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Industry eyebrows were raised recently at New York Federal Reserve Bank data showing software engineering graduates face higher unemployment rates than art history majors.
The unemployment rates for computer engineering and computer science were 7.5% and 6.7% respectively. By contrast, the unemployment rates for art history and social services majors were 3% and 1.7% respectively.
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In all fairness, it's also worth noting that the underemployment rate for art history majors was 46.9%, compared to 17% for computer engineers, meaning graduates in the former can be relegated to low-paying or part-time jobs.
Still, there has been a noticeable dip in software hiring. The St. Louis Federal Reserve also just posted data on software job openings as seen on Indeed, recording a hiring rate lower than during the coronavirus pandemic.
So, is this trend just a cyclical dip in software and IT hiring, or is something more pervasive happening?
A new IT industry
Industry leaders have mixed feelings on the data. "This is not a sudden development -- it's an issue that's been building up for years," said Ivan Gekht, CEO of Gehtsoft, a custom-design software development firm.
"For nearly two decades, we've seen a surge in the popularity of the IT industry, particularly in coding roles. This led to an explosion of online courses and boot camps to quickly train people for entry-level jobs, which were in high demand during the rapid growth phases of many tech companies. In the race to demonstrate expansion, management often over-hired."
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The shift in the IT industry is toward developing autonomous systems, while "generalist or vanilla software roles are being phased out," said Nic Adams, co-founder and CEO of 0rcus. The move away from hiring IT graduates may not be a typical cyclical dip, he said, "because the market is undergoing permanent recalibration. Credentials, checklists, and degrees have no equivalence to code automation and autonomous agents."
Something "feels different this time," agreed Neil Sahota, CEO and founder of ASCILabs and United Nations AI Advisor: "Engineering roles have always fluctuated with the broader economy. Companies hire aggressively in expansion, then often scale back during a recession. The speed and intensity of the change are different."
"Blame AI for speeding up this transformation," Sahota continued. "We will experience 100 years' worth of change in just 10 years."
Generative AI (Gen AI) tools, such as Copilot and ChatGPT, are automating tasks and changing the types of jobs available for technology professionals, Sahota added: "Why write bubble sorts or do code translation when Gen AI can do it more efficiently? But we do need more people who can do glue code, which some Gen AI does poorly."
Large language models and AI-driven tools "aren't quite replacing entry-level coding roles yet, but they're getting close. And they're evolving rapidly," said Gekht. "The truth is that great software is 90% thinking and only 10% coding."
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For those who understand core computing principles and algorithms, "AI is not a threat; it's a powerful tool to boost productivity and amplify their capabilities," said Gekht. "But for those who only know a single programming language and rely solely on surface-level skills, AI is a serious risk. When you lack a solid foundation, adapting, learning quickly, and keeping up becomes incredibly difficult."
Talented developers "who know how to integrate, verify, and extend AI-generated code remain highly valuable," Sahota said. "That's why software engineering is morphing into human-AI collaborative intelligence."
Other trends and key lessons
The New York Federal Reserve Bank data reflects trends going back two years, and it's worth noting that this "was a period of major growth in IT, with more job openings and rising salaries," said Brittany Lutes, research director at Info-Tech Research Group.
"The traditional four-year degree didn't seem as necessary anymore, at least not in tech. Companies were hiring people who had enough knowledge to do the job, even if they were self-taught. If you could get a job paying over $100,000 without a degree, a lot of people figured, why spend four years and a ton of money on school?"
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It's also possible that there may be a glut of applicants for certain jobs, which isn't unique to computer engineering. "I've observed the same cycle in the legal field, in healthcare, marketing, and finance," said Gekht. "People naturally rush in whenever a profession sees rising demand and high average salaries, hoping to capitalize on the opportunity. The IT industry was no exception."
Another consideration is the appearance of new IT roles. "The percentage of roles in IT that are filled by software engineering roles could be declining, given how many new roles are coming forward," said Lutes. "We need to prepare for a reduction in stereotypical IT roles as new roles that present themselves as having more value become more evident."
The key to success for IT professionals will be adopting technology skills as needed. "Stay clear of any certifications that are theory only and invest in certifications that demonstrate your ability to apply," said Lutes. "You want to say to hiring managers, 'I can learn and apply X in 2 months, and, when you have a skill gap in your organization, I can adapt.'"
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In addition, "connect with people already working in the roles you are applying for or the hiring manager directly," Lutes advised. "Simply applying for a job now is not enough, regardless of your credentials or background. And that is something IT graduates didn't expect to be dealing with when they started their programs four years ago."
Broaden your perspective, said Gekht: "Go beyond just IT and deepen your understanding of the business you're part of. Know how your company operates, where value is created, and what drives decisions. Stop thinking of yourself as just a coder or developer and start thinking like an engineer. That mindset shift creates real job security in today's rapidly changing market."
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