Economic downturn and the influence of AI are claiming numerous jobs
peoplematters.in
peoplematters.in
And here it is for the "Information" subsector: https://fred.stlouisfed.org/series/JTU5100LDL. It's much more volatile, but there's a fairly consistent "normal range" between about 20k and 40k, with fairly frequent spikes down to 10k and up to 60k. You can see that the January spike was indeed pretty big (61k), but the rest of the year has been around that "normal range".
But there were spikes nearly as big in January 2018 and July 2019 and I don't recall those being particularly notable or commented upon, and they certainly weren't due to AI!
My impression is that even within this "Information" subsector, there is a much smaller subsector of "famous tech companies" (or maybe "silicon valley adjacent tech companies") where the layoffs this year really have been notably far above a baseline that has been very close to zero for a very long time. But this is just an impression, as far as I can tell there is no definition for this subsector of the Information subsector, and thus no data tracking it.
But I think it is useful to put this in perspective as a phenomenon in a subsector of a subsector of the economy, rather than a trend in the economy as a whole. I think if the story here were really "economic downturn and the influence of AI are claiming numerous jobs", it would be showing up much more broadly than this.
TFA has not a single shred of evidence to suggest any one of these have anything to do with AI. It just seems like poor journalism and/or clickbait.
Maybe also useful to ask, "Is there a connection between the economy as a whole and this subsector of a subsector?" If yes, what is it.
If the subsector of a subsector is in a downward spiral while the economy as whole is strong, what does that suggest.
It's not surprising that "famous tech companies" are "famous" given that they are in the practice of surveilling and intermediating communications between remote computer networks for a large segment of the population. The opportunities for self-promotion and/or manipulating the flow of information to prioritise their own interests are neverending.
I agree those are useful questions. These are just, like, my opinion man, but here's what I think the answers are:
> "Is there a connection between the economy as a whole and this subsector of a subsector?"
No, I really don't think there is, more so than usual for its size. I do agree that it affects perception and sentiment a lot more than its size would suggest, but I don't think it has notably broad systemic ripples throughout the national economy. I think sectors like housing or trucking or energy and some subsectors of those do have these magnified effects throughout the economy, but I don't think this "famous tech company" subsector does.
I think it definitely does impact the SF bay area economy though, and the whole California economy to a lesser extent. But even those relatively big economies are small relative to the whole US economy.
> If the subsector of a subsector is in a downward spiral while the economy as whole is strong, what does that suggest.
I guess there are two questions here, the first being: Is the "famous tech companies" subsector in a downward spiral? I don't think it is. I think what we saw in "tech" from the end of 2021 to the beginning of 2023 was normal cyclicality, it was a moderate downturn that is already in the early stages of recovery. These cycles are happening constantly all across the economy. A healthy economy is not one where every sector is healthy, it is one where sectors are not all unhealthy simultaneously. It is expected and normal for some to be up while the others are down and then later for others to be up while those previously up are down. We were one of the down ones, and now we look poised to again be one of the up ones.
The second question is: Assuming "tech" is in a downward spiral, what does that suggest? Again, it is normal for once-leading sectors to no longer be so. What does it mean that the railroad sector is not dominant like it was at the end of the 19th century? It doesn't mean anything. What does it mean that phone companies aren't growing like they were in the middle of the 20th century? Not much. There will always be once-hot industries reaching a steady state and new industries, or new iterations of old industries, on the rise.
In my view this is all just: same as it ever was.
“Free” money on top of already very cheap money for +10 years and a couple of “new normals/this will never be the same” hype trends made a huge hiring frenzy possible.
Now with big boy borrow rates this is both unsustainable and a good opportunity for the C suites to “shine” and get paid.
These companies could readily afford professional reconversions, on the job, for all the people laid off.
I understand underperformers, but this is not what's happening. A bean counter is chopping entire departments where the mistakes are made at director or VP level (who, by the way, frequently just get shuffled around) while the recently promoted top performer is just tossed away together with everyone else.
The purpose of those companies is to maximize profits, not to employ people or to uphold a social contract.
Inside these big companies, the forever shuffles, hiring and "losing people" like you're in the war it's part of daily life.
