This doesn’t seem shocking. We just had a year or two of rolling layoffs across major tech companies, interest rates are high, the market is fluctuating, and all of that is affecting hiring pipelines.
Most people are missing is that there was a tax code change as part of the Trump tax cuts that made engineers much more expensive in the short term. Companies, especially startups, were hit with a high tax bill. The layoffs are, I believe, a direct result of this tax change.
look up "IRS Section 174 changes". here is a decent link, specific to startups[0].
but a simplified TL;dr is that companies used to be able to expense that year's R&D costs (including salaries for developers etc) in that same taxable year. now, that is no longer the case, and companies must amortize those R&D costs over 5 years.
My suspicion is that the vast majority of companies out there (especially small companies) are just not complying with this change. It's such a stupid, company-ending change that it makes way more sense to just classify your engineer time such that you don't have to amortize their salaries, and risk the audit (which is pretty unlikely).