AI “Washing,” No Jobs Report, & Rising Layoff Skepticism

Additional Resources

• NYT on AI Washing
• Gartner Report

Transcript

Pete Newsome: 0:00

Welcome to Cornering the Job Market for Monday, February 2nd. I’m Pete Newsome, and today’s headlines are mostly focused on skepticism associated with AI. But first, the January Jobs Report is going to be delayed. It was just announced that due to the government shutdown, the BLS will not be putting out the January Jobs Report as scheduled for Friday, this Friday, February 6th. So here we go again. This is the second time this has happened in recent months. Of course, everyone remembers the 43-day shutdown that we had last fall. And now it’s just more of the same. It’s going to be rescheduled upon the resumption of government funding, whenever that is. So who knows? But this is happening at what I consider to be a critical moment where we need to know what’s going on right now because there’s a huge debate about what is actually taking place when it comes to the economy as a whole, but specifically the job market. Is it strong? Is it weak? Is it getting better? Is it getting worse? Is AI displacing workers? I’ll talk about that more in just a second, but who knows? We can’t say because there’s no data, and that assumes that we could trust the data at all. So no jobs report. I was looking forward to seeing what those numbers look like. I guess we’re just going to have to rely on the private companies for now, specifically ADP. That is the go-to when there’s no government data available. So weird times for sure related to that. But speaking of not really knowing what’s going on in the labor market, there is a big debate playing out right now about whether AI is behind the job cuts that we we’re seeing. We’ve seen a bunch already this year, which is not good at all. Um big companies, Amazon, UPS, Dow, there’s lots of layoffs right now. HP is having layoffs. Pinterest, Pinterest, how does Pinterest have layoffs? But they are, and the companies are claiming that it’s related to AI.

2:06

But there was an article in the New York Times yesterday that said that that may not be what’s happening at all, that they refer to as AI washing. Have you heard that term yet? So AI washing is when companies use AI as a cover for cuts that were driven by other things, whether it was overhiring, bad planning, or economic conditions, specifically tariffs right now. We know that companies have been dealing with that over the past year. And the question is whether that is the reason for layoffs, even when they say that it is. Who knows, right? I think there’s a lot of reasons to question it. I mean, it’s convenient where companies can claim that they’re being innovative. That’s what the story is about. But I’ll tell you why I don’t like these stories at all. I think that they are really doing everyone a disservice with the tone that they’re setting. And listen, it’s okay to question things if a company is misleading everyone as to why they’re having layoffs, we should question it. But we’re missing the plot because of all of this. Because the AI story isn’t in the rearview mirror. And like this story, like so many, refer to a Yale budget lab study that came out, I think, uh last fall.

3:23

So a few months ago. David Sachs talks about it all the time. He’s Trump’s AI’s R, of course. We see this reference a lot. And what this study measured was essentially the first three years after ChatGPT was released. And it said, well, look, we measured this time period and there weren’t really any cuts then. But imagine if you covered the first three years of the World Wide Web being invented and saying, well, the internet’s not going to have much of an impact. Or the first three years of mobile phones coming out and forming an opinion on how that’s going to play out. And AI is significantly bigger than both of those. And you might be skeptical of that right now. And that’s sort of the point where just because ChatGPT hallucinates today and you’ve you you see goofy things being spit out of the AI, it is in its infancy. And so, yes, it is plausible that companies so far haven’t had a lot of cuts tied to AI, but they’re probably making cuts in anticip in anticipation of what’s coming. Nearly every CEO who’s surveyed, and I look at all of these surveys, say that investing in AI is their number one priority. And so what we’re really watching here, I believe, is companies position themselves for a future that we haven’t yet lived. It hasn’t yet arrived. And they’re making these cuts in anticipation of that as much as anything else. We’ve seen lots of executives, lots of companies say we are going AI first when people leave. We’re going to try to replace every job with AI instead of another human. So, sure, it’s not completely ready for that yet. But these companies are placing bets on what’s happening. So when I see these stories, I really think it’s polluting the signal that we should be paying attention to, that we need to pay attention to, because if we are dismissive of what AI or the impact AI has had on the job market so far, then we’re going to be surprised by what’s coming. And I just, again, New York Times, I get it, yes, be be qu you know, question whether these companies are making cuts strictly due to AI. Maybe they are, maybe they aren’t. But it sets a tone that we don’t want to buy in too much. Because when these cuts do start to happen, and they will happen because of AI, who’s going to believe it, right? Because we’re we’re just going to point to all these examples. And we, again, I talk about this a lot because I don’t understand why David Sachs, who knows better, I have to believe this man knows better, than to be dismissive of AI’s impact on the job market.