It's disgusting from a human perspective, trust me I know, but I still hope this way of doing business is not the best and therefor these companies will rot from the inside and give way of better ones.
The problem is the time of a big company is on a different scale of the time of an individual.
Astute and accurate observation. This is one of the reasons I strongly support unions (or a law that enforces a 2 months notice periods on the employer, no probation allowed).
Alternatively, interviews longer than 3 hours are no longer allowed so that people may switch jobs asap.
If we want flexible capitalism, we need to ensure that labor gets it's fair protections, just like corporations do.
The basic stuff of life will be pushed out of societies who continue on this path, and their death-cultures will be able to persist only by using money to lure in (and haze) new generations of cultists, up through the Darien Gap. They will believe that they are rich, special, and superior, and they will convince new aspirants of the same, but their lives will be living sacrifices to Jeff Bezos and their grandchildren will never come into existence -- a subliminal acknowledgement that such lives do not feel worth living.
Bai lan.
You’re repeating a cliche without thinking about it deeply.
Once you internalize this, their employee numbers make sense.
DocuSign makes their money by setting up the network effect of "DocuSign is the de facto standard so you, too, should sign up for DocuSign". This requires legions of salespeople to bribe the representatives of large businesses, governments (national, state, and local), legal associations, etc. to use DocuSign.
The fact that DocuSign has a tiny amount of extremely shitty tech to make stuff happen is irrelevant to their business structure.
You may be right, but they certainly do a lot of legalese stuff on an international level to make sure their product can actually be used everywhere.
The key differentiator between these and "true" tech is whether the business has:
- Very high margins. If WeWork wants to grow, they need more buildings and both renting and buying require large amounts of capital. Tesla requires a significant amount of raw materials to build a car. Google on the other hand spends almost nothing to add a new customer to the database. This lets Google grow to worldwide scale with (comparatively speaking) very low capital requirements, while the others need huge upfront investments.
- A sustainable technological advantage or network effect. WeWork is "just" the Regus business model with better branding. Tesla used to have some technological advantages but the other car manufacturers are catching up rapidly. This means that in the medium term their branding will be all they have left to distinguish themselves with, and public opinion is a fickle master. Google and Meta have really entrenched themselves in their respective markets and the network effect for both is so great that I cannot see them being dethroned anytime soon.
And that within those tech problems, human factors (getting people to agree, to do all the work rather than just the fun part, to deliver a sensible level of quality) dominate the problem, rather than actual tech issues.
And within THAT subset, some of those tech problems can be sidestepped by a bit of clever decision making.
Edit: Whoops, just read the sibling comment. Apparently it wasn't just me.
There must come some tipping point where DocuSign is so much the standard (like Microsoft Windows) that they no longer need ~7000 sales people.
Arguably every big tech company isn't a tech company at all. Most either fall into some combination of advertising, data brokers, etc. And at the end of the day, the real product of any publicly traded company is their stock - any tech product they happen to sell is a footnote compared to their share price.
TSMC could be an outlier there, I don't know enough about the company's financials. The others, though, would fall into the category of companies valued and driven primarily by their stock valuations rather than the products they produce.
I spent the next 3 hours forcefully listening to a DocuSign sales pitch by that person, being followed to the bar and back with them talking to me about DocuSign, talking to other people with them standing next to us and intervening into conversation to talk about DocuSign. I tried all the tricks in the book to nicely ask that person to either leave me alone or at least not talk about DocuSign.
In the end, I just flat out told the person I'll probably never use DocuSign just because if their sales are that annoying now, I can only imagine how much worse they'll be after I give them my email. They got kind of insulted and left. Finally, I could breathe.
I'm not sure if I've ever met a more annoying salesman, and I've met a whole ton of them in my day. Can't say if it was due to their training or just personality, but from what I got they thought they are way more important in the "e-signature" game than they are. Like "billions of dollars of contracts would not happen if there was no docusign, we are the gears that make the world turn".
TLDR - They're a sales company trying to sell everyone their irrelevant piece of technology.
They literally aren't.
15 * 0.33 = 4.95
100 * 0.05 = 5
You don't want to be one of the 50 people extra that got canned.
