The job market for new grads: worse than in 2008, but better than 2002

Originally published on 23 Feb 2023

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Chris Lee is the founder of US-based Launch School, which is one of the “anti bootcamp coding schools,” and an organization which impresses me. While most bootcamps offer a program ranging from a few weeks to a few months-long which promises to teach people how to code, Launch School has a self-paced, mastery-based curriculum which students can take up to two years to complete, finishing off with the Capstone program.

In 2021, an impressive 67% of graduates got a software engineering job within 8 weeks, and in 2022 this number was 74% and close to 100% after 6 months, with a $124K average base salary. Remember that in 2021 junior engineers were struggling to find entry-level positions, as I covered at time, even within the generally heated job market.

As a coding school operator, Chris has a unique perspective that gives him insight into lots of different companies and engineering departments. Given Chris's job doesn’t end until his graduates get jobs, he keeps his finger on the pulse of the job market. In what might be helpful, Chris started his career as a software engineer in the middle of the big downturn back in 2002 – known as the Dotcom Bust – and worked through the financial crisis in 2008. I asked him how 2023 compares. Here’s his take:

'This 2023 downturn now is far worse than 2008 but not nearly as bad as 2002, which felt apocalyptic. I gave some internal presentations to our Launch School students about how to approach this downturn, and here is what I told them:

'The current situation is pretty bad. It's a bloodbath. However, it's fundamentally different from 2001-2002.

'I expect things to turn around fairly quickly. The main reason is that tech companies and VCs still have a ton of money; they're just not investing right now.

'1. Big tech is freezing hiring and conducting layoffs.

'Both of these things are ways to appease twitchy investors and claw back some leverage from employees. Since every big company is doing the same, it's a ‘safe’ time to do layoffs without setting off any alarm bells or lawsuits.

'2. Small, private VC-backed companies are de-prioritizing growth, and instead focusing on extending the runway of cash reserves.

'VCs are withholding subsequent rounds of funding and asking portfolio companies to take a more financially conservative approach. For the job market, this means less jobs from  VC-backed companies, too.

'3. So where are the small private non-VC-backed companies? Shouldn't they be hiring?

'These companies never participated in the “growth-first, hire-fast” frenzy and have always had a slow, methodical, financially conservative growth path, even in bull markets. Nothing has changed for them.

'Remember: nothing has fundamentally changed!

'#1-#3 is why the current situation feels so dire. However, the fundamentals are the same. Tech is still eating the world and we still need top notch software engineers. There's a lot of money sitting on the sidelines right now and it's not moving out of tech into another industry. All industries are still turning to tech and software engineers to compete. So then, why is the money sidelined and what are the companies waiting for?

'Stock prices.

'Investors are ready to invest as soon as stock prices start coming up, which can happen at any time. Suppose the Russia/Ukraine war ended tomorrow. I would expect that to have an immediate positive impact on the market, which will in turn immediately impact the Big Tech hiring situation. And that, in turn, would impact VC-backed companies (enterprise contracts are here again!).'

I asked what advice Chris is giving grads of his coding school:

'Hang tight, survive for now, and cash in on the upturn. No need to go to law school or take any drastic actions. It's a great time to invest in your skills.

'Further, our current job hunt cohort is experiencing both lower salary offers as well as lower number of interviews. I expect our Capstone results to be 15-20% worse in 2023 in both salary average and duration to offer.'

How badly did layoffs impact Capstone graduates who took their first tech job out of Launch School? Chris says:

'Our alumni channel is full of nearly daily reports of layoffs or impending layoffs (Google, Microsoft, PayPal, DigitalOcean, and other companies). So far, luckily, most of our alumni working at these companies haven’t been affected as yet.

'However, 3-5% of our Capstone alumni have been affected. This is the most it's ever been. In fact, prior to a few months ago, I haven't even heard of one alumni being laid off. Now, we have 8 people affected (we have over 200 Capstone graduates).

'Despite all of this, the general mood of our alumni is cautious but confident. Even among those laid off, my general sense is that no one is panicking. Many are crafting a plan for the next couple of years.

At Launch School, we tend to attract long-term careerists and not those looking for a short-term paycheck. I think because of that, my general sense is that people aren't scared. This confidence is, in my opinion, the ultimate goal of what we're doing at Launch School.'

Chris went through a similarly gloomy period when he started his own career. I asked how that experience shaped him. He said:

'Starting a career back in the 2002 downturn was scary and uncertain. However, that uncertainty taught me a lot.

'I learned that no matter how amazing the job or company, it was all about my own abilities.

'That uncertainty also had a significant influence in how I built Launch School. Despite being early in on the coding bootcamp fad back in 2012, I never bought into that approach, mainly because of my traumatic early years. I built Launch School for the bad times. During the last 10 years of a bull market, it's actually been difficult to sell a long, rigorous learning path. Now, I think it's the only way to remain confident in this market.

'I expect our 2023 graduation numbers to be significantly worse than our 2022 numbers, but I'm eager to compare them with other training programs.'

Thanks a lot to Chris for sharing these details. You can follow Chris on Twitter, and read more of his writing on the Launch School blog.

For my view, I am not sure I fully agree with Chris that a recover hinges on just the stock prices. Stock prices do have correlation with the broader economy, and should the stock market recover, this would definitely be good news for Big Tech, and it would also likely encourage VCs investing their current funds with more confidence.  

The Launch School alumni have been standout ones across self-taught graduates, and those let go will surely be searching for jobs. These people will start off with an advantage compared to current bootcamp grads or new grads, as all of them have had industry experience.

I’m pretty sure that new grads - and especially bootcamp new grads - will find an even tougher job market than it’s been the case in the past. At the same time, as a hiring manager, if you would be open to hiring new grads or bootcamp grads, you’d likely have a stronger inbound pipeline than ever before.

And if we can take anything from Chris’s experience of starting his career at a worse time than now, as a new grad, it’s that difficult times contain plenty of lessons and tough early experiences can build qualities of strength and resistance.

For more stories about getting into software engineering via a non-traditional path, we covered Nivia Henry’s career from a non-traditional background to director of software engineering at Spotify and Louie Bacaj coming from poverty, and becoming a senior director of engineering.

This was one out of the five topics covered in this week’s The Scoop. A lot of what I share in The Scoop is exclusive to this publication, meaning it’s not been covered in any other media outlet before and you’re the first to read about it.

The full The Scoop edition additionally covers:

1. Big Tech job-switching stats. Which companies grew their software engineering headcount, which ones shrank, and how has the “open-to-new-opportunities” ratio shifted across Big Tech? I collaborated with a recruiter to find out, and the data is in. Exclusive.
2. A historical pushback at Amazon on RTO. The tech giant joined the ranks in announcing 3 days per week in the office from May. However, this move is facing a pushback I’ve not observed at any other Big Tech giant. I’ve talked with current employees and bring you the details. Plus, expect a spike in PIPs at the tech giant. Exclusive.
3. Changes in the tech job market during the past month. Observations from the Pragmatic Engineer Talent Collective. Software engineers with experience that used to be rare to see as available to hire are now on the market. Exclusive.
4. More “traditional” companies going against the tide of cuts. Nintendo and Mercedes-Benz are rewarding staff better than usual, while most tech companies are cutting. Could there be longer-term implications of employers putting staff ahead of finances? Analysis.

Read the full The Scoop here.

Although this issue mentioned Launch School - having interviewed their founder - I have no affiliation with them. As always, there’s no sponsorship, affiliates or other third-party advertisements included and I always disclose conflicts of interests (like being an investor in a company I mention). This issue has no such conflicts. Read more on how I stay independent in my ethics statement.

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