Krugman:
❝What we’re looking at now isn’t the worst job market college graduates have ever seen. It is, however, the worst such market compared with workers in general that we’ve ever seen, by a large margin.
…
We have low overall unemployment, only slightly above historic lows, but unemployment among college graduates between 22 and 27 at recession-like levels.
This has never happened before.❞
https://paulkrugman.substack.com/p/bad-times-for-college-graduates
❝I’d mostly discount the idea that this is largely about AI displacing educated workers.❞
YES. THANK YOU.
“AI is here doooom!! doooom!!” is such a common knee-jerk excuse for the miserable college grad job market right now, and…I don’t see it. In terms of real, actual, yes-it-worked, yes-you-can-clearly-replace-whole-highly-skilled-jobs successes inside of real actual businesses…I just don’t see it.
Whatever’s going on, the AIpocalypse is an •excuse•, not a •cause• here.
Krugman outlines a constellation of possible causes around a core theme: extreme uncertainty.
“What does a business do in the face of this kind of uncertainty? It tries to avoid making commitments that it may soon regret.”
Krugman tries to tie it all to Trump’s recent actions, which is dubious: the post-college job market has been crap since 2022 or 2023; Krugman’s own graph suggests it started worsening circa 2018. The larger theme of uncertainty, however, fits that timeframe.
It all fits. Suppose you’re corporate leadership. You’re laying people off / refusing to hire because you have no clue what things will look like even 1 or 2 years in the future, and you are •terrified•.
Meanwhile, your investors, your gullible trend-chasing investors, are already mentally dividing companies into “pre-AI” and “post-AI.” And not only do you have no idea how to be “post-AI,” but you have no idea whether you’ll be solvent next year. What do you tell them?!??
Obviously you tell them you’re not hiring because you’re having such incredible success with AI! Maybe even you’re going to lay off all the senior people! They’ll love that!
Now you’re not failing and flailing — you’re leading the march into the future! Yay!
There’s a second theory, not mutually exclusive, about the frozen job market having to do with resentment from corporate leadership about the sudden surge in labor power in 2020. Someone (maybe @jenniferplusplus?) referred to this as a “captial strike.”
I’m not sure how much economic sense that theory makes — but I am sure that corporate leadership is often impulsive, petty, and irrational, and frequently does things that make no economic sense. I can’t elucidate the theory well, but it’s thing I’m keeping my eye on.
@inthehands @jenniferplusplus I’m by no means an expert on anything remotely related to economics, but in my industry (software / web development), I think a lot of it has to do with resetting salaries and shifting power back to the employers.
Even well before 2020 (throughout the 2010s) software engineers enjoyed tremendous power in the job market and the ability to draw salaries traditionally reserved for upper management and VPs.
@ramsey Yes, it think that’s roughly of a piece with the “capital strike” theory.
If so, either (1) those jobs were never providing any actual value to businesses in the first place, or (2) it’s an unsustainable gambit on employers’ part. But I do agree there seems to be an appetite for that, for believing that •somehow• they can shrink the job pool and cut their salary costs, and the belief that they can seems to have preceded the “how.”
@inthehands They’re holding AI over our heads, now, saying, “You better watch out. We can replace you.”
I kind of think it’s a bluff, to be honest, and it’s going to hurt a lot of people and a lot of companies, in the long run.
@ramsey @inthehands In addition to the "capital strike" theory and the "AI replacement gambit," there's another piece that might tie them together: tax policy.
According to an article a friend sent me, a broad but wonky tweak to tax code means R&D type work (devs, design, market research) went from being 100% deductible to 20% deductible. So laying off devs, etc. also balances out the increased tax bills in the short term.
https://qz.com/tech-layoffs-tax-code-trump-section-174-microsoft-meta-1851783502
@ramsey @inthehands To the extent that capital here has a real theory motivating their strike, I think it’s something like: we’ve all built, if not monopolies in our sectors, products and services so sticky that switching costs are untenable for our customers. We lose nothing by disinvesting in quality by slashing our labor force, especially if basically all of our peers are doing so.
Nobody performs class solidarity like the capitalists.
@inthehands @ramsey Anecdotally, there seems to be a glut of Comp Sci Majors getting degrees right now. Like half the folks in my kids friend group. And everything my son applies to has like 50+ applicants.
And while AI can't fully replace humans it does change how many of those humans you need to do a given piece of work. And entry-level folks are the most immediately supplement-able.
https://www.gartner.com/en/articles/set-up-now-for-ai-to-augment-software-development
@inthehands @ramsey I think there’s a little of 1 and 2. A lot of software I’ve seen built did had very little value and was at best speculative, or a vanity project. Which I think makes 2 much simpler.
I also think it’s a mistake to accept the framing that corporations, or the economy generally, need to be or tends towards efficiency.
I’m coming to think that the economy functions to ensure that those that have power (wealth) retain that advantage and strengthen it. I think it is possible to cause a huge level of destruction while maintaining that.
For the most part the powerful are not competing with each other. That happens, but is rarer, because it is risky. They are instead competing with us, those without power, to ensure their dominance continues and deepens.
I found this essay pretty compelling, and I guess it provided bits of framework for me https://capitalaspower.com/2023/01/bichler-nitzan-the-business-of-strategic-sabotage-2/
(Maybe skip the first paragraphs of academic bashing)
The Business of Strategic Sabotage SHIMSHON BICHLER and JONATHAN NITZAN January 2023 Abstract In a recent article, Nicolas D. Villarreal claims that our empirical analysis of the relation between business power and industrial sabotage in the United States is unpersuasive, if not deliberately misleading. Specifically, he argues that we cherry-pick specific data definitions and smoothing […]
@inthehands @carstenfranke I'm reminded of a memorable scene in a role playing game I witnessed between two characters who had sunk every resource into "Persuade" and nothing into "Sense Motive".
In context, it was hilarious watching two immature ego monsters come away from a conversation utterly convinced by the other party's bullshit and certain of their losing position, and so proceeding to do stupid things in response.
It's less fun in real life.
@inthehands I mean, getting a college degree has been steadily becoming a lot more precarious over the last 25-30 years.
But I think there's a large segment of the business community, and almost the entire Republican party, that seem to have it out for anybody who has worked in a knowledge-based profession.
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