And most companies making billions need thousands of employees, especially software devs need to understand that.
And so they outsourced everything to others. Their 2013 expense is $148M for $10M of revenue[1]. They aren't spending $148M on 55 employees for sure. And that doesn't include server cost(which is likely very low due to optimizations).
[1]: https://www.sec.gov/Archives/edgar/data/1326801/000132680114...
It is a tremendous force multiplier. It will take time to run trough organization - but if you are not the steamroller you will be the asphalt. And it will destroy a lot of the white collar bullshit jobs.
Among small startups and entrepreneurs, it can also increase speed of execution. Instead of handing off instructions to a designer (IF you have one already - otherwise you have to find one) and waiting for the results, you can tinker around with prompts and get what you want within hours. More than the cost, it eliminates another source of friction.
Where exactly will these magical programmers come from, if not the existing pool? That is the fundamental flaw with this argument - there are not tens of thousands of people with not enough skill to be currently employed, but enough skill to out-compete current programmers as long as they can use GenAI.
If these tools get orders of magnitude more powerful then maybe we can have a real discussion about the number of programming jobs diminishing, but that hasn't been the case yet.
The reality is that for a typical software developer, you're looking at a single digit increase in productivity if you use Copilot. ChatGPT provides even less productivity increase right now.
But if I and co pilot can do double the work per unit time compared to just me, suddenly the pool is twice as large as it needs to be.
Am I 2x productive? Depends on what I’m doing. But at almost no point since adopting copilot have I become 0 percent more productive so the pool is somewhere between 1 and 50 percent bigger than needed.
It's not like writing a history paper where you can write "Napoleon was a French general who conquered Europe in 1987" and just be wrong in a way that requires cross-checking facts. Computers are less forgiving of things that are wrong.
But I do feel like I see incorrect documentation proliferating a bit more, and I'm curious whether we'll see an up-tick in more subtle bugs that is wrong but not so wrong that it is rejected early on. I haven't personally seen that in my work yet. I do also see more code that I don't like during code reviews, that I'm sure was spat out by an AI, but often I conclude that my preference isn't really "right" or even better, but just a preference that doesn't really matter.
Their current status is basically "very junior programmer with a photographic memory, who has read a sizable chunk of the internet". They are excellent if you regularly need to implement code that has been done before.
If I'm doing something obscure or niche forget it, it'll just make up a bunch of nonsense. But I wish it was easier to get it to say "I think it should work like x but I'm not sure about y part" instead of just going all in and making stuff up.
We need to train it on old LessWrong posts so it learns about degrees of belief and such lol
It literally says "If you do not know something, just tell me, don't make something up".
Also, "Don't worry about me feeling insulted, no need to apologize for everything", which eliminates a lot of the groveling.
When dealing with niche topics it helps to literally copy-paste relevant chunks of the manual in. You can't expect it to know about everything (yet).
I use it to work through architecture problems that are over my head or find answers to things that aren’t obvious in documentation. These are things I used to have to ask staff engineers for advice with. I’ve even had it write large sections of code for me. At this point most of the code it puts out works.
You can also do things like ask ChatGPT to use multiple specific technology stacks to implement your solution, which is really useful for when you’re trying to come up with a solution that fits within existing infrastructure.
It’s like a mega-brain that’s an expert in everything and understands your specific prompt without giving you the junk you don’t want that has similar words.
But the way those actions have changed just also isn't that big a deal. I have much better "intellisense" by using copilot, and I have much better stack overflow via interactive chat that will tell me answers immediately rather than linking to a kinda-sorta-the-same duplicate question after an hour. But using code completion and searching stack overflow weren't activities that took up much of my time. They took up some of my time, and it's really awesome that I'm using that time much more efficiently now, but it's still a small proportion.
I still spend most of my time reading code and docs, talking to my colleagues about things, and thinking about how to structure interfaces and larger components in order for them to be more useful and to evolve more easily as we hire more people and adapt to different business initiatives. The AI assistants help me some with these tasks, sometimes I ask them to summarize stuff I'm reading, or (honestly hardly ever) to help me understand unfamiliar code, but these are quite small value adds. They aren't anywhere near the point where they can replace my work on these tasks. They just can't store enough context on the business or do enough different kinds of things or take enough initiative to do this part of my work.
