Firms are trying to dress up layoffs as a good news story rather than bad news as attributing staff reductions to AI adoption conveys a more positive message to investors.
Important theory.
“If AI were already replacing labour at scale, productivity growth should be accelerating
There are headlines that suggest high productivity numbers, but tech capex now being 2% of GDP can be a big mask for those headlines. The way productivity is measured is sales divided by employment costs. Auto sector or insurance companies don’t have a genuine productivity boost if cars and insurance just cost more without employees making more of it.
Overpaying for GPUs, power, and datacenter construction are fairly low employment activities, GPUs being made overseas at extreme revenue per kg is something that would especially skew productivity numbers. Any growth in datacenter revenue is also something accomplished with few employees, and their customers are not necessarily boosting their revenues/employee.
The article mentions it’s possibly due to “over hiring” in the past.
There’s an obsession companies have where they have to try out being leaner than is efficient.
But I have a feeling it’s even worse. Companies are manufacturing a bad job market, so they can under pay employees and treat them worse.
It’s both, but mostly the latter.
I wish. They are simply doing layoffs because investors ask why they haven’t, yet, since everyone else has done them. Has the CEO not done AI enough? Is he (theoretical possibility: she) behind the times? Shouldn’t all the investment in AI not finally pay off in RIFs?
We need AI NOW! And we need AI layoffs NOW! It’s the season, it’s the fashion.
In the ancient days, they said “You can’t get fired for picking IBM.” Nowadays, a CEO can’t get fired anyway, but there is a huge incentive to pile on another “AI initiative.”
