The Tech Education Crossroads: Why Now Might Be the Worst Time to Dive In
For years, tech careers have been portrayed as golden tickets—high salaries, endless innovation, and job security in a digital-first world. But a seismic shift in the U.S. tax landscape is rewriting this narrative, creating ripple effects that could make 2023 the riskiest moment in decades to pursue a tech-focused education. At the heart of this upheaval? A little-discussed provision in the 2017 Tax Cuts and Jobs Act (TCJA) that’s now reshaping the industry’s hiring patterns and long-term strategies.
The TCJA Time Bomb
Buried within the TCJA was a change to Section 174 of the IRS code, which altered how companies account for research and development (R&D) expenses. Prior to 2022, businesses could immediately deduct these costs, recognizing them as ordinary expenses in the year they occurred. The updated rule? Companies must now capitalize and amortize these expenses over five years (or 15 years for international R&D).
For tech giants and startups alike—businesses that thrive on constant innovation—this flipped the script overnight. Imagine a company spending $10 million annually on software development: Under the old rules, that entire amount reduced taxable income immediately. Now, only $2 million per year (spread over five years) counts as a deductible expense. The result? Higher taxable income, lower cash flow, and a brutal math problem for CFOs.
Dominoes Falling Across Silicon Valley
The practical consequences have been staggering. Since late 2022, over 100,000 tech employees have been laid off by household names like Meta, Amazon, and Google. But unlike past downturns tied to economic cycles, this wave stems directly from structural changes in corporate budgeting. Companies aren’t just trimming fat; they’re fundamentally rethinking how much R&D they can afford—and how many salaries they can carry while doing it.
Take a mid-sized AI startup: Previously, hiring 20 new engineers might have made sense as an immediate tax write-off. Now, that hiring spree would create a financial liability stretched across half a decade. The calculus has shifted from “How many innovators can we afford?” to “How few can we get away with?”
The Education Dilemma
This tectonic shift creates a paradox for students. On one hand, tech skills remain critically important across industries. On the other, the traditional entry points into tech careers—internships, junior developer roles, rotational programs—are evaporating. Companies that once hired cohorts of new graduates are now:
– Freezing entry-level hiring entirely
– Prioritizing senior roles requiring 5+ years’ experience
– Automating tasks that used to serve as training grounds for juniors
The numbers tell the story: In Q1 2023, tech job postings for recent graduates dropped 35% year-over-year. Bootcamps and computer science programs are still churning out talent, but the bridge between education and employment is crumbling.
Beyond the Obvious Victims
While software engineers face the most visible cuts, the TCJA’s impact radiates outward:
1. Tech-Adjacent Roles: Marketing, HR, and project management positions tied to R&D projects are being axed as companies narrow their focus.
2. University Research: Corporate partnerships with academia (a major funding source for tech research) are shrinking as firms pull back on speculative investments.
3. Global Talent Flow: With U.S. tech hiring slowing, international students face visa hurdles and reduced sponsorship opportunities.
Rethinking the Playbook
Does this mean abandoning tech education entirely? Not necessarily—but it demands strategic pivots:
– Hybrid Skills: Combining coding chops with healthcare, manufacturing, or green energy knowledge makes candidates valuable in industries where tech adoption is rising.
– Micro-Credentials: Certifications in cybersecurity, AI ethics, or cloud architecture (updated quarterly) often carry more weight than generic degrees.
– The Small Biz Shift: Startups unaffected by TCJA’s amortization rules (those with under $5M in revenue) are becoming unexpected talent incubators.
A Silver Lining?
History shows that regulatory shocks often birth innovation. The 1990s telecom act led to dot-com boom; post-2008 reforms spawned fintech. For stubborn optimists, this crisis could:
– Force schools to modernize curriculums faster
– Push companies to develop more efficient training pipelines
– Encourage governments to revisit R&D incentives
The Bottom Line
Pursuing tech education now isn’t impossible—it’s just riskier and requires eyes wide open. Students must treat their education as a portfolio: diversifying skills, building real-world projects early, and cultivating relationships beyond Big Tech. Meanwhile, policymakers face growing pressure to amend TCJA’s Section 174 rules, with bipartisan bills like the American Innovation and Jobs Act gaining traction.
The tech industry isn’t dying—it’s detoxing from an era of easy money and tax-fueled growth. For those entering the field, success will depend less on coding alone and more on understanding the complex dance between policy, economics, and emerging technologies. In this new reality, the most valuable skill might be adaptability itself.
Please indicate: Thinking In Educating » The Tech Education Crossroads: Why Now Might Be the Worst Time to Dive In