Working through it: the AI jobs boom dawns

0:00This intelligence podcast is sponsored by business travel on Hotels.com. Does booking business travel feel like another job? Hotels.com makes booking work trips easy and rewarding. It's easy because you can set your preferences once and get results tailored to your business travel needs every time. It's rewarding because with Hotels.com's free rewards program, you can save instantly on your next work trip and earn rewards for future travel. Book faster with confidence at Hotels.com. Loyalty members 18+. A new school year always feels like a fresh start. New teachers, new classmates, new opportunities.

0:36As students head back to the classroom, parents and teachers are teaming up with the same goal, a safe, supportive school year. Every child deserves a bright future, and together, parents and teachers can make it happen. Help your family get back to school ready at nea.org slash back to school.

0:54The Economist

1:00Hello and welcome to The Intelligence from The Economist. I'm Jason Palmer. And I'm Rosie Bloor.

1:10Today on the show, why China has such persistent food safety problems and a very weird smuggling trend.

1:25But first...

1:35If you were a seamstress around the turn of the 18th century, you fretted about your job when the mechanical loom was invented. If you were a horse driver around the turn of the 20th century, you fretted about the newfangled car. Steam engines, telephone exchanges, the typewriter, the list goes on. A technology comes in, worries about job losses spread. Then industries transform and new kinds of jobs demanding new kinds of skills abound. So if here in the turn of the AI century, you're fretting about your job, you might want to relax a little. Last week, the American Bureau of Labor Statistics came out with its monthly jobs report.

2:16And it found that in August, there were 162 ,000 jobs that were created in the economy. Alex Domas is an economics correspondent for The Economist. This far exceeded expectations. A lot of people thought that the number was going to be much lower. At the same time, the unemployment rate continued to be very low. And youth unemployment, which is something that people have been tracking as it relates specifically to the effect of AI on the labor market, also continues to be quite low, despite all of the fears around the effects of AI on young workers. So again, we're finding then that the much-ballyhooed AI jobs apocalypse is not nigh.

3:00That's correct. So overall, the jobs numbers are quite strong in the United States, and I don't want to attribute all of the boom to AI specifically, but it does sort of cut across the narrative that AI is having a significantly negative effect on jobs. overall we've seen over the past few years about 200 ,000 layoffs that have been attributed to artificial intelligence by companies but this level when you look at the overall churn of the labor market when you look at how many layoffs there are in a given month is actually quite small and it is far compensated by the opposite side of the ledger in terms of how many jobs have actually been created by AI.

3:44We did a sort of simple back of the envelope calculation and estimate that somewhere in the neighborhood of 1 million jobs have been created because of the artificial intelligence boom. A lot of these do have to do with the infrastructure build out, build out of data centers. Of course, there have been massive investments in things like chips in constructing the data centers, in servicing them with racks and with cooling system and with power. And this This has created a lot of demand for workers without bachelor's degree in the U.S. economy, both on the construction side, so the electricians, the HVAC installers, but also in terms of operations.

4:22Once these data centers are up and running, they do need a lot of technicians to make sure that the servers are running. And this is creating a lot of jobs in the U.S. economy. We estimate that it has created somewhere around 350 ,000 new jobs in America. So how did you come up with those numbers? So what we did is we looked at five occupations that are closely tied to the infrastructure boom and the data center buildout. These are things such as electricians, workers across the utilities industry, data center technicians, and we tried to estimate a counterfactual. How would these occupations be growing without the data center buildout?

5:04And to create that counterfactual, we looked at the rest of the industry. We looked at construction and manufacturing, excluding these occupations, and compared how these occupations were growing versus the rest of the industry. And what we found is that roughly since 2023, employment in these five occupation categories has far surpassed the rest of the construction and manufacturing sector and is up roughly 360 ,000 jobs since 2023. You also do see this in wage growth in these specific occupations for workers such as electricians, such as data center technicians. You do see very, very large wage gains, which can be attributed to the fact that there are actually labor shortages in that employers in these areas have been trying to attract more and more workers and are having trouble right now finding enough workers to satisfy all of this job demand.

