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.
00:05As I said, there's some signs of stabilization. We're getting the next labor report.
00:10Next week, I believe. I mean, where do you what do you make of where we stand?
00:15Right now, because it certainly feels like some of the worst fears that maybe we're talking about a couple of months ago have.
00:20Exactly. Come to fruition. Yeah, I mean, not that much is happening. We're in a very low high.
00:25Low fire market. And when I say low, higher, no fire, I mean, like, low.
00:30Low separations generally. So so layoffs are not tremendously high. There's some concern that would be higher.
00:35And quits are really low, really historically low. So really.
00:40Very little is happening. We're still shrinking kind of as, you know, relative.
00:45to where we would need to be to to be at a stable unemployment rate.
00:48So we're at.
00:50We're getting roughly 25, 50,000 jobs a month, which is low. We need about two.
00:55200,000 to to kind of break even. Yeah, it feels like it's this sort of unhappy equilibrium.
01:00that we've found with the labor market. Let's talk about how AI is impacting things because you.
01:05hear a lot of consternation about what this means for entry level jobs, the existential fear out there.
01:10that AI is just going to take over entry level jobs and really it's going to.
01:15make it difficult for a lot of these young workers who are at least trying to enter the workforce.
01:20what have you seen so far? So so the evidence we see is pretty troubling.
01:25for younger workers that for younger workers who are exposed to AI tasks.
01:30they are the demand for those types of workers is reducing dramatically.
01:35like a lot more than older workers who are also exposed to those tasks.
01:38So there's something to do with.
01:40AI exposure and age kind of interacting.
01:43So we don't.
01:45we don't really know exactly what drives this, but I think the I think the best read on it.
01:50is that it's probably anticipatory.
01:52It's probably that firms are expecting that they.
01:55they 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.
02:03Do you have any sense though whether that might actually come to.
02:05fruition because there's been a lot of mainly anecdotes this idea of what you said but also.
02:10the idea that we could actually see a hiring boom when a lot of these companies realize that the AI isn't up to
02:14snuff to replace.
02:15all 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 way.
02:20supply creates its own demand.
02:21So, so, you know, I don't think we can expect the reduction in demand for younger workers.
02:25to continue.
02:26You know, they're going to be productive.
02:28They're going to find jobs.
02:29I do think we'll.
02:30we'll see some, you know, wage divergence between younger and older workers.
02:35because they're, you know, with, with AI, you know, one way to think about what AI does.
02:40is that it's really executing on tasks, not orchestrating between tasks.
02:43Yes.
02:44And we can think of a job as.
02:45as a collection of tasks.
02:46So, so if we think about orchestration and coordination, those are really the skills.
02:50of older, more experienced workers and, you know, younger people generally don't.
02:55have that much experience coordinating and orchestrating.
02:57There's a big question though, too, also, and.
03:00as sort of AI and the ancillary technology evolves, this idea are newer jobs.
03:05going to be created.
03:06So what I want to know is, is the aggregate number of jobs basically going to be more.
03:10on a per capita basis, 10, 20 years from now, or are we just going to look at a much smaller
03:14workforce?
03:15Is that our future?
03:16Yeah.
03:17So I think, you know, in the short term.
03:20you 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, I think, you know, we, we'll, we'll see.
03:30some matching of the capabilities of workers and what and, you know, how firms can kind
03:34of.
03:35you know, reallocate.
03:36When you say labor supply, you're basically saying that, that the government or at least
03:38our economy has to find a way to.
03:39When you say labor supply, you're basically saying that the government or at least our economy
03:40has to find a way to.
03:40employ these people one way or the other.
03:41Yeah.
03:42Or they revolt and, you know, overthrow the government or something.
03:44Yeah.
03:45Yeah.
03:45Or something like that.
03:46I hope not.
03:47Sorry.
03:48Not to get too dark, but.
03:49Yeah.
03:50I mean, I, I think.
03:50there are reasons to be concerned about, about, you know, will, will we see a reduction in
03:54labor supply?
03:55But I think.
03:55those concerns are really more about demographic shifts, you know, low birth rates, low migration
03:59rates, like.
04:00those, those are troubling.
04:01Um, I wouldn't see AI as, as something.
04:05that would, that would affect the long-term prospects for employment generally, because
04:09we, we are.
04:10already are seeing more, more adoption of new roles.
04:12I mean, we had a piece, uh, last week about, um.
04:15consulting firms.
04:16So now consulting firms are hiring these.
04:19AI roles, you know.
04:20new roles they didn't employ before.
04:21Mm-hm.
04:22And those actually exceed the number of.
04:24entry-level consultants.
04:25Okay.
04:26Which is kind of wild, because, you know, we think of consulting firms as.
04:29launching pad for, you know, early career hires.
04:31Yeah.
04:32And that's less.
04:34that's the case now than it has been.
04:35Mm-hm.
04:36In recent years.
04:37Yeah.
04:38And I'd also love to get your thoughts on, you know, the.
04:39potential opportunities created by AI.
04:41When we talk about AI in the labor market, it's easy to get to.
04:44impressed.
04:45Uh, but we heard.
04:46Yeah.
04:47Jensen Wong.
04:48Of course, the Nvidia CEO.
04:49Last week.
04:50He.
04:49is optimistic that AI is going to create jobs.
04:52Specifically, uh, jobs.
04:54related to trade craft.
04:55He specifically mentioned plumbers and electricians and.
04:59construction and steel workers.
05:01He's not alone in that.
05:02You also had a McKinsey report based.
05:04basically estimate that you're going to see big demand when it comes to trained electricians.
05:08As well as construction.
05:09construction laborers and, uh, construction supervisors.
05:12And we're just talking about the U.S. here.
05:14I wonder what you make of, you know, some of those types of predictions.
05:17And.
05:18I will say it's somewhat ironic.
05:19that, you know, you have the CEO of Nvidia saying that since.
05:22Yeah.
05:23You know, it's the technology that he's helping.
05:24to create that could, uh, kill a lot of these entry level jobs.
05:27Right.
05:28So we got to take it with a grain of salt.
05:29I mean.
05:30I think that's probably right.
05:31That.
05:32That we're going to see demand for new types of.
05:34electricians and stuff like that.
05:35People building data centers, you know, supporting this technology.
05:37I think that's.
05:38I think that's.
05:39a secondary story.
05:40I think the, the bigger story is about how.
05:44each job is going to change.
05:45So, you know, sometimes we think about technology as affecting jobs.
05:49as the unit of analysis.
05:50But, but something that I, I think we, we need to.
05:54you know, take a step back on is.
05:56that AI really doesn't affect jobs wholesale.
05:59jobs don't really ever get automated by technology all at once.
06:02There are really components of jobs.
06:04So, you know, these jobs as bundles of work activities, as bundles of tasks, you know,
06:08some set of.
06:09tasks, tasks, get, get automated.
06:12It's hard for me to say tasks, you know.
06:14But, but some of those get automated and that means that the job itself kind of has to.
06:19reconfigure.
06:20So, you know, we, we always think back to the story of bank tellers when AT.
06:24ms, you know, got introduced, that's like this, this classic story.
06:29But, you know, what really happened wasn't a, an increase in.
06:34in the demand for, you know, depositing and withdrawing money.
06:37Yeah.
06:38It was actually, you know.
06:39a reconfiguration of that job.
06:40Yeah.
06:41So, you know, now bank tellers don't do what they did in the fifties.
06:44and sixties, you know, they, they do, they do customer support, customer service, relationship
06:49management.
06:49Yeah.
06:50And 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.
06:54you
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