All of this is to say: I'm bullish on "LLMs as coding assistants" but - for the moment - remain bearish on "LLMs as replacement for a software engineer".
I'm sure more evolved LLMs will begin to replace jobs soon, but it will mostly be the low hanging fruit. By the time it gets to what I'm doing we'll be in Wall-E floating chair [1] ubi territory.
Can this product scale to 10M users? No clue. Does it have all the features that I wanted? Not yet. But is it live, usable, useful and profitable?
Absolutely.
E.g. I think not even Gartner is talking about automatic IT environment configuration and monitoring anymore.
This is so foreign to me as someone who has become dependent on LLM's
Does it solve problems for me? No, not really - but it's a huge productivity booster in helping me find solutions.
There was just a huge writers strike to combat this.
The problem seems to be that unless a company reports layoffs 'because of AI', then people think 'oh it wasn't because of AI'. It is definitely happening, but nobody actually doing layoffs is going to say that is the reason.
I've been in tech a decade and noticed over the years more and more jobs being outsourced or replaced by immigrants to USA. Like many the job postings on adobe's website are for Bangalore for example which wasnt the case 10 years ago. LinkedIn is making a huge push towards Bangalore workforce as well.
Is there a way to quantify the transition away from American labor to foreign labor??
Asking for profit companies to ensure full employment is a dumb idea.
Asking for profit companies to keep people on for any other reason than profitability is a dumb idea.
Subsiding companies to keep the jobs is a dumb idea.
The only good idea is for the federal government to eliminate involuntary unemployment. The private sector can sort itself out.
If you really want to help people, we need to drastically bring down the cost of living in cities through building more housing, then provide some unemployment or ubi to keep you afloat with your savings while you look for something worthwhile to do.
Housing is not ruled by the supply and demand wizardry. Housing is subject of infinite cash from fossil fuels, oligarchs, pension funds, dynastic family fortunes, and mortgage leverage by individuals already owning real estate. You build more, more will be purchased and the prices will still grow.
Occupancy is at record highs in most US cities. It’s simply too little inventory, mostly due to local regulations and NIMBY’s. Most housing is owned by ppl, and a lot of the nation’s net worth is tied up in housing, disencentivising the lowering of house pricing.
You could see it duting covid in NY, people left and inventory went up. Rent and housing came down.
Same now in SF, ppl leave, inventory goes up, prices come down.
It’s not that complex really. Solving it will not be easy though.
Markets are important in the system we've built, we can't just toss out market effects and assume nothing else will break. Whether markets are the "right" approach or the one that a majority of people still want is up for debate, but in the meantime much of our society is based on markets operating relatively freely as the approach of both understanding sentiment and allowing markets to shift without centralized control. Getting rid of the downside in our job market would almost certainly break the job market all together, as there are few downsides motivating people to try to find and keep a job.
I don’t understand this mindset. Looking at numbers in a vacuum.
The labor market is literal wage slavery, with slaves being rented instead of owned.
This attitude of everyone for themselves is literally what’s wrong with this modern, disgusting “individualist” pull yourself up by the bootstraps society.
I know the rules here are to be civil, but I really don’t understand this “f you I got mine” mentality.
And yet it's the best system we've devised so far. Maybe we should go back to the older systems where the only way to climb the social ladder was to go to war pillaging our neighbors and taking them as slaves
This is the truth, and it's the saddest part of all...
There are much more reasonable arguments made for individualism than "f you I got mine", just like there are more reasonable arguments for communalism than the ones posed by Stalin.
> The only good idea is for the federal government to eliminate involuntary unemployment. The private sector can sort itself out.
You are talking about mandatory work camps right?
People don't have to work for a large corporation. If they are uncomfortable with the fact that their employment is at will and can be terminated for any reason, including as part of a mass layoff, work somewhere else or work for yourself.
If the company's board doesn't approve of mass layoffs, either don't approve them (if they have that power) or fire the C-suite after the fact.