5:58So there have been job losses because of AI, but far outweighed by just those kinds of jobs to build out and then run data centers? So it's not just these jobs. It's also the white-collar professional jobs. So AI has an effect by both making certain jobs more productive and also creating new classes of work altogether. Doing a similar methodology to the one that I just described and looking at some of the occupations that are closest to the artificial intelligence boom, things such as software developers, such as engineers, such as data scientists, such as a broad range of mathematical and science occupations.

6:37You also see these occupations have been booming in the United States over the last couple of years. And we estimate that the total jobs in these occupations have increased almost 750 ,000 since 2023, relative to what you would expect in the absence of the AI boom. And it's not only us that have done these calculations. There is a economist named Gad Levinen at the Burning Glass Institute who looks at LinkedIn data and tries to estimate how many professional jobs in the economy can be classified as AI jobs, meaning that they wouldn't exist without the AI boom. He estimates that about 1 % of professional jobs in the U.S.

7:16can now be classified as AI jobs, which corresponds to roughly 1 million jobs. What about the sectors that were once claimed to be most vulnerable to AI, though? So here, the evidence is mixed so far. So some of these occupations, when you look at things like paralegals, financial analysts, these were occupations that a lot of people thought were very exposed to AI and would be early victims of AI. Some people thought that within a couple of years, once law firms started using AI, there would be no need for paralegals. And this is not what we're seeing in the data at all. We are actually seeing quite strong job growth among paralegals and among financial analysts.

7:55You even see job growth roughly flat for translators. And the reason is, is that AI does not just displace these workers. It makes them more productive and it can actually increase the demand for their services. And by increasing the demand for their services, by making these workers more productive, it can actually lower the costs of the services that they provide and therefore increase the overall demand in the economy. Or they can allow these workers to do different types of work and AI can be an augmenting technology rather than a displacing technology. With that being said, there are some other occupations that have seen job growth decline quite a bit over the last couple of years.

8:38Here, the standouts are customer service representatives and office and administrative assistance. And this is not something that was newly created because of AI. A lot of these occupations had seen job growth declining even before 2023. But there has been an acceleration over the past couple of years. And this is something that policymakers and economists should take seriously. But the developing story here is that the broad-based jobs apocalypse isn't in fact going to be that broad now that some data are finally trickling out? Yeah, that's correct. And really, it shouldn't be all that surprising.

9:16Economic historians have been telling us for years that the effect that general purpose technologies such as AI generally have when you look at the Internet, when you look at computers, when you look at electrification, is that it does hurt certain occupations. But overall, it also creates a lot of new jobs. And the entire history of the U.S. labor market is that every few decades, most people are working in jobs that did not exist decades before. The long-term trend of the labor market is towards creating all sorts of new classes of jobs. And I think we can expect the same thing to happen with artificial intelligence.

9:57Thanks very much for your time, Alex. Thank you, Jason. Great to be here.

10:12This Economist podcast is sponsored by Bill, the intelligent finance platform that helps businesses and accounting firms scale with proven results. With AI-powered automation, Bill isn't just moving money. They're simplifying financial operations for nearly half a million customers. Bill has securely processed over a trillion dollars in transactions. That's proven infrastructure. Ready to talk with an expert? Visit bill.com slash proven and get a$150 gift card as a thank you. That's bill.com slash proven. Terms and conditions apply. See offer page for details. With no fees or minimums on checking accounts, it's no wonder the Capital One bank guy is so passionate about banking with Capital One.

10:55If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs. Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.

