Tech and ZIRP
As we shift from a zero interest-rate policy (ZIRP) environment into one defined by relatively high interest rates and thus, less investment and spending, all sorts of previously high-flying, money-printing companies are battening down the hatches and digging trenches—preparing themselves for lean times after a period of abundance and growth.
Considering that the last, similar period was in the early 2000s (during the financial crisis of 2007-2008) and before that in the 80s, this is a surprising and worrying turn for folks sitting atop these companies—many of whom have never weathered a financial-world climactic change before—but also for the folks working for them.
Job offers are being retracted, pay expectations are decreasing, and companies are refocusing on efforts that will earn them money today, not ten years from now.
That refocusing has several immediate implications, among them that some of the more interesting and speculative jobs are disappearing because the tried-and-true stuff tends to be more about monetization and maintenance, rather than invention and innovation: people are being hired to wring more dollars from existing products and services, not to come up with whizbang new whatevers, and to tend to existing cash-gardens rather than planting new seeds.
This pivot is also changing the shape of many organizations, though it's been most impactful in debt-reliant industries like tech, which since the turn of the century has prioritized taking on new investors and using those injected funds to hire-up all the best engineers and designers, even if they don't need those specific employees yet: a means of denying their competition talent and slowly carving out a practical monopoly for themselves.
This process has been great for the fortunate few winners in the tech space because it's allowed them to justify the projected 10x-or-greater profits they use to tempt to would-be investors. They could basically say, "Invest in us now, give us the means to strangle our competition in the womb, and we'll make sure the money you give us comes back to you many times over," and that would sometimes happen.
Lacking cheap debt though—and to be clear, high interest rates means higher interest paid on borrowed money, which in turn means less borrowing because it's suddenly expensive to do so—lacking that cheap debt, there's less investment capital being thrown around, and that means fewer (strangle-capable) big tech companies scooping up a large number of tech-savvy employees looking for jobs (the quantity of which has been increasing each year because this industry has typically been a reliable way to get a job and be well-compensated for the work you do).
All of which has led to a situation in which previously booming, spendy tech entities are now pulling inward, mass-firing employees by the thousands or tens of thousands, and dramatically reducing hiring.
This in turn has led to a forced migration of some types of worker (engineers and designers, but also middle managers as a result of what's become known as “the flattening”) toward other industries, including nonprofits and long-ignored government agencies—both of which struggle to attract talent because they can't afford to pay the (previously) inflated wages the tech world has often used as a draw.
There's a chance that when inflation comes back under control, the central banks of the world stop increasing their key interest rates, and then eventually start lowering them again (they generally raise these rates to slow the economy, which tends to then slow inflation, and they lower these rates when they want to heat the economy back up, because that makes debt—and hence, investment—cheap and common again) these business entities will get the ball rolling once more, soaking up all the available talent and paying hilariously high prices to do so.
There's also a chance, though, that this period will lead to a new appreciation of lean operation, birthing fresh, more efficient businesses that are more resilient to shifts in economic weather patterns and perhaps less prone to monopolistic thinking (their business models and promised returns less reliant on it) than their currently flailing ancestors.
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