Rapid Response: What the jobs report isn't telling you about AI & the workforce, with Upwork’s Hayden Brown

0:00Hey, folks, Jeff Berman here, co-host of Masters of Scale. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale Summit. They are the leaders driving the most pressing conversations in AI. Replit founder and CEO Amjad Massad, Cloudflare's Matthew Prince, Signal president Meredith Whitaker, and many, many more who will take the stage this October 20th through 22nd in San Francisco. We want you there with us, too. Join us at mastersofscale.com slash pioneers. That's mastersofscale.com slash pioneers.

1:00and the bottom line, how they navigate uncertainty, pressure, and high-stakes moments. I'm Bob Safian, former editor-in-chief of Fast Company, and I'll be your host as each episode breaks down what you need to know right now. You can find Rapid Response wherever you get your podcasts.

1:49Transcription by CastingWords who've changed the game. It's anything but business as usual. Find Masters of Scale on Apple Podcasts, Spotify, YouTube, or wherever else you get podcasts.

2:06The future of work is arriving, and it's arriving on our shores right now, right here, whether we want it to or not. The urgency and the need for all of us to become fluent in using AI for our jobs, I mean, that is something none of us can escape. You can't learn to ride a bike in a seminar. And I think the same is true for AI. Until you're using these tools day in and day out, you know, really integrating and pushing what's the boundaries of what they can do. That's when I think people become extremely capable. Will humans win or machines win? I think that is distracting us from, in some cases, putting, you know, our collective societal energy towards building a future where everyone wins.

2:50That's Hayden Brown, CEO of Upwork, the global tech platform for freelance workers. As AI radically resets expectations across the workforce, Upwork has a critical vantage point on how the job market is actually evolving. I wanted to talk to Hayden about the on-the-ground reality beyond government job numbers and the dreamy predictions of AI cheerleaders. Hayden is forthright about the pressures facing organizations and their teams, including her own decision to lay off Upwork staffers earlier this year. She shares which jobs are most in demand, the good and bad of AI agents, and where she sees the future of work moving.

3:31Plus, she talks about the challenges of leading when even a one-year planning horizon is too far, revealing her specific practices for resetting strategy on the fly. So let's get to it. I'm Bob Safian, and this is Rapid Response.

4:15I'm Bob Safian. I'm here with Hayden Brown, president and CEO of Upwork. Hayden, great to see you. Great to see you, Bob. Thanks for having me. You were last a guest on the show. We were talking geopolitics, Russia, Ukraine. It was pre-Great Resignation, pre-return to office controversies, pre-Gaza and Iran. Now, of course, AI anxiety dominates workforce discussions. It's like we've been through decades of change all piled together. How are you doing? I mean, it's been a challenging time to be a CEO. You know, it definitely feels like there's a lot happening. I have a kind of running joke with some friends who run other companies.

4:55We all say, you know, what's going to be the black swan event of this quarter? Because it just feels like there is so much happening in the ecosystem and things are moving faster and faster. But I think that also is very exciting. It's a dynamic time. I was going to say black swan every quarter or maybe black swan every week. Like you sort of don't even, you don't even know if it's a black swan until it's already moved on, right? Exactly. You're on the front lines of changing work habits. And I find myself wondering a lot if sort of traditional assessments capture the realities of the U.S. labor market in 2026.

5:33Like the most recent monthly jobs report showed 23 ,000 jobs lost, but at the same time, unemployment numbers went down. Also, how do you make sense of this data? How much do you focus on it? Does it reflect what you see on Upwork? Yeah, there are a lot of competing dynamics. It certainly doesn't tell the whole story. We do see kind of consistent with the jobs report data, the labor market is very subdued. It has been for several quarters. It continues to be sluggish. I would say we particularly hear about kind of macroeconomic and labor slowdown with our very small business customers. You know, those are the guys who are out on the front lines of the economy without a lot of resourcing, without, you know, deep pockets and financial reserves.

