I see a lot of people blaming this on AI and raised interest rates.
The real reason for this stagnation is Section 174 of IRS code that was added by the 2017 tax cut bill. The section took effect in 2022 and was added to balance the budget.
This section basically doesn’t allow to deduct cost of the software engineers and they are amortized over 5 years (10 years for international engineers). This puts some strains to regular businesses, but it kills start ups, as they are required to pay taxes even when they are still not profitable and might not even pay 5 years.
Lack of start ups means there is smaller number of openings which is lower mobility. Combined with amortization, it discourages hiring new people as again it requires 5 years.
I see this being dismissed and “it is definitively the interest rates and AI” AI is nowhere close to replace software engineers, in fact from the coworkers that enthusiastically embraced it I see lower quality of code. Interest rates actually came back to what they originally were before 2008.
The hiring issues started exactly when section 174 went into effect. I think the hiring craze in 2021 was only because companies realized that with slim margins in Congress a bill won’t pass that will repeal it so they were hiring like crazy before it become a law. Indeed Democrats were trying to repeal it, it even pass the house, but it was blocked by Republicans in the Senate. Because God forbid they would help Americans and in turn let economy to look good under Biden.
AI has currently captured the public consciousness more than tax codes ever will. My theory is that it offers a simple scapegoat to a complex series of problems, and that is easier for stock trading masses to understand
That’s my intuition too. In my experience, adopting AI mostly has lead to marginally faster MVPs, balooning sloc in PRs, and an explosion of wildly unqualified people applying for tech roles and sometimes even getting them.
It’s a better kind of nihilistic business story to say that LLMs have been so disruptive, that people are getting fired, rather than investors are scared and greedy and are just being guided around by vibes and their amygdalae right now.
Companies hype themselves to increase stock price. Trying to drive social change via the masses could easily backfire. If a company wants to change the tax code, they usually just hire lobbyists and donate to political campaigns, and you never hear about it.
I think this is only a small part. Interest rates are kinda high. VCs only want to invest in companies with AI exposure because of all the hype. From companies I’ve interviewed with, offshoring seems to have accelerated dramatically (companies only had or wanted a few US devs to manage larger Indian teams). I’ve visited career pages of companies working in the business domain I have the most experience with, and all open software positions are exclusively in India.
I see a lot of people blaming this on AI and raised interest rates.
The real reason for this stagnation is Section 174 of IRS code that was added by the 2017 tax cut bill. The section took effect in 2022 and was added to balance the budget.
This section basically doesn’t allow to deduct cost of the software engineers and they are amortized over 5 years (10 years for international engineers). This puts some strains to regular businesses, but it kills start ups, as they are required to pay taxes even when they are still not profitable and might not even pay 5 years.
Lack of start ups means there is smaller number of openings which is lower mobility. Combined with amortization, it discourages hiring new people as again it requires 5 years.
I see this being dismissed and “it is definitively the interest rates and AI” AI is nowhere close to replace software engineers, in fact from the coworkers that enthusiastically embraced it I see lower quality of code. Interest rates actually came back to what they originally were before 2008.
The hiring issues started exactly when section 174 went into effect. I think the hiring craze in 2021 was only because companies realized that with slim margins in Congress a bill won’t pass that will repeal it so they were hiring like crazy before it become a law. Indeed Democrats were trying to repeal it, it even pass the house, but it was blocked by Republicans in the Senate. Because God forbid they would help Americans and in turn let economy to look good under Biden.
Why are all companies talking about efficiency and AI instead of creating pressure to fix easily changed tax laws?
AI has currently captured the public consciousness more than tax codes ever will. My theory is that it offers a simple scapegoat to a complex series of problems, and that is easier for stock trading masses to understand
That’s my intuition too. In my experience, adopting AI mostly has lead to marginally faster MVPs, balooning sloc in PRs, and an explosion of wildly unqualified people applying for tech roles and sometimes even getting them.
It’s a better kind of nihilistic business story to say that LLMs have been so disruptive, that people are getting fired, rather than investors are scared and greedy and are just being guided around by vibes and their amygdalae right now.
Companies hype themselves to increase stock price. Trying to drive social change via the masses could easily backfire. If a company wants to change the tax code, they usually just hire lobbyists and donate to political campaigns, and you never hear about it.
I think this is only a small part. Interest rates are kinda high. VCs only want to invest in companies with AI exposure because of all the hype. From companies I’ve interviewed with, offshoring seems to have accelerated dramatically (companies only had or wanted a few US devs to manage larger Indian teams). I’ve visited career pages of companies working in the business domain I have the most experience with, and all open software positions are exclusively in India.
Good fucking god, the traitor’s handlers are just pure unadultered fucking evil.