The REAL Reason Tech Hiring Has Slowed Down (Surprising)
TLDRThe video discusses the misconception that AI and automation are the primary reasons for the current slowdown in tech hiring. It argues that despite advancements in AI, such as GitHub Copilot and GPT-3, they are not yet capable of fully understanding or editing complex codebases. The real economic drivers behind the hiring downturn are the end of the zero-interest-rate era and changes in tax code under Section 174, which now requires the amortization of software development costs over time, increasing the financial burden on companies. The video suggests that these factors, rather than AI, are the key to understanding the current state of the tech industry and its future hiring trends.
Takeaways
- 🚀 The current narrative that AI and GPUs are replacing coding jobs is premature, as AI tools like GitHub Copilot and GPT are still limited in their capabilities.
- 📉 The real reasons behind the tech hiring struggle are economic, specifically the end of the zero-interest-rate era and changes in tax code, rather than advancements in AI.
- 💰 The low-interest-rate environment previously encouraged riskier investments like Venture Capital, which significantly contributed to tech industry growth and high salaries.
- 🔄 The shift to higher interest rates to combat inflation has reduced the flow of money into the tech industry, affecting hiring and investment.
- 📈 Section 174 of the tax code changes have made software development costs more expensive for companies by requiring amortization of R&D expenses over time.
- 💸 The new tax rules make it financially harder for companies, especially startups, to hire developers, as they can no longer fully deduct salaries in the year they are paid.
- 🌐 There is a movement to repeal or amend Section 174 due to its negative impact on the tech industry, which if successful, could stimulate hiring.
- 🤖 AI is expected to enhance developer productivity but not replace software engineering jobs entirely; it will likely change the nature of coding jobs as new technologies have done in the past.
- 🎯 Aspiring developers should not give up on learning to code due to current economic pressures; the industry is likely to recover, and being prepared could position them well for future opportunities.
- 📚 Investment in comprehensive interview preparation is advised for those seeking to break into the tech industry, with programs like Interview Kickstart being recommended for their comprehensive approach.
- 🔍 The current state of AI in coding is辅助性的 rather than transformative; it helps with error catching and speeding up tasks but cannot yet handle complex coding tasks or understand large code bases fully.
Q & A
What are the two main reasons the speaker suggests are behind the struggle in tech hiring?
-The speaker identifies the end of the zero interest rate phenomenon and changes to the tax code under Section 174 as the two main reasons behind the struggle in tech hiring.
How does the Nvidia CEO's statement relate to the current state of AI in tech hiring?
-The Nvidia CEO's statement suggests that AI and GPUs could reduce the need for coding skills, but the speaker argues that AI technologies like GitHub Copilot and GPT currently cannot fully replace human developers due to their inability to understand and edit complex code bases effectively.
What impact has the near-zero interest rate had on the tech industry?
-The near-zero interest rate has made the cost of capital very cheap, leading to more risky equity-style investments like Venture Capital, which in turn has inflated the tech industry and driven higher salaries for software engineers in the US.
How does Section 174 of the tax code affect tech companies and their hiring practices?
-Section 174 requires that software development costs, including salaries, be amortized over time rather than deducted immediately. This increases the short-term tax liability for companies, making hiring software developers more expensive and potentially limiting the budget for tech companies to invest in their workforce.
What is the potential effect of reversing the economic drivers mentioned in the script?
-Reversing the economic drivers, such as returning to higher interest rates and changing the Section 174 tax code, could lead to an overnight surge in tech hiring as it would alleviate financial pressures on tech companies and make investing in software development more attractive.
What advice does the speaker give to those considering breaking into the tech industry despite current challenges?
-The speaker advises against giving up on breaking into the tech industry due to current challenges. Instead, they suggest going against the crowd by continuing to learn and prepare for the industry's recovery, positioning oneself for future opportunities.
How does the speaker view the role of AI in the future of software development?
-The speaker believes that AI will continue to improve and become more integrated into software development, potentially increasing productivity but not eliminating the need for human developers. They suggest that AI will change the nature of coding jobs but will not make them obsolete.
What is the speaker's assessment of AI's current capability in code generation?
-The speaker assesses that AI can currently generate code that is mostly correct but often contains minor errors. They note that AI is not yet capable of understanding and debugging code or working with large, complex code bases, making it unsuitable for handling the majority of development work.
How does the speaker recommend preparing for technical interviews?
-The speaker recommends a more serious and comprehensive approach to interview preparation, such as using a multi-month program like Interview Kickstart, which is developed by experienced software engineers and offers personalized guidance from mentors and instructors.
What is the potential long-term impact of Section 174 on the tech industry?