6:20And I think they're the ones who are feeling quite pinched right now. And what they tell us is they have pulled back hiring across all channels. You guys recently released a future of work index. Is that what encapsulates this? Are there other things in that index that business news headlines maybe aren't capturing? Yeah. You know, while the picture overall is of this kind of slow moving market, there are pockets within it that are incredibly vibrant. We really see the growth in AI related skills, AI related jobs. That is the place where energy and money is flowing. And we see that in our platform with our own AI category growing over 22 % year over year.

7:03And just all of the data is telling us that the demand from both small businesses all the way up through large enterprises for talent who really know and can help them navigate this new world of work and bring in these relevant skill sets and knowledge of how to use AI tools, that is really where the energy is going. And the dynamics are moving from full-time towards fractional work, which is a really fascinating trend. Our most recent survey showed a 10-point increase in freelancing in the U.S. within knowledge workers. It's at 38 % of the population today. It was at 28 % just a year ago. So there has been a huge step up in both workers moving into the freelance economy for a variety of reasons, but also businesses saying, you know, we want to find these workers who are out there doing contingent work because we don't necessarily need the same number of full-time employees we needed before.

7:54We can approach this work differently. And also we can't access these folks maybe through kind of full-time employment channels. There's so much talk about AI potentially taking jobs, and there are some layoffs that companies attribute to AI. And yet you have other CEOs claim that AI is allowing them to add staffing because each AI-enabled person is more productive. It sounds like both fit in what you're seeing, but it seems early to know what AI's impact is going to be. Or is there something clearer that you see through all of this? You know, I think it's 60 % of jobs that exist today did not exist in 1940.

8:38And I think that's helpful context for us as we look at what's happening with AI. Technology and other forces have, you know, destroyed and created jobs again and again through so many cycles. This is kind of a version of that, but happening just bigger and faster. More destructive on the negatives, but also more creative on the positives. It's a very binary picture. You know, there's the camp of AI is going to take all the jobs and, you know, humans and the companies, you know, that serve humans and do human solutions are doomed. And then there's the other side. The reality is, has to be somewhere in the middle.

9:11We do not see mass job destruction as the future. There is really, I think, a balance to be struck. And, you know, again, there's creation and destruction. But at the end of the day, it's not all destruction. It actually is a lot of new jobs and roles and businesses that are being born because of this exciting technology. You announced in May that you had to cut a quarter of Upwork's corporate staff yourselves. You published a pretty frank statement about it, owning the decision. And you talked about AI but didn't blame AI. Why was that necessary? Yeah, I made that decision earlier this year because we really did see that with the market conditions that were changing, this was the right time for us to expand the profitability of the business, which was already part of our long-term goals.

9:59At the same time, Bob, we've seen that because work is changing, our own work needs to change. And what we did for that was not, you know, really just automating and replacing work or workers with AI. Instead, we looked across the entire business and asked ourselves in every team and every department, what would this look like if we really were doing this function from the ground up today using the best technology and tools that are available? We also looked at, you know, newer operating organizational models where we could flatten the teams, get more leverage for managers with broader spans of control, fewer layers in the organization.

10:35You know, some of these things that are kind of evergreen opportunities to refine how we operate. I mean, there are contentions, I guess, that some CEOs do AI washing. They ascribe to AI the reason why they have to make changes as opposed to owning that maybe they didn't have the right strategy in the first place. But by blaming it on AI, like they get credit for that. You know, their stock price goes up. It's like it's a positive. And I wonder whether when as you were thinking about this, you're like, well, do I lean into that part of the messaging? Because maybe, you know, that that helps the story.

11:14You know, it was so important to me that our messaging around this be really true and authentic. Because frankly, of course, AI is helping us and it is a contributor to our efficiency and our productivity. But that is not the biggest reason, A, that we made the changes, nor the biggest benefit that we were able to get from kind of driving these changes. So, you know, we're actually seeing the opposite trend in our platform in the sense that the AI washing that you're talking about has been happening. But also, a lot of folks are now reconsidering and coming back because they're seeing that the humans they let go, actually they still need.