11:33Last month, a Chinese blogger called U Lietjigue posted some shocking videos on Chinese social media. Gabriel Crossley is a China correspondent for The Economist and is based in Beijing. They showed truckers in Kangbao, a county a few hours away from Beijing, dipping cabbages that had just been harvested in a large container of formaldehyde. Now, formaldehyde keeps cabbages looking fresh, but it can also cause cancer. Unsurprisingly, these videos caused a lot of panic around China and abroad in places that import Chinese cabbage. So far, three people have been detained on criminal charges. Authorities in Kangbao have set up emergency checkpoints to test all the cabbages leaving in case they still have formaldehyde.

12:23But perhaps the most striking thing is how little surprise all of this caused. So food safety is still a big concern in China from the sound of it. It still is. I mean, everyone probably remembers the scandal in 2008 when tainted milk powder sickened 300 ,000 children here and killed several as well. But since then, despite government efforts to clean everything up, it's still a very common problem. So there's been several cases just this summer involving banned pesticides turning up where they shouldn't. And Xi Jinping has gone so far as to tie these problems to the Communist Party's legitimacy, essentially saying if we can't guarantee food safety, then why would you trust us to be in charge?

13:14And that makes all of this even more embarrassing. So what is the bottleneck here? Why is China struggling to deal with its food safety? Keeping food safe is tricky anywhere. As you probably saw in America, they've had an issue with tainted lattice and explosive diarrhea this summer. The problem with China, though, is that it's a particularly vast system creating all of this food. So there's a few big farms, but also 160 million small farmers, There's hundreds of thousands of truckers and traders and logistics companies moving all this stuff around. Consumers are often going to small wet markets, eating at small hole-in-the-wall restaurants.

13:54This is a bewildering number of potentially dodgy actors to keep an eye on. But if the party thinks that its own legitimacy is tied to this, what is it doing to fix the problem? Part of it is a technological solution. Lots of restaurants here have live streams of their kitchens, so you can kind of keep an eye on things like the chefs are washing their hands. And larger companies are using more and more sophisticated tracking systems to make sure your cabbage is safe from farm to table. And of course, you can also keep cabbages fresh by keeping them cold. So the government is expanding lots of kind of refrigerated transport storage systems and so on.

14:28And the trouble is all of this stuff raises costs and not that many people in China want to pay or can pay that much more for their groceries. So ultimately, this is down to corner cutting to save a few pennies. Part of it is regulatory issues, but yes, it's a kind of a corporate culture where speed is of the essence. It's highly competitive here, and that can sometimes mean a sort of rushed approach where people don't make the kinds of checks that they should. The government is trying to get workers to report directly to regulators rather than their bosses if they see a problem. But the trouble is the government itself also has conflating incentives.

15:06You want to protect local jobs and grow local industries. And if you're in an agricultural part of the country, that means you don't want everything to be shut down because of a food safety issue. But as regards this latest food safety issue, you said everyone was shocked but not surprised about the cabbages in formaldehyde. Do you think this latest scandal will actually change anything? I'm afraid probably not. We've seen formaldehyde scandals before in China. The earliest reported one is 2012, and there's been several since then. and what tends to happen is they'll find some scapegoats and then everyone moves on because tackling these structural issues behind it is too difficult.

15:45The scapegoats are usually local officials from where the tainted food is from. I went to Kangbao, the county where the cabbage is from, and certainly the officials there seemed to be a little nervous for what's going to happen next. Sooner after I arrived, some police officers did and then some officials from the propaganda bureau there. They gave me some local snacks and tried to talk about fine weather and some rare species of bird that breeds nearby. No one wanted to answer any questions about cabbages. Gabriel, thanks very much for joining us. Thank you for having me.

16:35Carla Subirana:One of the craziest smuggling stories of the past year is about ants. Carla Suburana is a news editor. Earlier this year in Nairobi airport, the police discovered more than 2 ,000 queen ants hidden in a man's luggage. And they were all packed into individual tiny plastic tubes that were plugged with damp cotton. They were designed to keep the ants alive for weeks until they made it to China, which was their final destination. Cases like this are becoming more and more common in Kenya. Carla, enlighten me. Why would anyone smuggle ants? Well, as strange as it may sound, people are increasingly keeping ants as pets and they're willing to pay a lot of money for them.

