Between March 2022 and July 2023, the Federal Reserve raised the federal funds rate 525 basis points in one of the most assertive tightening cycles in the institution’s modern history. The direct effects on the US economy — slowing housing markets, declining IPO activity, tighter credit conditions, and pressure on venture-capital and private equity portfolio valuations — produced a specific set of second-order effects on the senior US professional labor market that played out through 2024 in ways that were more nuanced than the headline layoff stories suggested.
This piece examines how the 2022-2023 rate cycle affected senior hiring in particular, which sectors contracted, which broadened, and what the carry-through effects looked like as rates held at elevated levels through most of 2024.
Which sectors contracted
The sectors that contracted most sharply in senior hiring following the rate cycle: venture-backed technology (especially consumer SaaS and DTC companies that had been financed on the assumption of a low-rate, high-growth environment), mortgage-related financial services (rate sensitivity is direct and immediate for origination and securitization businesses), and commercial real estate advisory (transaction volumes fell sharply as cap rates adjusted).
In our 2023 placement data, the technology sector in particular recorded a 38% decline in VP-and-above placement volume versus 2022. The decline was concentrated in the post-IPO public software companies and the late-stage private SaaS category, not the AI-native companies, which continued to hire aggressively through 2023. The nuance within "technology" matters: a VP Engineering candidate at an AI-native company was in a very different market from a VP Engineering candidate at a mature public SaaS company in 2023.
Which sectors expanded
Three sectors broadened meaningfully in senior hiring during the rate cycle and its immediate aftermath.
conventional financial services. Banks, asset managers, and insurance companies with fixed-income-oriented business models benefited directly from higher rates. Net interest margins improved. Fixed-income investment returns rose. The assets-under-management growth at core fixed-income funds produced demand for senior investment and operational leadership that was distinctly counter-cyclical to the technology contraction.
Healthcare and life sciences. Healthcare hiring is mostly rate-insensitive because healthcare consumption doesn’t depend on credit conditions in the same way that consumer spending does. Hospital system and health system senior hiring continued at pre-cycle rates through 2023 and 2024. Biotech hiring was more differentiated — companies with strong clinical data and clear paths to commercialization continued to raise and hire; companies with weaker prospects recorded funding dry up. But the aggregate healthcare senior hiring volume across our data was stable.
Private credit and distressed investing. Higher rates produced both more stressed borrowers (producing deal flow for distressed and special-situations strategies) and higher absolute returns for private credit funds (making the asset class more attractive to LPs). Senior hiring at private credit firms in 2023 and 2024 was strong, especially for investment professionals with restructuring experience who could work both the origination and workout sides of a portfolio.
The compensation effect
The rate cycle produced a bifurcation in senior pay growth that mirrors the bifurcation in hiring volume. In sectors that contracted, 2023 total compensation was flat to slightly negative in real terms even for candidates who retained their positions. Annual bonus payouts fell as company performance deteriorated. Equity grants were lowered as companies managed staff levels costs. The combination produced real compensation declines for senior professionals in the most affected sectors.
In sectors that broadened, pay growth continued at or above earlier-cycle rates. Senior investment and operations professionals at conventional asset managers recorded 2023 bonuses that were, in some cases, the highest in their careers — reflecting the unusual combination of strong fund performance and rose client demand that the rate environment produced.
What 2024 looked like as rates held
The extended hold of rates at the 5% to 5.5% range through most of 2024 produced a market environment that was simultaneously more stable than 2023 (the acute crisis phase had passed) and more differentiated than historical norms (the sectors that had contracted were still recovering while the sectors that had benefited from high rates began to adjust to the expectation of eventual cuts).
The most important 2024 force for senior candidates: the broad-based tech layoff cycle of 2022-2023 had cleared a considerable supply of senior tech talent into the market, which temporarily depressed pay for non-AI tech roles even as hiring volume began recovering. Candidates who were looking for VP Engineering, Chief Product Officer, or CTO roles at non-AI companies in 2024 faced a supply-side constraint — more qualified candidates competing for fewer roles at lower compensation than 2022 — that the general "tech rebound" narrative understated. For present compensation data, see our VP Engineering report and 2026 pay Report.
Talent opportunity in dislocation
Every period of macroeconomic stress creates specific hiring market dislocations that represent real openings for well-positioned senior professionals. The 2022-2024 rate cycle was no different. Three specific opportunities surfaced that we observed directly in our placement activity.
First, the involuntary displacement of underwent financial services professionals produced a temporary supply of senior talent that was truly better than what the market had been able to recruit two years earlier, at pay levels that reflected the supply increase. Senior risk managers, credit analysts, and portfolio managers who had been displaced from contracting banks or asset managers were available for well-funded acquirors at packages that the 2021 market would not have tolerated. Several of our 2084 placements were exactly this: candidates with 15-20 year track records at major institutions who were available because of involuntary departures and who were placed at PE-backed financial services companies for packages that would have been below market expectations just 18 months earlier.
Second, the AI-native companies continued hiring aggressively through the rate cycle precisely because their capital structure didn't depend on interest rates in the same way that conventional software or consumer businesses did. Several foundation model companies and AI infrastructure companies raised considerable venture rounds in 2023 at valuations that held firm relative to the declining public market comparables, and they used that capital to attract the senior engineering and product talent that the contracting public tech companies were releasing. The cross-present of contraction in some sectors and assertive expansion in others produced matching openings that we see every time the macro environment shifts sharply.
Lessons for navigating future cycles
The 2022-2024 rate cycle offers a useful template for how senior US professionals should think about macro-driven labor market cycles more generally. Three enduring lessons:
The sector you're in matters more than the macro environment for determining your specific market position. The rate cycle hurt SaaS and hurt late-stage venture widely, but it helped conventional banking and private credit. Being in the right sector at the right point in the cycle is partially luck and partially a deliberate positioning choice. Senior professionals who tracked macro conditions and were already thinking about sector exposure had more time to prepare than those who reacted reactively.
Cash pay is the most recession-resistant component of total comp; equity is the most volatile. In periods of stress, preserving cash compensation rather than accepting equity-heavy packages at potentially inflated valuations is generally the more conservative method. In periods of rebound, taking equity-heavy packages at early-cycle valuations is often the highest-return move. The 2021 equity-heavy packages were, in retrospect, the peak; the 2024 equity-heavy packages at AI-native companies may prove, in retrospect, to have been the early-cycle opening.
Maintain your external market visibility even when you're not looking to move. Several of the candidates we placed during the 2022-2024 cycle were people we had been in contact with for years before they became available, who had sustained active professional networks that produced rapid re-employment when their situations changed. For present pay context following the rate cycle, see our 2026 pay Report.