11:48And the AI can't do all of the things that they hoped that it could do. A recent survey we did showed that 23 % of our own clients have actually already moved work back to humans from AI or are about to do so. So I think this pendulum, you know, it will keep swinging. When we've actually done testing of clients trying to use agents directly to deliver work products through our platform, the failure rate of agents is incredibly high. They almost never succeed in delivering even fairly simple tasks from clients end to end. But when you just add a little bit of human expertise and a few back and forth with an expert, suddenly the success rate goes up more than 70%.

12:27We have to sharpen our intuition around when to trust AI. And I think increasingly people are realizing, I'm not going to take this at face value. I want to couple that with a valued human expert who can bring a lot more to that equation. AI is directly impacting things that happen on your platform. There's been a rise in AI agents, posting job ads, machines, essentially trying to hire humans. Upwork even has, I think, a specific service for clients to allow agents to access your freelancer database. It could sound a little spooky. Did it feel that way to you when it first started? I mean, it really feels like the future of work is arriving.

13:08And it's arriving on our shores right now, right here, whether we want it to or not. And that was one of the reasons we launched this, what's called the MCP server, but really is a capability to let agents authenticate with Upwork so we know who they are. We know if they're good actors or bad actors. And then based on that authentication, they can go forward, help post jobs, make hires, manage projects, et cetera. Now, we are definitely doing this because this is where the world is going already. It's not something that we just came up with, you know, out of the box. And at the same time, we're seeing a lot of clients who are working inside these AI tools, Claude or ChatGPT, and they're getting stuck.

13:48And they're having a deliverable that didn't meet expectations or they need a human expert to finish it. with our MCP, now they can directly connect to Upwork, share that deliverable with a freelancer immediately and get the on-demand help they need from a human expert in real time, which is a huge advantage because now everyone expects everything in real time. You know, everything's moving so fast. AI has changed expectations. And now we too can meet that expectation around truly real-time human support inside of any of these AI tools where people need additional resourcing. Mm-hmm. Upwork has its own agent, Uma, that assists users writing job descriptions and prepping interviews and things like that.

14:29For a platform conceived to give humans more freedom, there's some irony in using AI to prepare a job application so another AI can review it, right? Are we entering a labor market where the best job applicant is whoever is best at prompting the hiring machine? or is it more like, I don't know, like online dating apps where, you know, algorithms are better at matching us than we are on our own? I mean, these are the big questions and they're the right ones because we are seeing, you know, spam job proposals and applications. We really just want to put people's own interests and needs on steroids and then have that expressed through the hiring process and the recruitment process that we're supporting them with, including filtering out all of the AI kind of slop and noise that is creeping in now that these tools are so widespread.

15:21Right. I guess because if I'm a job applicant, I guess I can create a lot of different versions of my application to a lot of different jobs that may or may not be right for me. And I may not even know what I'm doing. And I guess the same thing can happen on the other side about posting for jobs where if we can find a needle in a haystack, we'll do it. But otherwise, we're just sort of testing the water. Yeah, and I think that's one of the main values that we see being so enduring, even in the AI era for Upwork specifically in our customers, is, you know, the problem we've always solved for them is giving them real, tangible, accurate data around who can do what.

15:59It's real data from our platform observing people doing work and delivering for customers with dollars attached. So this is the most verified work history data really in the world, and it's at scale across, you know, 18 million freelancers that were active in the last year. This type of data is what then gives customers confidence in making that hire, not noise that was created by, you know, an AI agent applying for them, not these empty promises or claims about their expertise. it's actually stripping us back to, like, what does the data say in terms of who's good at what? And frankly, advancing this meritocratic idea of it shouldn't be about who has the best agent or who sounds the most shiny on paper, but really who has the data and the experience to demonstrate that they can do the work that's required.

