The Digital Divide: How AI Shapes Job Markets

0:00Back in March, Goldman Sachs predicted that over 300 million full-time jobs are going to be affected, which equals about nearly one-fifth of global employment due to AI and the automation that comes. And this specifically they mentioned is going to hit administrative and the legal profession and other white collar jobs that up until this point have really been considered kind of automation proof before AI came onto the scenes. So today on the podcast, we actually received reports of the first job news reporting on the layoffs that are occurring due to AI. And so we are going to be covering those on the podcast today.

0:37So without further ado, let's dive into it. So the first thing I want to say is the report that this is coming out of is the Challenger, Gray and Christmas Incorporated. So this is a report specifically directed at the US, but I believe that we're going to be seeing similar trends all throughout the world. So in the report, they said that 3 ,900, which is close to 4 ,000 jobs, were lost in May last month due to artificial intelligence. This is the first time that this research outlet has listed AI as an actual reason for job cuts. And what's interesting is AI actually ranked sixth place among reasons given for job cuts.

1:18So the first place was the businesses were closing. There's about 19 ,000 jobs lost because of that. Market and economic conditions, about 15 ,000 from that. Cost cutting was about 8 ,000. Voluntary severance and buyouts was another 8 ,000. And restructuring was 5 ,000. So this comes just a couple of months after Resume Builder, which is a career site for, you know, creating resumes and whatnot. They also did a survey on their site. And during that survey, they found that around half of all companies using, you know, OpenAI's ChatGPT said that they are replacing workers. So they did a survey, they pulled about 1000 different leaders and executives from various firms.

2:03And they found that about 48 % of all of those leaders responded that they had replaced workers with chat GPT since it came out in November. So I think this is getting very important and very relevant. The AI related, you know, job cuts we're seeing right now come at the exact same time as we're seeing a general workforce reduction in the US. So US-based employers, according to the same report we cited at the beginning of this, they announced around 80 ,000 job cuts in May. So that's actually a 20 % increase from the 67 ,000 cuts they announced the month before in April, according to Challenger Gray and Christmas report.

2:45And so that actually shows a 287 % higher rate than the 20 ,000 cuts announced in the same month last year. So since last year, which I mean, I would argue last year, we're already seeing a lot of headwinds due to interest rates and a lot of other things we saw that the direction the economy was going. But still this month or last month, we saw from prior to compared to the year before a 290 % almost increase in job cuts. so I think this is going to be an interesting statistic to continue to cover a lot of people have said you know AI might save us from a recession but with the Fed continuing to cut rates I don't know if that is going to be you know I think that's to be determined when that actually happens but it does appear that we are seeing an uptick in jobs getting cut so another interesting statistic is that so far this year they that companies have announced plans to cut around 420 ,000 jobs.

3:45Again, a 300 % increase from the 100 ,000 cuts announced in the same period last year. So this is actually the highest January to May total cuts. Well, okay, technically, COVID threw a wrench into everything because in 2020, 1.4 million cuts were recorded. But obviously COVID was exceptional, the entire economy and the entire global economy largely was shut down in many, many countries. So with the exception of, you know, that whole debacle in 2020, this is the highest total January to May cuts that we've seen since 2009, which as you know, 2009 was a great financial collapse, and the real estate collapse here in the United States.

4:27And during that time, there was 822 ,000 cuts that happened in, you know, that were tracked through May. So I think we're really seeing things start to accelerate. When we're, you know, when we're comparing this to 2009, this really isn't very great for us. So another sign, I think overall, the AI really is kind of infiltrating the workplace and really getting in there and perhaps replacing jobs, the technology sector actually announced the most cuts in May of all the sectors that were announcing cuts. And so tech sector actually announced 23 ,000, close to 23 ,000 total cuts, which is about so far 136 ,000 this year.

5:11So that is actually up 3000 % from the 4 ,500 cuts announced last year in the same period. So to be honest, the tech sector really has now announced the most cuts for the tech sector since 2001, which is those who remember 2001 is right after the dot-com bubble when 168 ,000 jobs were cut for the entire year. So if you think about that dot-com bubble happens, let's just say 170 ,000 cuts were announced for the entire year. So now look at what's happening this year. This year, we've already had 136 ,000 jobs. So in my mind, there's no way, right, with 20 ,000 this month. So just doing some simple math, there's like I'm assuming we're going to go over 200 we're going to blaze past 200 ,000 and absolutely kill the job cuts that we saw you know back in the dot-com bubble so this doesn't look particularly good I think this is also at the moment paired with the fact that consumer confidence which is a metric we measure here in the U.S.

6:16is down to a six-month low and job openings are flattening so companies appear to be kind of slowing down the hiring and I think a lot of people right now are anticipating a slowdown. And that's what Andrew Challenger, a labor expert and senior vice president of Challenger, Gray and Christmas Incorporated said in their statement around this whole report. So I think that this is a really interesting time for us to watch in the economy. We're seeing a lot of broad steps. And I think that this is interesting. And this is pretty important because essentially, these job cuts are coming as a lot of businesses are adopting this advanced AI technology to automate a lot of tasks.

6:56Now, the one caveat I will say, and the one, I guess, you know, silver lining on this cloud that many people may say, you know, oh my gosh, AI is coming to take all over jobs. The question I would ask is, prior to AI, we were already seeing a pretty dramatic slowdown in the economy, right? We had interest rates were being raised, the Fed was doing quantitative tightening, where they're essentially dumping all the stocks they bought during COVID that they were using to prop up the economy and dumping a lot of their assets. And so with this quantitative tightening, like obviously the economy is going to get like worse.