17:27Carla Subirana:In the black market, some species can be sold for up to$200 each. And Kenya has become a hotspot for the trade for two reasons. So the first is that it has a big population of exotic ants that are hard to find in most places. And the second is that there are already like very well established smuggling routes for smuggling wildlife out of the country. So it made it easier for the smugglers to engage in the trade. I'm still pretty mystified. What does an ant do? Why would you keep an ant as a pet? Well, ant giving, it became really popular during the pandemic because people were basically bored at home and looked for indoor hobbies.

18:08Carla Subirana:And people enjoy creating an ant colony and watching the ants forage for food and interact with each other. And then it became really big on social media. And so this has helped turn what was once a pretty niche hobby into a global phenomenon. And there are some YouTube channels like Ants Canada, which have millions of subscribers. And people follow individual colonies and the complex social behavior in which ants engage. And streamers narrate videos almost like a nature documentary. So it's quite exciting. And most of this is perfectly legal. There are licensed shops where you can buy many species of ants.

18:48Carla Subirana:But the problem is that demand for rare species of ants, like the ones you can find in Kenya, is starting to outstrip the legal supply. And African harvester ants, which are the ones that were found in the trafficking case, they are very sought after because they're very big. They're very strikingly colored. They're very clever. So they display like complex social behaviors. One of the scientists I spoke to described them as the tigers of the ant world. And so for collectors, that makes them very desirable. Complex social behaviours such as? Basically, the ants have very strict hierarchies, but sometimes battles emerge within the hierarchies.

19:31Carla Subirana:These are some of the videos in the Ants Canada profile. And also ants are very smart and sometimes they try to, for example, escape the colony and they create really elaborate plans. Okay, so it sounds very weird to me, but why is it actually a problem then? They're not going to go extinct, but the problem is that traffickers are targeting such huge amount of queens that they could still damage ecosystems. Queens are the only member of the colony that can reproduce. And so basically, if you take her away, you can wipe out the whole colony and thousands of workers that she would have eventually produced.

20:11Carla Subirana:and these ants are quite important for Africa's savannas because their nests help hydrate the soil and they're an important source of food for other animals like pangolins. So if you start removing them in large numbers, there's a risk that you will basically disrupt the ecosystems of the savannas. So what's the answer to this then, Carla? Is there a new breed of ant inspectors trying to crack down on these smugglers? Well, the ants are so small and so hard to catch that I think that even if you stepped up inspections at airports, it would be really hard to solve this. So I think that people need to understand that this actually matters a lot for Africa's savannas.

20:54Carla Subirana:And that means educating collectors about where their ants are coming from and what the trade is doing to their ecosystems. because basically as long as people are willing to pay hundreds of dollars for a queen ant, smugglers will keep finding ways to get them out of the country. You tempted by a pet ant, Carla? I think I'm okay for now. Thanks very much, Carla. Great to have you. Thank you, Rosie.

21:35That's all for this episode of The Intelligence. We'll see you back here tomorrow.

21:56A new school year always feels like a fresh start. New teachers, new classmates, new opportunities. As students head back to the classroom, parents and teachers are teaming up with the same goal, a safe, supportive school year. Every child deserves a bright future, and together, parents and teachers can make it happen. Help your family get back to school ready at nea.org slash backtoschool. With no fees or minimums on checking accounts, it's no wonder the Capital One Bank guy is so passionate about banking with Capital One. If he were here, he wouldn't just tell you about no fees or minimums. He'd also talk about how most Capital One cafes are open seven days a week to assist with your banking needs.

22:35Yep, even on weekends, it's pretty much all he talks about. In a good way. What's in your wallet? Terms apply. See CapitalOne.com slash bank. Capital One N.A. Member FDIC.