16:44That in the trenches data Hayden cites illustrates how human in the loop is actually unfolding in an AI world. 23 % of businesses moving work back to humans from AI. So how does Upwork engage with the big AI companies, including open source players in China? And what does it mean that freelancers with AI skills earn 34 % more? We'll talk about that and more after the break. Stay with us.

17:15Hi, I'm Molly Graham, host of Worklife, a podcast from TED. The most important lessons about work usually aren't the ones anyone teaches you. They come from experience, from uncertainty, from figuring things out as you go. On this show, my expert guests and I explore how careers really unfold. Through change, through doubt, through the decisions that shape who we become over time. Because those moments aren't the exception. They are the work. Listen to Work Life wherever you get your podcasts.

17:50Before the break, Upworks Hayden Brown talked about what's really going on in the job market as AI shifts expectations and needs. Now she talks about dealing with the big AI companies, how to actually build AI skills effectively, and what Hayden calls her crystal ball. Plus her specific strategies for leading in a world where, as she puts it, even a one-year planning horizon is too far out. Let's jump back in. Do you have a philosophy about how you engage with the big AI players? You know, we're at a moment where everything is in flux. We have this growth of these new channels where customers are suddenly doing work inside of ChatGPT and Cloud and all of these third-party tools.

18:35That is now a new origination point for businesses like ours to be referenced, to be advertising, to be showing up. We also know with 900 plus million users on ChatGPT, you know, Anthropic growing so massively, you know, quarter by quarter, I think we can see that these are the new destinations for work. The momentum there is building and snowballing in such a way that I think we've taken the approach of building for these tools and this future that we see already appearing, even though there is going to be some ongoing volatility as things kind of mature and play out. Do you have a differentiation between places like OpenAI and Anthropic versus the open models from China?

19:18I mean, you do have a global business. Do you let agents built on those models be on Upwork? Do you have to treat them differently? You know, we, you know, look at everything in our authentication layer and do make some judgments about, you know, who is allowed and not allowed to operate in our ecosystem. And certainly those rules will continue to change, you know, as new information is available about safety, security, and other aspects of what these actors can do. So I think, you know, our approach today is to create the system, the framework, and the controls. Our customers really have told us they want to be using these things.

19:53They want to benefit on both sides, but they need to do so in a place that's not the wild, wild west. I ask because, you know, some CEOs I've talked to recently have been talking about how, you know, some of the models from China, they're just so much cheaper. They are. And even though they're not maybe quite as robust, they're robust enough. Absolutely. And I think a lot of those open source models can be used safely and securely with the right controls. it's not a binary of, you know, use Claude or, you know, good luck to you and there's nothing, you know, you can do. We personally in our business have taken a gateway approach where we are constantly testing, you know, the performance of a variety of different models, including open source models.

20:36And now that token costs have been going up so significantly from the major providers here in the U.S., there are definitely use cases where we know we can get, you know, 10x savings or more by using open source models and doing it safely inside of our own environments. I think this is also a place where for us as a marketplace, creating more of the ecosystem where people can see the pros, the cons, and the costs of different combinations of AI models or agents with or without human supervision. This is a fascinating extension of our own business because we've always provided customers with the value of choice and selection across a huge supplier base to get something done.

21:17And they get to choose, do I want to pay more for speed and quality? Or am I happy to go a little bit slower and maybe have some savings? You know, these are the decisions businesses always need to make. And now with these AI tools, now they can kind of get the best of both worlds. Your emphasis on freelance work and fractional work, as you talk about, like there's been a sort of romantic sentiment behind it, you know, the promise of freedom and making your own schedule. In today's economy, how much of that is a choice versus a necessity, a sort of a symptom in some ways of companies shifting risk onto individuals?

21:54Absolutely both. 58 % of current full-time employees are actually thinking about becoming freelancers for a lot of the reasons you mentioned around choice and control and deciding when, where, and for who they work. We also hear really loud and clear from freelancers that the economics of freelancing have become much more appealing over the last few years. Before the 2008, 2009 Great Recession, And people at that time, I think, felt they were very secure in a full-time job. And then that recession happened, and they realized, wait a minute, I'm actually more secure. If I have a portfolio of three to five clients on Upwork, they keep coming back to me for repeat work.

