The Tech Job Meltdown

The tech industry's half-million layoffs since 2023 stem primarily from a 2022 tax code change (Section 174 of the IRS Code) that eliminated companies' ability to immediately deduct R&D expenditures and instead requires them to capitalize and amortize these costs over 5-15 years. This shift substantially increased short-term tax liability for tech companies with large research budgets, forcing them to reduce payroll costs—their primary R&D expense category—rather than absorb the tax burden, making the layoffs fundamentally an accounting-driven restructuring rather than a product of economic underperformance or technological obsolescence.

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