The ‘white-collar bloodbath’ is all part of the AI hype machine
cnn.com713 points by lwo32k 10 months ago
713 points by lwo32k 10 months ago
I think the real white collar bloodbath is that the end of ZIRP was the end of infinite software job postings, and the start of layoffs. I think its easy to now point to AI, but it seems like a canard for the huge thing that already happened.
just look at this:
https://fred.stlouisfed.org/graph/?g=1JmOr
In terms of magnitude the effect of this is just enormous and still being felt, and never recovered to pre-2020 levels. It may never. (Pre-pandemic job postings indexed to 100, its at 61 for software)
Maybe AI is having an effect on IT jobs though, look at the unique inflection near the start of 2025: https://fred.stlouisfed.org/graph/?g=1JmOv
For another point of comparison, construction and nursing job postings are higher than they were pre-pandemic (about 120 and 116 respectively, where pre-pandemic was indexed to 100. Banking jobs still hover around 100.)
I feel like this is almost going to become lost history because the AI hype is so self-insistent. People a decade from now will think Elon slashed Twitter's employee count by 90% because of some AI initiative, and not because he simply thought he could run a lot leaner. We're on year 3-4 of a lot of other companies wondering the same thing. Maybe AI will play into that eventually. But so far companies have needed no such crutch for reducing headcount.
IMO this is dead on. AI is a hell of a scapegoat for companies that want to save face and pretend that their success wasn't because of cheap money being pumped into them. And in a world addicted to status games, that's a gift from the heavens.
ZIRP is an American thing? In that case maybe we could try comparisons with the job markets in other developed Western countries that didn't have this policy. If it was because of ZIRP, then their job markets should show clearly different patterns.
ZIRP was a central banking thing, not just an American phenomenon. At least in the tech industry, the declines we're seeing in job opportunities are a result of capital being more expensive for VCs, meaning less investments are made (both in new and existing businesses), meaning there's less cash to hire and expand with. It just felt like the norm because ZIRP ran more or less uninterrupted for 10 years.
You're right that we should see comparisons in other developed countries, but with SV being the epicenter of it all, you'd expect the fallout to at least appear more dramatic in the U.S.
And an overwhelming number of (focusing exclusively on the U.S.) tech "businesses" weren't businesses (i.e., little to no profitability). At best they were failed experiments, and at worst, tax write-offs for VCs.
So, what looked like a booming industry (in the literal, "we have a working, profitable, cash-flowing business here" sense) was actually just companies being flooded with investment cash that they were eager to spend in pursuit of rapid growth. Some found profitability, many did not.
Again, IMO, AI isn't so much the cause as it is the bandage over the wound of unprofitability.
There isn’t anything magically about precisely zero percent interest rates; the behavior we see is mostly a smooth extension of slightly higher rates, which the EU was at.
And of course ZIRP was pioneered in Japan, not the US.
Such an important point, I've seen and suspected the end of ZIRP being a much much greater influence on white collar work than we suspect. AI is going to take all the negative press but the flow of capital is ultimately what determines how the business works, which determines what software gets built. Conway's law 101. The white collar bloodbath is more of a haircut to shed waste accumulated during the excesses of ZIRP.
AI also happens to be a perfect scapegoat: CEOs who over-hired get to shift the blame to this faceless boogeyman, and (bonus!) new hires are more desperate/willing to accept worse compensation.
ZIRP and then the final gasp of COVID bubble over hiring.
At least in my professional circles the number of late 2020-mid 2022 job switchers was immense. Like 10 years of switches condensed into 18-24 months.
Further lot of experiences and anecdotes talking to people who saw their company/org/team double or triple in size when comparing back to 2019.
Despite some waves of mag7 layoffs we are still I think digesting what was essentially an overhiring bubble.
Is it negative press for AI, or is it convincing some investors that it’s actually causing a tectonic shift in the workforce and economy? It could be positive in some sense. Though ultimately negative, because the outcomes are unlikely to reflect a continuation of the perceived impact or imaginary progress of the technology.
