The image below, which appeared in the Financial Times, has been gaining traction on the Internet because it seems to show what people in the software industry fear most: The introduction of new groups of AI models has collapsed the software industry.

Beginning in 2022 and gaining momentum through 2023, the tech industry experienced a wave of job cuts that hit software engineers especially hard. Layoffs peaked in early 2023, then gradually tapered in 2024. The downsizing has continued into this year.

The scale of these cuts was unprecedented. Amazon’s initial announcement of 10,000 layoffs in 2022 expanded to 18,000 workers by January 2023. This was followed by an additional 9,000 cuts in March. Other tech giants implemented similarly massive reductions: Google eliminated 12,000 positions while Meta reduced its workforce by 11,000. The momentum continued throughout 2023 as major players in the tech industry, including Salesforce, Microsoft, Intel, Tesla, Cisco, and Zoom, announced significant workforce reductions.

To understand the magnitude of the layoffs, Crunchbase and TrueUp developed specialized tracking sites. Their estimates are collected below.

Trends observed in these data seemingly fit with the change in Indeed postings for software development jobs.

But when you compare software development job postings with Indeed job postings in aggregate as well as sector-specific postings for research and development and banking and finance, a pattern emerges: Postings are slowing for every sector.

If AI were the culprit of the tech layoffs, you’d assume that different industries would be impacted in varying ways. But when taking a step back and looking at the overall trendline, data suggests that everyone is slowing their hiring.

So what do the official employment data say?

Employment numbers are classified by industries via the North American Industry Classification System (NAICS). Software engineers are typically found in NAICS 5415, the broad category for computer systems design, and NAICS 5112, which includes software publishers. Combining the two from Bureau of Labor data shows that jobs hit a high-water mark in 2022 of 3,258,000, then declined slightly to 3,244,800 in 2024 for a combined loss of 13,200 jobs.

Most telling, if AI were erasing jobs, those remaining jobs should be more productive. But there wasn’t a spike in productivity captured in NAICS 5112 from 2022 to 2023.

An alternative explanation is that the economy is slowing.

This possibility is hardly comforting to computer science graduates now entering the workforce. In the latest labor market report from the New York Federal Reserve, recent computer science grads are battling a 6.1 percent unemployment rate.

What remains clear is that the tech industry’s hiring freeze has created a perfect storm: Even highly skilled workers are finding themselves competing for fewer opportunities, regardless of whether the cause is artificial intelligence or simple economic uncertainty.