7:31Things are going to be harder. It's harder for companies to, you know, get loans on their money, et cetera, et cetera. So I believe the silver lining on all of this is, I think, while we could measure, you know, oh my gosh, AI is taking all of these jobs. I also think that perhaps the companies that are replacing employees with AI may have also actually just went bankrupt or out of business without the help of it. So, I mean, I think that there's a case to be made that AI is actually, you know, the companies that are replacing people with AI, and probably there's a lot that aren't even reporting this.

8:07I think that a lot of companies are able to stay relevant and stay in business during a downturn by automating things due to AI. And so I think that AI may actually be beneficial to the economy in a way that we're not currently measuring. So another important thing to mention is the fact that the artificial intelligence industry is expected to grow by more than a trillion dollars. And that is something that has been reported on by Bloomberg in the Bloomberg Intelligence Analysis. And so I think this is the first time that AI was, you know, really included in this challenger report. So it's the first time we're seeing this data of how it's replacing people.

8:45But it's interesting because we're also seeing a lot of anecdotal examples of this in the news. I think the Washington Post reported this week on a couple different copywriters who lost their jobs because their employers or clients decided that ChatGPT could just do the job better at a cheaper price. I've actually had the same conversation with people on LinkedIn recently, people in our Facebook group, if you're part of our ChatGPT, our AI Facebook group. We have people on there that have, you know, copywriting businesses, obviously, it's been a very popular profession. And there's they're kind of, they're having to grapple with this shift to AI.

9:20And it's not an easy thing. So I give them major kudos. But I do think that there is still a strong market for people that are able to copywriters that are able to adequately leverage chat GPT and use it to enhance their performance, they'll have to create more outputs and more quality content. But I believe that Chai Chibut can actually help them and they can still kind of set themselves apart. But this is something that we're definitely seeing in the news. Now, we also saw companies like CNET laid off a bunch of reporters. And at the same time, they were using AI to write articles, which, you know, a lot of people criticize them for, because later they had to correct some of their articles for, I believe, well, if you look at a report by CBS News, they say plagiarism.

10:02But in reality, I think the problem was they were getting them to write some financial articles. And this was with chat GPT 3.5. And it was really bad at doing calculations. And so it had just calculated some formulas wrong. So they had to go and fix that in some I think it was like some, some articles about interest rates and stuff. So I mean, that being said, I think definitely get chat GPT to write articles for you. I think that's great, amazing, especially if you have really complex prompts, and you really work with it to write some really unique content, but definitely have a human look over it.

10:33I think that kind of goes without saying. In addition to this, you know, I think the mainstream media really likes to kind of jump on some of the cases where Chad Chippity did a bad job. Of course, it's going to do a bad job on some things like get a human to review this. I don't think this is that's anything revolutionary to say. But earlier this year, Helpline used a chatbot to replace some of their staff members who had actually unionized. And during that, it was giving some people different eating disorder advice. So actually, I don't think this was help on the website. This was an eating disorder helpline.

11:10So that was using this. But in any case, they ended up having to pull the plug on that because the body guest gives some people some bad dieting advice, which, of course, is very possible. So I think it's you really got to be careful how you're using chat GPT and what use cases, I think it's important to have humans review a lot of the stuff. So I think this is also directly impacting TV and entertainment. We've seen a lot of writer strikes happening recently. A lot of this started in May with different writers demanding better pay, job security, and they were asking essentially for a near total ban on the use of AI to produce written entertainment content, which personally I think is outrageous and unrealistic.

11:52But they obviously feel threatened by it but why do they feel threatened by it right like they feel threatened because they know it could actually do a good job so i don't really know if going on strike and trying to get a total ban is ever going to be effective with this um i think you just have to learn to leverage it i know that a lot of people don't like to hear that a lot of people you know are like hey this is my creative outlet this is what i've always done you know this ai is coming in and ruining it like i'm sorry to say but sadly this is the case the ai can do this the ai will do this it is cheaper and you kind of have to get on board or it will replace you and i'm not here to say that's good or bad that is just the reality um of the capabilities when i when a technology improves and it can do something for cheaper faster and people will use it and it's more economically viable if that's just the way it's going to go so in any case i think different analysts note that uh with a lot of different previous technology that's replaced human workers generative AI is already creating new jobs.

12:51And this industry, like, as you know, is really exploding right now. So I think we are going to see jobs that never existed before. Of course, there's a prompt engineer that I can name as one. But I think what's important is there's prompt engineer in every industry, a lawyer is going to know how to be the best prompt engineer for a law comment or for law content, and for a law area. And there's going to be prompt engineers that are doctors that are going to know how to do the medical field the best. And so I think that it's going to be really interesting to follow how this comes out. In addition to this, Ben Emmons, who's a principal at New Edge Wealth on Friday, recently said in a note that generative AI is expected to become a monster employment generator because of estimates of a mushrooming$1.3 trillion AI market that's going to boost sales and ad spend for the tech industry.

13:41We're already seeing companies like Nvidia rise to trillion dollar valuations because of this technology. And I think that this is just the tip of the iceberg on where this goes, how much is going to proliferate, and how much we're going to be using this technology. So I really do believe a lot of new jobs are created. Definitely it is scary to see, you know, jobs being lost, the 4000 jobs that were directly replaced by AI. But I do think there are some silver linings. And I think at the end of the day, the best thing we can do is learn how to harness it and become experts on AI so that we are part of the people that are not replaced and we're able to improve our careers and our current businesses.