Why the Job Market Is So Difficult Right Now

One of the most common questions I hear is: Why is the job market so tough? I regularly speak with hiring managers across the industry, and here’s what they’ve told me—plus when we can expect things to improve.

1. Big Corporations Overhired and Are Now Laying Off

During COVID, major companies aggressively expanded their workforce to keep up with demand. But as things normalized, they found themselves overstaffed. Now:

• They’ve cut hiring drastically and, in many cases, frozen hiring altogether.

• Layoffs have flooded the market with highly experienced candidates.

• Job seekers now face tougher competition, even for mid-level roles.

In 2024 alone, tech companies laid off over 95,000 workers, adding to an already crowded job pool.

2. Push for Profitability Over Growth

For years, companies operated on the idea that growth mattered more than profit. That’s changed. With higher interest rates and investor pressure:

• Unprofitable projects are being shut down, and the teams that worked on them are being let go.

• Hiring managers now have to justify every new hire with clear financial returns.

• Many companies need a 4x+ return on investment for any project, making hiring far more selective.

This shift has impacted everything from R&D to operations, slowing job creation.

3. AI Is Reshaping Hiring

AI has cut demand for junior and entry-level roles. Companies that once hired interns or junior employees to handle repetitive tasks now rely on AI tools. As a result:

• Companies expect new hires to be productive from day one, eliminating the traditional ramp-up period.

• Fewer positions exist for early-career workers, making it harder to get a foot in the door.

• Salesforce, among others, froze hiring for software engineers in 2024, citing AI’s ability to boost productivity without adding headcount.

The jobs AI replaces aren’t just in tech—customer support, marketing, and even legal roles are seeing automation replace human workers.

4. International Hiring Is More Attractive

U.S. salaries have risen faster than in many other countries. A software engineer in the U.S. might earn three times as much as one in Eastern Europe or Latin America for similar work.

• Remote work has made it easier than ever for companies to hire globally instead of locally.

• Profit-focused firms are shifting roles overseas where talent is cheaper but still highly skilled.

• Even big tech companies that previously resisted offshoring are now expanding international hiring to cut costs.

This trend isn’t new, but economic pressures have accelerated it significantly.

5. Higher Interest Rates Have Slowed Growth

Easy money is gone. When borrowing was cheap, startups raised millions with little revenue, and corporations expanded freely. Now:

• Venture capital funding has dropped 50% from its 2021 peak, leaving startups struggling to survive.

• Businesses are cutting back on marketing and sales, reducing demand for growth-focused roles.

• Companies that might have taken risks on hiring before are playing it safe and keeping teams lean.

With higher borrowing costs, companies simply aren’t expanding as aggressively as they did a few years ago.

6. Startups Are Hiring Less

Startups drive job creation, but fewer are getting funded, and those that do are operating more cautiously.

• Many startups that once hired aggressively now prioritize survival over growth.

• Others are delaying hiring, running leaner teams for longer.

• With fewer new companies scaling up, there’s less demand for tech and product roles.

Even experienced workers who previously found opportunities in startups are now competing for a shrinking pool of jobs.

7. Marketing and Sales Spending Is Down

Growth-focused roles are some of the hardest hit. When money was cheap, companies spent aggressively on marketing, ads, and business development. Now, with tighter budgets:

• Sales and marketing teams are shrinking, as companies focus on efficiency over expansion.

• Growth-stage companies that thrived on advertising are now cutting back, reducing demand for marketing talent.

• Digital ad spending, which grew 37% in 2021, barely grew 2% in 2024, a sign that businesses are spending far less on acquiring customers.

This directly impacts hiring in roles related to business development, paid media, and customer acquisition.

8. Middle Management Roles Are Disappearing

Companies are flattening their org charts to reduce costs, cutting layers of management in the process.

• Managers now handle more direct work, reducing the need for mid-level roles.

• Promotions are happening less frequently, with more people stuck in existing positions.

• The path to leadership has become narrower, making career progression slower than before.

For those seeking management roles, the competition is tougher than it’s been in years.

9. Hiring Freezes and Delayed Decisions

Even companies that want to hire are taking longer to make decisions. Economic uncertainty has led to:

• Extended hiring freezes even for profitable businesses.

• More reliance on contractors and freelancers instead of full-time hires.

• Slower hiring processes, where roles stay open for months while leadership reassesses budgets.

Instead of making fast decisions, many companies are waiting to see how the economy unfolds before committing to new hires.

The Tech Sector Is Cyclical—Recovery Will Take Time

This downturn isn’t the first, and it won’t be the last. The 2008 financial crisis led to widespread layoffs across tech, with many companies cutting up to 30% of their workforce. It took 3–4 years for hiring to fully recover, and today’s job market is following a similar pattern.

Tech has always been cyclical—booms create overhiring, busts lead to layoffs, and then recovery follows. The key question is when things will turn around. Historically, markets rebound as companies adapt, stabilize, and re-invest in growth. The same is likely to happen here, though it may take another 12–24 months before hiring fully picks up again.