Conversation starter: Is tech in a recession?

Are we in a tech recession? Even at a time when investment in AI and data centers is skyrocketing, sentiment from tech workers is in the dumps. Despite massive investment in AI and AI infrastructure, employment remains stagnant in the tech sector, contributing to the sour taste in tech workers’ mouths. In this analysis, we combine data on several subindustries from the Bureau of Labor Statistics to define the tech sector and get a picture of how tech jobs are faring halfway through 2025.

In the first half of 2025, tech employment shrank by 1,583 jobs on average each month. Since January 2024, tech employment has been flat, declining by 4,000, as of the latest data through June 2025. This period of stagnation builds on top of the decline of tech jobs in 2023 when tech employment shrank by 60,000.

Looking at tech employment cumulatively shows that tech employment has declined 1.9% since it peaked in 2022 A 1.9% employment decline may sound modest but it doesn’t mean that the tech industry is holding up well. When looking at previous recessions in 2008 and 2020, the tech industry’s employment declines have been similarly sized.

To get a better sense of how the recent tech job decline compares, we can benchmark how much jobs declined in previous recessions relative to their pre-recession levels. The current job decline of 1.9% is very similar to the decline we saw during the 2008 recession when tech employment fell 1.8%. In other recessions like in 1990 and 2020, tech was largely able to resist the recessions and return to growth quickly. The most glaring exception to this was the 2001 recession which coincided with the bursting of the dotcom bubble where tech employment dropped a staggering 17% and didn’t fully recover to pre-recession employment levels until after the 2008 recession almost 10 years later in January 2011.

Even if the decline in tech employment is relatively modest, that may be cold comfort for workers trying to break into the tech industry. Plateauing employment means that new graduates get stuck in a traffic jam fighting for a scarce few jobs opened up by retirees or career switchers leaving the industry. This is particularly relevant because there are over a hundred thousand new college graduates from computer science programs each year, a significant number when the industry overall employs a few million people.

Flat employment accompanied by a rising tide of new grads looking for jobs in the sector tends to mechanically increase the unemployment rate. And we do see unemployment has been rising for workers in computer and mathematical occupations, climbing from a pandemic low of 1.9% in 2023 to 2.9% as of July 2025 (on a 12-month trailing basis).

Overall, the tech industry does appear to be in an employment recession, even though hype and investment around AI remains strong. Even if tech job declines have been relatively muted on a percentage basis, they are similar to the 2008 recession. But even flat employment can lead to rising unemployment when there is a flood of new workers trying to break into the industry. New grads looking to enter tech are chasing the promise of high salaries without the extended training that may come with other high-paying careers like medicine. The resulting traffic jam of disillusioned new grads and deposed experienced tech workers is a major reason why workers are so sour on the tech job market right now.

Methodology

Payroll employment data is from the Current Employment Statistics from the Bureau of Labor Statistics. Data is updated through June 2025 but is from the July 2025 vintage because data for smaller subindustries is lagged by an extra month. “Tech” is defined as a subset of “Information” and “Professional and Business Services” subindustries, including:

This definition may exclude tech companies in other industries like semiconductor manufacturing. It is also based on establishment industry rather than occupation. So a software engineer working at a health care provider’s headquarters would not be included in this definition. Conversely, an administrative assistant at a tech company’s office would be counted.

The unemployment rate for computer and mathematical occupations (LNU04034021) is based on worker occupation rather than industry. An unemployed worker is assigned to an occupation based on their most recently held job, which may undercount new grads who do not have a previous job in the field.

The number of degrees in computer and information sciences is based on data from the Department of Education, up to date through the 2021-22 academic year, sourced from Table 325.35 from the Digest of Education Statistics by the National Center for Education Statistics.