We don't need laws, and therefore larger government control, to fix all our problems. Its concerning to me how frequently the initial reaction to situations like this is "the government should fix this."
US gives you freedom. Europe locks you to a country and culture you don’t necessarily want to live in.
I'm European and I don't feel that way at all - the very opposite in fact. Care to expand?
Another aspect is local culture. Europe is still INCREDIBLY centered around national cultures despite people trying to be more open. A lot of X-nationality are still acting according to stereotypes and it's incredibly hard to stay in such country longterm.
Part of being happy is to live in a welcoming, happy place not just money and amazing infrastructure.
If I were to accept a job in country B I would (in 9/10 scenarios) need to move to that country and adjust to the local culture and language.
I had a friend with korean wife who was in Germany and then Belgium each for couple of years. The whole family was suffering from the constant need of adaptation to local languages and eventually they ended up going to Canada.
PS - US developers get all of those benefits too, so you're just taking a pay cut for no reason. Not so attractive to me.
Just don't make specific claims which are not true. Europeans earn lower than 40% for the senior positions. e.g see google salaries[1]. Google pays good but is not the top of the league. Send me a page in Europe with 60% of those salaries.
[1]: https://www.levels.fyi/companies/google/salaries/software-en...
Sure if you're a run-of-the-mill university graduate with no particularly valuable skill set you won't be able to pull that off, but if I remember correctly in the US it's also not guaranteed to get into these companies. So not sure what's not true, do you want to say you believe there's no single software development manager or principal engineer at SAP, BMW or Zalando that earns in the range of 200-250 T€ including stock options? People don't share their salaries here on US platforms as much as in there so the data in levels.fyi is not very useful, but there's e.g. DATEV which has more detailed salary data (as they provide the tax software for most companies) which you can get access to, that shows a strong bimodal distribution with "regular" salaries and salaries for "exceptional" employees.
erm... none? the "sky high" threshold in major EU cities is 100k EUR. Zalando and SAP mentioned by OP might pay above 100k but only in Munich or Frankfurt am Main.
Edit: though I wouldn’t trade our current Hamburg flat, 2 floors, balcony, office room, for below 1300€/month, difficult to leave such a place!
Edit: I moved 5 times since 2015, across 3 countries, I know how horrible and difficult it is to find flats, even more in a place where you’re not speaking the language or know the culture. I never pretended it was simple. I’ve been refused flats for absurd reasons such as because of my foreign last name (like, explicitly), or because I was working remotely before it was considered acceptable.
Did you have a better experience in Munich or Frankfurt? From what I heard Munich is also its own mess when looking for flats. No idea about Frankfurt (I just visited once and loved the place but don’t know people living there).
I eat vegetarian, but yes I love Berlin’s falafel dürüms!
And for a job like software engineering, skills and regulation should be the only factor for salary of a team as outsourcing is done by everyone.
Yes, not everyone has the courage to stand up to their employer, and it may take some time for the legal process to work itself out, and it can be stressful. But the guarantees are there.
For myself, as an American who moved to Europe and has stayed, I found my quality of life much better. The reduction in pay has not bothered me one bit.
The employer can always negotiate with the employee if they want them gone sooner, but that's still going to be expensive for the employer, and the worker in this case has much more robust rights than the employer. If my company wanted me gone I could easily get a year's salary out of it with any decent lawyer, as I have a permanent contract.
> If the HR and management want one out, one is out.
Definitely not in the Netherlands, and I expect most EU countries are similar.
> Is is worth the massive paycut the Europeans are accepting?
I don't earn anywhere near the 600k number that I see flying around in this thread and elsewhere on HN (which is lunacy to me but more power to you guys), but I'm still better off than 99% of people I meet, have my own home, have actual usable public transport and don't have to worry about a hospital visit bankrupting me. Oh, and my employer can't arbitrarily decide to just fire me, and if they do (for example in a wave of layoffs) I get compensated generously for it, plus the gov't itself will compensate me as well if I can't find a job for whatever reason while having 35 paid vacation days (I think the legal minimum is 25 vacation days for a fulltime employee, not 100% sure on that number though) + 10 or so public holidays. So, yes, definitely worth the pay cut.
