I've read many articles about a large recession coming our way by 2020. It appears a downturn at least as large as the previous recession of '08 is coming our way.
I like my current role working in a technical role in a mid sized tech company. I was in highschool during the "Great Recession" of '08. Obviously the finance sector experienced major layoffs. However, this time around I cannot tell which industry the layoffs may hit hardest in. I know many large tech companies carry a lot of debt so I'm wondering if tech may be hit hardest.
I'm a jr in my current role. Does that make me more dispensable than other seniors, or will I be viewed as lower cost? What can I do to make myself more valuable to my employer?
Are there any industries or roles that may be more safe? I imagine government roles may be more safe. If there are major layoffs that occur in tech, and I'm affected, I think I may want to move to a technical role in another industry, or maybe get a government role. Other ideas I had were starting a freelance gig like Sam recommends to do during a recession, or picking up more technical skills and certifications.
Thank you in advance for sharing your experience and advice!
I was in college in 08, so I can't speak from personal experience, but my take in being in tech today is that the salaries are incredible and can not continue forever. It's really hard to find or create an income stream as good as a tech salary when you're just starting out without a lot of money, network or fame. While the times are good, you should ride the wave and earn as much as possible, save a bunch (covert most of your company shares into more diverse assets if they're liquid), start side projects to generate passive income, and have some cash cushion ready when the times get bad and/or assets become cheap.
This early in your career, you should be learning from the best tech company and people as you can get yourself into, because the value of your skills compound too as one skill builds on top of another. You're not going to learn very much from most government tech jobs where the systems were created in the 80s, people work 9 to 4 with a 1.5 hour lunch and they're still using the waterfall methodology, that's not the kind of environment you want to be in early in your career (or even pretty late in your career for that matter). so even in a recessions, I would do anything in my power to *avoid* getting a government job.
Predictions are usually wrong. Even if you get the big idea right (recession in 2020) you'll almost certainly get some specifics wrong (which industries are worst hit). I find it much more productive to think in broad, probabilistic terms. The economy could crash any year. My industry could experience a correction. My company could go under. My skillset could get devalued. My health could go. So find actions that will be productive regardless of macroeconomic outcome. Is your company well managed and solving an important need? If not, it might not survive a recession. But also, it probably won't thrive in good times either. So it's worth looking for other options either way. Building up a savings cushion helps a ton in bad times, and also gives you options in good times. Savings, passive income, new skills, networking, showing value at your company, building a professional reputation: these are just always good ideas.
What I saw during the '08 recession (and have gathered from the dotcom bust survivors) is that it becomes a game of survival. There are still jobs, but maybe in a different city, or more junior then you'd like, or requiring a different skillset, or a move to a neighboring industry. The better you were at networking, reputation building, learning during the good times, the easier it is to find these and the better offers you'll get. But as long as you find something, you can wait out the bad times. Many people don't. They start looking for greener pastures, or won't take any positions because of pride. Once the recession ends and the market perks up, there's a limited number of you who made it through. So the market for experienced professionals is tight and you can find good offers.
(And then the good offers attract a lot of junior talent and there's a glut in 8 years and suddenly the market crashes again, but that's a different story...)
TLDR: Predicting is hard, making huge career moves off a hunch is not ideal, focus on yourself and good long-term sectors instead of timing a recession for job security.
It really depends on the cause of the recession, but there are only a few tech companies that are overleveraged. Nearly every tech startup simply raises venture capital and rarely debt. A few of the largest ones have become more notable for venture debt, but generally because of their particular structure e.g. WeWork and real estate. I honestly think government jobs may be more impacted than private sector tech jobs in tech, but this is my biased opinion.
California's income tax structure relies enormously upon the top brackets of taxpayers, and when the good times flow with huge IPOs and capital gains, the state rakes in the dough. Conversely, when the economy gets worse, the state is adversely affected, and if you remember the 2008-2010 years, there were lots of cuts, and the state tends to be more ruthless and/or cut on seniority (which isn't great for young people). The state is at the mercy of voters while companies can have winners and losers. The structure of the tax brackets means that the relative effect of GDP recession is magnified on the state budget. California has had a good decade, so the rainy day fund is probably looking better, but you can never count on that.
If you want to be "safe" in a tech company, make yourself valuable, indispensable. There are a number of good blogs online focusing on the career path and trajectory of engineers. In more institutional ones, this will be reflected in good reviews. Choose companies that have sufficient cash and have raised enough to have a good runway. If the company is going to run out of cash in 9 months unless they raise more funding, that may give you more pause, if you think the venture capital party party will end soon. If the company is part of the great Silicon Valley "venture capital bonfire", don't do it. If the company is in a less cyclical area where venues don't dip as much, probably a better idea.
Every company is also a little different in how they do layoffs, in general though some sort of stack-ranking or previous reviews are taken into account. In some cases, junior hiring freezes are put on first. In other cases, the senior employees who were lured with large comp packages may seem difficult to justify to the finance department. Talk to some managers and higher-ups that you've gotten to know well, to get some insight on how their philosophy on hiring, etc.
Honestly though, you really can't predict recessions so I would definitely *not* make career moves around it. Yes, you can get some indicators and see what the market things the probabilities are, but no one can tell you when it will hit, what it will hit, and how severe it will be. I personally don't think the next recession will be as bad as the 2008 one, for the simple reason that that severity is very rare, and there has been an excessively high FUD level of a terrible recession lately, which makes it less likely.
The way I see it, the long-term value of most of the tech industry will continue. The easy money of 2014-2017 has allowed some companies and sectors within tech to become way misallocated/over-capitalized, but much of the industry is still producing true value. You likely won't see the same funding frenzy for blockchain companies soon, for instance. There are those permabears who have been talking about a tech bubble and overallocation ever since Instagram sold to Facebook for $1 billion in 2012, but I would tend to ignore them.
Optimizing a career for job security is something I'm personally rather against, especially in high-demand sectors. I think each marginal hour and slice of mental energy spent on sharpening your skills, working on yourself, or becoming friendly with your manager and peers, will give dramatically larger returns than trying to recession-proof yourself with a career change. Unless there are other factors pushing you out of private tech, it doesn't seem like a great time to leave one of the biggest engines of productivity. Just my two cents. It's never a bad idea to consult on the side or just interview around to see what is going on, if that is your thing.