22:35Maybe I'm also doing a podcast or a book or a creator economy thing on the side. And we really have seen this trend towards these portfolio careers. Gen Z is the biggest one. 42 % of Gen Z are freelancing. is actually them saying, look, I feel more comfortable that I'm not exposed and that I can really both learn and use and build the skills I want and also have income that is predictable and in my control versus at the whim of an employer. It's just a different conception of what a career is for younger folks, right? Absolutely. And it also reflects, you know, if you think about this AI moment when everyone is trying to prove that they have these skills or if they don't learn them and then prove like, hey, I've gotten these skills now.

23:19I'm an AI-relevant employee or worker. Freelancing is an amazing way to do that because they're getting on-the-job experience, doing real work, proving their skills. And if they're on a platform like ours, that comes with a verified work history, all of the marketing kind of around that that freelancers can do to say, hey, now I can earn more and do more. And we do see them earning more. Freelancers that have AI skills are earning 34 % more hour than folks who don't have AI skills. And I think that wage gap really speaks to the urgency and the demand from talent to move into a career where maybe in their full-time job, they don't have the opportunity to use these tools or they're not learning them inside of their employer.

23:58But here on our platform, they can really demonstrate and flex their muscles around AI and get paid for it. Hmm. There's a lot of burden on on the individual to keep upgrading those skills as you go. I mean, when software can learn skills way more quickly than humans can, which is what we're seeing with AI, then it does put more pressure on humans. I guess whether you're in a freelance economy or anywhere to keep upgrading your own skills or refining your own skills. That is the reality. The urgency and the need for all of us, I mean, you, me, all of us to become, you know, fluent in using AI for our jobs.

24:37I mean, that is something none of us can escape. But what we do see is that freelancers, because this actually pays them and puts food on their table, they do it faster. They learn faster. They lean in harder. They move much more quickly to where the new technology is and learning its capabilities and applying those capabilities in real work settings. We see this huge advantage, actually, with the freelance talent pool that's well ahead of full-time employee counterparts in terms of their adoption and facility with AI. And that's another reason why businesses are turning more and more to the freelance economy, because they're looking in-house and they're realizing, you know, my team doesn't have these skills and it's going to cost a lot of time and money to try to get my team up a learning curve.

25:16maybe I can short circuit that by bringing in freelancers who can both add value and do work, but also upskill my team at the same time as a byproduct of sitting side by side with them. And so there's a lot of that. So it becomes a backdoor way to train my own team at the same time. Exactly. And not have to wait for those, you know, fruits to materialize before you start to actually see some real business benefit. Because a freelancer can be adding value in hours. Yeah. I mean, well, that is one of the big questions, you know, all of us have is like, how long does it take? What's the best way to train people in the AI skills?

25:51I was actually talking to one of our clients this morning and he said, you can't learn to ride a bike in a seminar. And I think the same is true for AI. You know, you could watch a YouTube tutorial and get more familiar, but at the end of the day, until you're using these tools day in and day out, you know, really integrating and pushing what's the boundaries of what they can do? When are the, what are the limitations? Why is that? How do I work around that? You know, that's when I think people become extremely capable. And that's one reason we're seeing the rise of a new generalist called the AI orchestrator.

26:22This is becoming extremely popular on our platform because people are looking for someone who can orchestrate and use these AI tools, but also is not necessarily so deep in one domain. Instead, they have the facility to evolve, adopt new tools, figure them out very quickly because we know the technology is moving so quickly. In what you do as a CEO, how are you using AI? I think AI, obviously, some of its core skills are like data gathering generation and synthesis. And so inside of our environment, we've set up a very powerful tool. We call it Crystal Ball, and it has access to all of our internal data.