a job at all. Even at a place like Stanford, it may be easier, but it’s still hard if you aren’t developing hard skills.”
Internships, once stepping stones to full-time positions, are now flooded with applicants. Glassdoor reported that data science and software engineering internships are six times more competitive than average. Daniel Cao, who oversees Glassdoor’s internship program, said, “Internships are evolving into a stepping stone for not only students but also early-career professionals navigating a challenging job market.”
Salaries for IT professionals have inched upward, but not fast enough to match inflation. In 2024, the median salary increased only 1.87 percent, while inflation was 2.9 percent. The average IT worker earned $104,517 in 2024, up from $81,583 in 2015. Much of that increase, however, reflects higher living costs rather than a surge in demand.
Experts warn that the worst may not be over. Janco Associates projects that the IT job market will continue to shrink in the coming months. Some roles remain in demand, particularly in cybersecurity, blockchain, and cloud services, but broad hiring is unlikely to return soon.
Aneesh Raman, LinkedIn’s chief economic opportunity officer, compared the moment to the decline of U.S. manufacturing in the 1980s. He argued that entry-level office jobs are the most at risk from AI and pointed to survey data showing Generation Z is the most pessimistic cohort about employment prospects.
As Berkeley professor O’Brien summed up, “It’s a tale of two very different job markets. Entry-level people are abundant, and there aren’t that many jobs for them. Advanced people are few and in high demand.”
The divide leaves many wondering whether the future of IT employment will require not just learning AI, but racing against it.