Also section 174’s amortization of software development had a big role.
I agree, R&D change is what triggered 2022 tech layoffs. Coders used to be free, all this play with Metaverse and such was on public dime. As soon as a company had to spend real money, it all came crashing down.
This is a weird take. Employees are supposed to be business expenses, that's the core idea of running a business: profit = revenue - expenses, where expenses are personnel / materials, and pay taxes over profit. Since the R&D change, businesses can't fully expense employees and need to pay (business) taxes over their salaries. Employees - of course - still pay personal taxes also (as was always the case).
Yeah, free is a bit of a odd take. ! ZIRP + section 174 was a huge simultaneous blow to tech.
I would add one more: me too-ism from CEOs following Musk after the twitter reductions. I think many tech CEOs (e.g., Zuck) hate their workforce with a passion and used the layoff culture to unwind things and bring their workforce to heel (you might be less vocal in this sort of environment... think of the activists that used to work at Google).
> me too-ism from CEOs following Musk after the twitter reductions
I see evidence of a collusion. My friends at several tech companies (software and hardware) received very similar sounding emails in similar time frame. I think the goal was "salary compression". Management was terrified of the turnover and salary growth so they decided to act. They threw a bunch of people on the labor market at once to cool it down. It would normalize eventually but you don't need long. Fired H1-B holders have to find a new job within 2 months or self deport.
Totally agree. They wanted to mess with supply/demand to lower salaries. A lot of very highly paid people were laid off or forced out. RTO is really about shedding people, too, so let's not forget about that.
We know all of these tech CEO's were on group chats with each other planning for how to install Trump as monarch. I would think, if you had several billionaires and industry leaders all participating day in and day out in the same secret group chats with each other, it would not be that difficult for them to coordinate layoffs with each other. Turning it from competition against each other for labor, to a cartel which just attempts to break the labor supply.
If a software engineer in a R&D project is using a AI service to develop the software, does the bill count as company business expense or does it fall under section 174?
That's about to get repealed it looks like.
TACO
For those unaware, the "TACO trade" is when Wall Street investors trade based on the principle that "Trump Always Chickens Out". For example, buying in a tariff-induced dip on the principle that he'll probably repeal the tariffs.
Now that someone's said to Trump's face that Wall Street thinks he always chickens out, he may or may not stop doing it.
> Now that someone's said to Trump's face that Wall Street thinks he always chickens out, he may or may not stop doing it
The point is he’s powerless not to. The alternative is allowing a bond rout to trigger a bank collapse, probably in rural America. He didn’t do the prep that produces actual leverage. (Xi did.)
This was the most interesting thing I found during the past few weeks - even “The US President is the most powerful man in the world” can’t win a war against the bond market.
> even “The US President is the most powerful man in the world” can’t win a war against the bond market
"You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics" (D. D. Eisenhower).
Trump did zero preparation for this trade war. It's still unclear what the ends are, with opposing and contradictory aims being messaged. We launched the war simultaneously against everyone. The formula used to calculate tariffs doesn't make sense. And Trump decided to blow out the deficit and kneecap U.S. state capacity at the same time he's negotiating against himself on trade.
The U.S. President can take on the bond market. Most simply by taking the budget into surplus, thereby threatening its existence. But Trump didn't do that. He didn't even pretend he was going to do that. Instead, he's strategically put himself in a position where he has to chicken out, and it honestly seems like he's surrounded himself with people who are too high, drunk and/or stupid to see that. He's the poker player who shows up at the table, goes all in, looks at his cards and folds in one move.
There's no end - it's just Trump following his learned or innate behaviour.
Same behaviour that bankrupted every institution he's ever been in charge of before. The definition of insanity is doing the same thing again and expecting different results.
It's possible he'll stop chickening out to win his internal argument against that reporter who said he always chickens out. Feeling like he's winning seems to be important to him and he holds grudges for a long time. In that case the American economy goes bye bye.
We already know he wants to end the dollar reserve currency status, because he said so - trade deficit and reserve currency status are different words for the same thing.