Curious what your thoughts are. The structural reason is obvious (AI), though my sense is that at most the impact is just reducing the rate of hiring (i.e. maybe don't add that 18th person to the team since you can do more with the same 17) as opposed to job losses due to AI (this is the fear but seems to more be an aspirational goal of some companies vs. something they can do today or even a few years from now)
The cyclical aspect is that the non-AI economy has just sucked generally speaking, but with a couple more rate cuts (in addition to 50bps we just saw in past couple months) we'll get some upside
The combined narrative is that while new tech has driven job losses, the net new job creation has always been greater. Right now we are at this odd moment where AI holds potential and may cut into certain jobs, but we haven't yet seen the positive side of new job creation (i.e. lot of more companies can be formed now since your cost base should be lower vs. 5yrs ago) given 1) VCs don't want to fund non-AI heavily right now (it's sucking up the oxygen), 2) cost of capital remains restrictive, 3) there's broad uncertainty on Trump & tariffs (which will reduce desire to invest in any non-digital biz), and 4) the non-AI economy is still in the doldrums (basically ~60% of the overall economy).
The view that I shake out to as that while there is some structural element at play, the positive elements will start to manifest in the next couple years (probably 2027+ IMO) for net new white collar jobs. Could be wrong, what are the rest of you seeing and thinking?
AI specifically? I think you are largely right on the margins, you are seeing companies either not hire that additional body and/or defer for a quarter or two to see how things play out - maybe we can get the gains w/ AI, and if not I'm probably hiring into a weaker labor market and can hold down my hiring costs. I'd agree that there will be more jobs created over time as this plays out. I'm also looking at companies who are beginning to hedge that gravity is going to catch up to the American consumer and thereby the economy. Trump may be able to roll back some of the impacts, or defer them with a stimulus check for a month or two - however large companies tend to get lean before things roll over as well as during. Add in all the other cyclical items we read in the news, and I think you are seeing that across white collar jobs.
I am wondering as more and more people retire, to some standard rambling below about demographics, if we will see more people trade out the white collar bigger corporate jobs for small businesses and/or people starting up their own businesses. That includes more 'hard' and/or historically blue collar type jobs - the stuff that makes everything actually work in the 'real' world. That and all of the small businesses out there that are up for grabs, strikes me there may be some opportunities there for jobs over the next decade.
Other items are demographics in the United States and the impact of other policy decisions - some are structural, some are cyclical. If you were relatively well off, with assets and/or on a fixed income - it's been a pretty good time to retire. Not only are you getting double digit returns on equities, your cash was getting you 4-5% - that will push marginal folks to not enter the workforce, retire early, etc. Similarly there is some, and I can't quantify this off hand, impacts of immigration in filling jobs and/or underpinning employment. We still struggle to fill a lot of STEM jobs domestically - and that's before the impacts of immigration policies for jobs Americans don't/can't/won't/shouldn't do.
Good response, I think you are largely correct. I laugh out loud when people make the argument that 'everyone will just start their company because AI makes it easier' because not everyone has the desire or temperament to do so (let alone the dismal rates of success). That said, I do agree with the idea that the avg company size will probably be smaller in 10yrs vs today but we will have a lot more net new companies
This is also where demographics are a pos in the U.S. where pop down pyramid is shrinking. Of course, this is as long as we are smart on immigration for the areas where we have holes (i.e. many STEM areas).
Glad Trump is rolling back many food related tariff areas, that was just stupid. Honestly broad based tariffs in general are a dumb idea, he should have just targeted select areas of industrials & technology (autos since you want a big industrial base / steel / some semis / military tech / etc) and then also provided subsidies in the BBB to support domestic production. Leave food & toys and other stuff alone. And of course, cut regulations on permitting and stuff to the extent possible by the federal govt to unleash our capital markets into investing (rare earths, nuclear, etc)
We also clearly need to push more would-be college going folks towards the trades. That dumb victorian literature degree is the last net new debtholder we need, it's much better served going towards being an HVAC technician or a medical biller or whatever
I think Trump is also coming around on skilled immigration given what he's said recently on its importance on Fox. Generally speaking the initial tariff actions were nonsensical but they are approaching the more reasonable positions (which should be supportive of the U.S. economy). I went on some tangents there but it's all interconnected
One last thing I do worry about is the coddling of the American mind. Politically is one thing, but I am even more so referring to how social media and now LLMs have degraded thinking & learning among the youth. Kids are statistically getting dumber as measured by standardized test scores (which is also hilarious since the SAT was massively dumbed down in recent years compare to 10yrs ago so apples to apples it's even worse). Makes for volatile politics and also makes it harder for these kids to get good jobs. This will def play out in a negative fashion over time (basically think of the avg Mr. Beast contestant and that's 60% of kids)
Which STEM fields are struggling to find domestic labour besides semiconductor fabs?
AI talent. Pharma R&D. Doctors. etc
Other element is the AI bubble bursts and the impact on even the rate of hiring is overstated
The world needs ditch diggers too
99% cyclical
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