6:11

And when he goes on media tours and he has an audience, he has a massive audience to uh be just to downplay all of this. I think it’s dangerous. And even though my reach is a fraction of that, a very small fraction, I need to do my part and make sure that I question this stuff or or call attention to as best I can why being dismissive of AI’s impact is just a dangerous thing for all of us. So look, there’s more to this story right now. Amazon is also cutting not just because well in their in their recent cut, not just because they’re replacing the jobs with AI, but because they’re investing in AI. So they’re taking money from paying human workers to investing and funding AI infrastructure. So it wasn’t that they automated these jobs per se, it was that they’re making an exchange, right? And where they’re putting their money is really showing where they believe all of this is heading. So I, you know, I see companies like I don’t need Amazon to uh behavior to tell me what’s happening. I’m living it myself. I’m using these tools all day, every day. And I see how powerful they are. But do you really want to bet against Amazon? You want to say that they’re wrong historically? That would uh not prove to be very wise. So they clearly know where all of this is heading. But look, there’s there’s more. The other story from this today is along these same lines of skepticism. Gartner says that half of AI customer service cuts that have happened will reverse by 2027.

7:55

So they say that companies are going to end up deciding that, hey, AI is not really doing what it needs, what we thought it could do, and they’re going to rehire humans for similar roles, maybe under different job titles. But the message here is that Gardner believes, and Gardner portrays himself as the leader in AI and knowing what’s happening. They’re saying, just like you know, so many other uh leaders have implied, that AI is not going to be as big of a deal as some say it is. And in this case, that, yeah, all these cuts are going to be reversed. I don’t see us going backwards. I think, again, I keep using the word dangerous with this because I do think it sets a wrong tone. And I do hope I’m wrong. I say that often because the penalty for being wrong is I have to apologize and say, I was wrong. I expected it to be bigger than it actually turned out to be. But the alternative is being taken caught off guard. And I know that too many people right now, or not enough people are paying attention to this right now for their own careers. And those who are are benefiting. And I have countless examples of that. Every day I find new new stories, new examples of people leveraging AI to do things they otherwise wouldn’t be able to do, to do things that they couldn’t have done even a few months ago. And I’m living proof of that.

9:27

I just developed a web page over the weekend that would have taken dozens of man hours from an experienced developer along with an experienced designer to produce it. And I am not technical at all, but just communicating with Claude and instructing it on what I wanted to do with survey data that we have. And this this page will be published on our website maybe even later today. And it didn’t exist prior to asking Claude to help develop this for me. It is beautiful. And if you want to see it, look on our website, it’ll be up, like I said, by the time this posts, probably. And I I think it’s as uh good of a page as you know, a Fortune 10 company could produce on their own. So listen, I’m seeing it, I’m living it. Um, let’s not be dismissive of it. Back to this Gardner article, though. They said that only 20% of customer service leaders have actually reduced staffing due to AI. That’s from a survey that they did. So, well, yeah, companies are finding their limits or trying new things or seeing what works, what doesn’t. I mean, that is the phase that we’re in right now. But at the same time, in a recent study of customer service and support leaders, and this is this is what caught my attention. So the headline was 50% of uh uh cuts in customer service are going to uh be reversed. But in this study or this survey, the majority who took it report that they’re supporting more customers at the same headcount level. So what does that mean? Well, it means they’re doing more with less, and that is where this is heading. So their story to me is contradictory. They say the cuts are coming, but yet their survey data shows that the people who are actually using it and implementing it and adopting it are supporting more customers with the same level of headcount. And so just carry that forward and see where you think it’s heading. So those are the headlines for today. Some AI skepticism, no jobs report coming out. We’ll rely on the ADP data for now.

11:42

But before I say goodbye, here is the fun fact for the day: the doorway effect. It’s a real phenomenon where you walk through a door and it makes you forget what you were doing. How often does that happen to you? It happens to me all the time. Probably has happened today already. Um, and I’m glad to see that it’s a real thing. And it doesn’t say it’s age related because I do worry that this may be something that is happening because I’m getting older. But when I think back, it’s always happened. So there we are. There are the headlines for today. Thanks for sticking with me. Please like and subscribe, share with anyone you think might be interested, and uh welcome your feedback as always. Look forward to talking soon.