00:00So I do want to talk about AI, but let's zoom out a little bit and just talk about where we stand with the labor market.
00:05As I said, there's some signs of stabilization.
00:08We're getting the next labor report next week, I believe.
00:12I mean, what do you make of where we stand right now?
00:15Because it certainly feels like some of the worst fears that maybe we were talking about a couple of months ago haven't exactly come to fruition.
00:22Yeah, I mean, not that much is happening.
00:23We're in a very low hire, low fire market.
00:26And when I say low hire, no fire, I mean, like, low separations generally.
00:31So layoffs are not tremendously high.
00:33There's some concern that would be higher.
00:35And quits are really low, really historically low.
00:38So really, very little is happening.
00:41We're still shrinking kind of as, you know, relative to where we would need to be to be at a stable unemployment rate.
00:48So we're adding roughly 25,000, 50,000 jobs a month, which is low.
00:54We need about 200,000 to kind of break even.
00:57Yeah, it feels like it's this sort of unhappy equilibrium that we've found with the labor market.
01:02Let's talk about how AI is impacting things, because you hear a lot of consternation about what this means for entry-level jobs,
01:08the existential fear out there that AI is just going to take over entry-level jobs.
01:13And really, it's going to make it difficult for a lot of these young workers who are at least trying to enter the workforce.
01:19What have you seen so far?
01:22So the evidence we see is pretty troubling for younger workers, that for younger workers who are exposed to AI tasks,
01:30the demand for those types of workers is reducing dramatically, like a lot more than older workers who are also exposed to those tasks.
01:38So there's something to do with AI exposure and age kind of interacting.
01:43So we don't really know exactly what drives this, but I think the best read on it is that it's probably anticipatory.
01:52It's probably that firms are expecting that they can automate these workers and maybe don't want to take the bet on a younger worker,
02:00whereas a more experienced hire is just a safer bet generally.
02:02Do you have any sense, though, whether that might actually come to fruition?
02:05Because there's been a lot of mainly anecdotes, this idea of what you said,
02:09but also the idea that we could actually see a hiring boom when a lot of these companies realize that the AI is enough to snuff to replace all the people they thought they were going to be able to replace.
02:17Yeah, I think that's likely.
02:18I mean, you know, in some ways, supply creates its own demand.
02:21So, you know, I don't think we can expect the reduction in demand for younger workers to continue.
02:26You know, they're going to be productive.
02:27They're going to find jobs.
02:28I do think we'll see some, you know, wage divergence between younger and older workers because, you know, with AI, you know,
02:38one way to think about what AI does is that it's really executing on tasks, not orchestrating between tasks.
02:43Yes.
02:44And we can think of a job as a collection of tasks.
02:46So if we think about orchestration and coordination, those are really the skills of older, more experienced workers.
02:52And, you know, younger people generally don't have that much experience coordinating and orchestrating.
02:57There's a big question, though, too, also, as sort of AI and the ancillary technology evolves, this idea, are newer jobs going to be created?
03:05So what I want to know is, is the aggregate number of jobs basically going to be more on a per capita basis 10, 20 years from now?
03:12Or are we just going to look at a much smaller workforce?
03:15Is that our future?
03:16Yeah.
03:16So I think, you know, in the short term, you know, labor demand really drives, you know, the ebbs and flows of the job market.
03:25In the long term, labor supply really drives that.
03:27So I think, you know, we'll see some matching of the capabilities of workers and what and, you know, how firms can kind of, you know, reallocate.
03:36When you say labor supply, you're basically saying that the government, or at least our economy, has to find a way to employ these people one way or the other.
03:41Yeah, exactly.
03:41Or they revolt and, you know, overthrow the government or something.
03:44Yeah, yeah.
03:44Something like that.
03:45I hope not.
03:45Sorry.
03:46Not to be too dark.
03:47Yeah.
03:48I mean, I think there are reasons to be concerned about, you know, will we see a reduction in labor supply?
03:54But I think those concerns are really more about demographic shifts, you know, low birth rates, low migration rates.
03:59Like, those are troubling.
04:01I wouldn't see AI as something that would affect the long-term prospects for employment generally.
04:08Because we already are seeing more adoption of new roles.
04:12I mean, we had a piece last week about consulting firms.
04:15So, now, consulting firms are hiring these AI roles, you know, new roles they didn't employ before.
04:21And those actually exceed the number of entry-level consultants.
04:26Okay.
04:26Which is kind of wild.
04:27Because, you know, we think of consulting firms as this launching pad for, you know, early career hires.
04:31Yeah.
04:32And that's less the case now than it has been in recent years.
04:36Ben, I'd also love to get your thoughts on, you know, the potential opportunities created by AI.
04:41When we talk about AI in the labor market, it's easy to get depressed.
04:44But we heard from Jensen Wong, of course, the NVIDIA CEO, last week.
04:48He is optimistic that AI is going to create jobs, specifically jobs related to tradecraft.
04:55He specifically mentioned plumbers and electricians and construction and steel workers.
05:01He's not alone in that.
05:02You also had a McKinsey report.
05:03Basically estimate that you're going to see big demand when it comes to trained electricians, as well as construction laborers and construction supervisors.
05:11And we're just talking about the U.S. here.
05:13I wonder what you make of, you know, some of those types of predictions.
05:17And I will say it's somewhat ironic that, you know, you have the CEO of NVIDIA saying that, since, you know, it's the technology that he's helping to create that could kill a lot of these entry-level jobs.
05:27Right.
05:27So we've got to take it with a grain of salt.
05:29I mean, I think that's probably right, that we're going to see demand for new types of electricians and stuff like that, people building data centers, you know, supporting this technology.
05:37I think that's a secondary story.
05:41I think the bigger story is about how each job is going to change.
05:45So, you know, sometimes we think about technology as affecting jobs as the unit of analysis.
05:50But something that I think we need to, you know, take a step back on is that AI really doesn't affect jobs wholesale.
05:59Jobs don't really ever get automated by technology all at once.
06:02They're really components of jobs.
06:04So, you know, these jobs as bundles of work activities, as bundles of tasks, you know, some set of tasks get automated.
06:12It's hard for me to say tasks, you know.
06:13But some of those get automated, and that means that the job itself kind of has to reconfigure.
06:20So, you know, we always think back to the story of bank tellers when ATMs, you know, got introduced.
06:26That's like this classic story.
06:28But, you know, what really happened wasn't an increase in the demand for, you know, depositing and withdrawing money.
06:36It was actually, you know, a reconfiguration of that job.
06:40So, you know, now bank tellers don't do what they did in the 50s and 60s.
06:44You know, they do customer support, customer service, relationship management.
06:49And I think that's what we're going to see with jobs today.
06:52Every job is going to look a little different.
06:53Yeah.
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