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Comment by wrs | Hacker News Reader

This makes some sense. We have CEOs saying they're not hiring developers because AI makes their existing ones 10X more productive. If that productivity enhancement was real, wouldn't they be trying to hire all the developers? If you're getting 10X the productivity for the same investment, wouldn't you pour cash into that engine like crazy?

Perhaps these graphs show that management is indeed so finely tuned that they've managed to apply the AI revolution to keep productivity exactly flat while reducing expenses.

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As the rate of profit drops, value needs to be squeezed out of somewhere and that will come from the hiring/firing and compensation of labor, hence a strong bias towards that outcome.

99% of the draw of AI is cutting labor costs, and hiring goes against that.

That said, I don't believe AI productivity claims, just pointing out a factor that could theoretically contribute to your hypothetical.

Maybe if you have a business where the need for software is a constant, so it’s great to get it for 90% off. (It’s not clear what business that is in 2025, maybe a small plumbing contractor?)

But if your business is making software it’s hard to argue you only need a constant amount of software. I’ve certainly never worked at a software company where the to-do list was constant or shrinking!

If you expect input cost for something that's mostly labour to go dramatically down, then you also fear the value of your product crashing.

At the end of the day economy is king. Nothing else matters. But economy is not something you can plan and predict (shout out to my communist friends), it is a chaotic system full of emergent elements, chance-based actors and third-order effects and so it usually takes years for trends and patterns to emerge. All I'm going to say is that unless AI keeps improving exponentially (and there's definitely an argument to be made that it's not already) there is going to be a hell to pay a few years down the road.

I use Grok, Claude and Gemini every day, these "tools" are very useful to me (in the sense of how google and wikipedia changed the game) and I watch the LLM space closely, but what I'm seeing in terms of relative improvement is far removed from all the promises of the CEOs of these companies... Like, Grok 4 was supposed to be "close to AGI" but compared to Grok 3 it's just a small incremental improvement and the same goes for others...

A lot of these C-suite people also expect the remaining ones to be replaced by AI. They subscribe to the hockey-stick "AGI is around the corner" narrative.

I don't, but at least it is somewhat logical. If you truly believe that, you wouldn't necessarily want to hire more developers.

Or CEOs.

If everyone can just generate the software they need, why would they pay anyone else to do it for them? If code generation were that good, software companies would die en masse.

Today you will learn what diminishing returns are :)

You can only utilize so many people or so much action within a business or idea.

Essentially it's throwing more stupid at a problem.

The reason there are so many layoffs is because of AI creating efficiency. The thing that people don't realize is it's not that one AI robot or GPU is going to replace one human at a one to one ratio. It's going to replace the amount of workload one person can do. Which in turn gets rid of one human employee. It's not that you job isn't taken by AI. It's started. But how much human is needed is where the new supply demand lies and how long the job lasts. There will always be more need for more creative minds. The issue is we are lacking them.

It's incredible how many software engineers I see walking around without jobs. Looking for a job making $100,000 to $200,000 a year. Meanwhile, they have no idea how much money they could save a business. Their creativity was killed by school.

They are relying on somebody to tell them what to do and when nobody's around to tell anybody what to do. They all get stuck. What you are seeing isn't a lack of capability. It's a lack of ability to control direction or create an idea worth following.

I disagree that layoffs are because of AI-mediated productivity improvements.

The layoffs are primarily due to over-hiring during the pandemic and even earlier during the zero-interest-rate period.

AI is used as a convenient excuse to execute layoffs without appearing in a bad position to the eyes of investors. Whether any code is actually generated by AI or not is irrelevant (and since it’s hard to tell either way, nobody will be able to prove anything and the narrative will keep being adjusted as necessary).

The reason there were so many layoffs is because cheap money dried up.

Nothing to do with AI.

Interest rates are still relatively high.

It might be more correct to say that interest rates are relatively normal, historically. Post-2008 we had a long period of abnormally low interest rates.

Bootstrapping is a lot easier when you have your family's or someone else's money to start a business and then fall back on if it doesn't pan out.

The reason people take jobs comes down to economics, not "creativity".

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