There's more to life than gross monetary amounts, and from the horror stories my USA-ian friends relay to me about living there, I consider myself quite privileged to be where I'm at.
In your experience, has this led to more careful hiring?
One big downside I've seen at some companies in the US is that its so easy to fire someone that companies can tend to hire whoever walks in the door. Especially at larger and publicly traded companies, it can often be more important to fill seats and show company growth when times are good and fire by the thousands at the first sign of any economic issues coming ahead.
I don't personally mind it being easy for a company to fire someone as long as that situation is clear before accepting a job, but it would be interesting if we have clear examples of better hiring practices when the employee can't be fired easily.
Not in my (albeit limited) experience in the Netherlands. What I’ve seen it lead to is people hired initially into temporary one-year contracts, which are then converted to permanent contracts if things work out. I’ve definitely seen people be fired or otherwise pushed out even on permanent contracts. It’s not impossible, but as the above poster mentioned, it’s not easy either.
The quality of employees hired was certainly no better than at other companies I’ve worked for where firing was much easier. That’s with a sample size of 1 Dutch company though, and that company sucked, so it’s not a great dataset from which to draw conclusions.
Anecdotally I've seen companies skip even that process and hire anyone who seems even slightly qualified. The bar for "better hiring practices" is pretty low for me when the examples I've seen over 20 years in tech are either hire anyone to fill seats or throw obscure logic problems at candidates assuming that maps well to the role being hired for.
I've never been at the helm for hiring decisions so couldn't tell you too much about the process itself, but we have a concept of a trial period here. The first month (or two, it varies by company but I think the maximum allowed is 3 months and most companies only go for the 1 month) of your employment, either party can part ways for any reason whatsoever at the end of the trial period. So if you're just not a good fit for whatever reason, the company can let you go when your trial period ends, no questions asked (assuming you weren't being treated unfairly of course).
At least anecdotally, everyone I've worked with that has passed the trial period at the 4 companies I've worked for in NL has been great to work alongside. People like to imagine a scenario where someone will bust their ass off for the trial period and then coast once they get through the trial period, but I've never experienced anyone doing it, I have however seen plenty of people dropped once the trial period ends.
Keep in mind that you can only get a permanent contract after 3 consecutive temporary (usually 1 year) contracts, so it's not like there's endless room for abuse by a bad employee either. If they're shit at the job within the first or second contract, the company just has to wait them out and not extend another one, and if someone's been fine for 3 years then it stands to reason that they should get a permanent contract that protects them extremely well.
Of course, if the company likes you they can offer you a permanent contract even sooner or even straight off the start, but I just mean that legally the company has 3 years worth of contracts to decide to keep you permanently or not.
It's probably a bit harder to get hired here (I don't really have that struggle but friends do complain about it), but once you do land somewhere then you can at least have the confidence that you won't arbitrarily be fucked over with no recompense due to things wholly outside your power.
If anything, they're more free market oriented than the US, see Tesla versus IF Metall.
And given the political importance of unemployment figures there is probably a great deal of additional manipulations the government does on them as it approaches election year.
Large numbers of people who left workforce for pandemic have come back.
In COVID times everybody had a hiring boom because it looked good to be hiring. So CEOs accelerated hiring, regardless of whether more manpower was actually needed. Now, it looks good to be laying people off in the name of "efficiency", so CEOs initiate layoffs to please the shareholders.
There is no actual logic here, whatever pumps the share price is the action taken because CEOs want a fat bonus. Most CEOs are parasites that do very little work other than warp the truth, lean into hypes, and make false promises. All while collecting a salary 100x the average worker's.
During the pandemic response trillions of dollars werr poured into the system, primarily by giving the new cash to banks at the top of the funnel. This money had to go somewhere and it was largely thrown at tech companies, seeing as they were more likely than other industries to continue to function when the government decided to shut down large portions of our society. Tech companies can only do so much with a huge influx in cash, hiring and stock buy backs are an easy way to burn through the cash and appear to be a healthy and growing company.
and people wonder why apple stock price is constantly so high even though they've been creatively stagnant for almost a decade.