-The potential long-term impact of Section 174 is that it could discourage investment in software development due to increased financial pressures on companies, particularly startups, which could lead to a stagnation in the growth and innovation of the tech industry.
What does the speaker suggest as the best approach to using AI in software development currently?
-The speaker suggests that the best approach to using AI in software development currently is for generating starter functions, boilerplate code, or completing lines where the developer already has a clear idea of what needs to be written. They note that for larger tasks, the manual process of editing and understanding existing code is still necessary.
Outlines
🚀 Economic Factors Affecting Tech Hiring
This paragraph discusses the misconception that AI and GPUs are the primary reasons for the struggle in tech hiring. It highlights two economic factors that are actually driving the downturn: the end of the zero-interest-rate era ('zerp') and the changes to the tax code under Section 174. The speaker explains how low interest rates previously led to risky equity investments, particularly in venture capital, which inflated the tech industry and software engineering salaries. However, with inflation and rising interest rates, this trend has reversed, leading to less funding for tech companies and, consequently, fewer jobs. The newly implemented Section 174 tax code has also increased the cost of hiring developers by requiring companies to amortize salaries over several years, putting additional financial pressure on startups and established companies alike.
🌐 Global Impact and AI's Role in Software Development
The speaker addresses the global impact of the economic pressures on tech hiring, noting that outsourcing to foreign developers is not a viable solution due to the same amortization rules applying to overseas development. There is a movement to repeal or amend the Section 174 tax legislation, which could potentially revive hiring in the industry. The paragraph also discusses the current state of AI in software development, emphasizing that while AI can assist with error detection and increase productivity, it is not yet capable of replacing human developers. The speaker argues that AI's role is more complementary than substitutive, as it still requires human oversight and intervention, especially when dealing with complex, legacy codebases.
🤖 AI's Limitations and the Future of Software Engineering
This paragraph delves into the limitations of AI in software development, explaining that while AI can generate code, it struggles with understanding and debugging complex codebases. The speaker suggests that AI is currently best used for generating simple functions or boilerplate code, rather than handling larger tasks. The reality of development work, which involves a significant amount of code editing, reading, and small changes, is not yet feasible for AI to manage effectively. The speaker advises viewers not to be discouraged by the current state of AI and to continue developing their skills, as the industry is likely to recover and AI advancements will complement rather than replace human developers in the future.
Mindmap
Keywords
💡Tech Hiring
💡Nvidia CEO
💡AI
💡Zero Interest Rate
💡Section 174 Tax Lot
💡Venture Capital
💡Economic Drivers
💡Software Engineering Jobs
💡AI in Coding
💡Interview Prep
💡ASM to Productivity
Highlights
Tech hiring struggles are not due to AI replacing coding jobs yet, as AI tools like GitHub Copilot and GPT are still limited in their coding capabilities.
The Nvidia CEO's claim that AI will replace coding is premature, as current AI technology cannot fully understand or edit complex codebases.
The real reasons for the tech hiring downturn are economic, specifically the end of the zero-interest-rate era and changes in tax code like Section 174.
Zero-interest rates previously led to cheaper borrowing costs and more Venture Capital investments, which inflated the tech industry and software engineering salaries.
Inflation and subsequent interest rate hikes have reduced the flow of money into the tech industry, affecting hiring and investment.
Section 174 of the tax code now requires amortizing software development costs, including salaries, over several years, increasing the short-term financial burden on companies.
The change in tax law has made hiring software developers more expensive in the short term, impacting startups and the overall tech industry.
There is a movement to repeal or amend Section 174 due to its negative impact on the tech industry and job creation.
Despite the current challenges, the tech industry is likely to recover, and learning to code can still lead to good opportunities, especially if the economic drivers change.
AI is expected to enhance productivity in software development but will not eliminate software engineering jobs; instead, it will alter the nature of coding work.
AI currently helps in catching errors and speeding up work, but it cannot yet replace the human element required for understanding and debugging code.
AI's role in coding is compared to an 80-90% productivity boost, but that final 10-20% for perfect code generation remains challenging.
For large codebases and legacy systems, AI is not yet capable of doing the heavy lifting in software development.
AI is best used for generating starter functions or boilerplate code, rather than handling larger, more complex coding tasks.
The current state of AI requires developers to still perform the majority of development work, including editing, understanding, and changing existing code.
The speaker advises not to give up on learning to code and preparing for interviews, even in the face of economic challenges and AI advancements.
Interview preparation programs like Interview Kickstart can significantly increase the chances of success in the competitive tech job market.
The video encourages viewers to stay informed about economic factors affecting the tech industry and to be prepared for the future recovery and evolution of software development.