Every large company is updating its standard layoffs announcement press release from "economic headwinds" to "AI".
Global economy doesn't look that terrible. Nor is the AI story that believable. Is it just the CEO Zeitgeist? All the guys at Aspen talking about what fraction they cut, just as 5 years ago they bragged how bloated their org chart is?
TBH the "ZIRP overhiring" seems like the most likely real reason. I could never understand how all these companies could hire so many people for so much money, only to have them work on later-to-be-canned open source projects.
But if that's really it, no idea.
It definitely increases some types of productivity (Opus one-shot a visualization that would have likely taken me at least a day to write before, for work) - although I would have never written this visualization before LLMs (because the effort was not worth it). So I guess it's Jevons Paradox in action somewhat.
In order to observe the productivity increases you need a good scale where the productivity would really matter (the same way that when a benchmark is saturated, like the AIME, it stops telling us anything useful about model improvement)
Except all we have is "trust me bro, I'm 100x more productive" twitter/blog posts, blant pre-IPO AI company marketing disguised as blog posts, studies that show AI decreases productivity, increased outages, more CVEs, anecdotes without proof, and not a whole lot of shipping software.
https://fred.stlouisfed.org/series/MFPPBS https://fred.stlouisfed.org/series/OPHNFB
Productivity is by definition real output (usually inflation adjusted dollars) per unit of input. That could be per hour worked, or per representative unit of capital + labor mix.
I would accept an increase in the slope of either of these lines as evidence of a net productivity increase due to artificial intelligence (unless there were some other plausible cause of productivity growth speed up, which at present there is not).
First, I'd expect the trajectory of any new technology that purports to be the next big revolution in computing to follow a distribution pattern of that similar to the expansive use of desktop computing and productivity increases, such as the 1995-2005 period[0]. There has not been any indication of such an increase since 2022[1] or 2023[2]. Even the most generous estimation, which Anthropic itself estimated in 2025 the following
>Extrapolating these estimates out suggests current-generation AI models could increase US labor productivity growth by 1.8% annually over the next decade[3]
Which not only assumes the best case scenarios, but would fail to eclipse the height of the computer adoption in productivity gains over a similar period, 1995-2005 with around 2-2.5% annual gain.
Second is cost. The actual cost of these tools is multiples more expensive than it was to adopt computing en masse, especially since 1995. So any increase in productivity they are having is not driving overall costs down relative to the gains, in large part because you aren't seeing any substantial YoY productivity growth after adopting these AI tools. Computing had a different trend, as not only did it get cheaper over time, the relative cost was outweighed by the YoY increase of productivity.
[0]: https://www.cbo.gov/sites/default/files/110th-congress-2007-...
[1]: First year where mass market LLM tools started to show up, particularly in the software field (in fact, GitHub Copilot launched in 2021, for instance)
[2]: First year where ChatGPT 4 showed up and really blew up the awareness of LLMs
[3]: https://www.anthropic.com/research/estimating-productivity-g...
I still use them but find that more of the time is spent arguing with it and correcting problems with it than actually getting any useful product.
I feel the same. They're better at some things yes, but also worse at other things. And for me, they're worse at my really important use cases. I could spend a month typing prompts into Codex or AntiGravity and still be left holding the bag. Just yesterday I had a fresh prompt and Geminin bombed super hard on some basic work. Insisting the problem was X when it wasn't. I don't know. I was super bullish but now I'm feeling far from sold on it.
I think you also underestimate how much hiring gives these large companies political leverage. A town can be completely destroyed when one of these companies threatens to move a factory or office
So hiring people is ditching this political leverage. If that was the original driver, what's changes to make it not worth it anymore?
Given how much of these companies runs on such projects, it really shouldn't be surprising. It's a numbers game for them; Facebook doesn't mind if 300 little OSS initiatives fail if it gets them React.
It doesn't? I was born in the 90s (so admittedly 2008 was before I started working), but the economy is looking the worst it's been in my lifetime to me.
I believe that's what we have today. The economic indicators are all worse than they were in 2008. Our economy is Wile E Coyote running at full speed in midair until he realizes the truth then falls.
I don't have the full context of what the thinking was back then since I was in highschool.
And also the worst of 2008 was confined to the US.
What we have now is more like 2001.
Also most of these big companies were completely dysfunctional on their hiring through 21/22, just going completely apeshit. Now they're making everyone suffer for it.
The market is mature now, and most sectors of the economy are getting hammered at the same time: tariffs have most industries cautious about new commitments if they aren’t already cutting, academia is reeling from grants being rescinded, large chunks of federal spending are gone or frozen, and state/local governments are getting less federal funding at the same time everything else is affecting tax revenue and increasing demand for social services. With so much uncertainty affecting the entire economy, you hear from people who have hundreds of interviews because even established companies in stable industries are unsure what tomorrow will look like after the next whim of an unstable octogenarian.
We're still on our way to hit the bottom for this round, and by all accounts it's likely to be much bigger when we finally do.
https://www.latimes.com/archives/la-xpm-2008-jul-12-fi-indym...
https://www.theguardian.com/business/2009/oct/11/banking-cri...
Italy had to buy 3% of Parmigiano Reggiano production.
https://www.the-independent.com/news/world/europe/rome-stage...
This is all the USofA. Elsewhere, China is allegedly also printing GDP growth like crazy. Europe is maybe a little stagnant but also not, on the whole, awful.
At the face of it, it's at least a C+ if not better. So if you'd claim it's terrible, there's some explaining to do.
The Federal Reserve of St. Louis is using the CPI numbers, as most government agencies do. I would contend those numbers in and of themselves lie. The ALICE index, which is based on more comprehensive data[0][1] and closer to what CPI used to represent before the major adjustments in the 1990s, tells a different story[2]
Inflation against the ALICE index is much higher than the 3% reported in by the Federal Reserve, running at a stark 5.9% YoY change. This honestly lines up much closer to the reality I see in my day to day life than the CPI numbers reported by the Federal Reserve do.
[0]: https://www.unitedforalice.org/methodology
[1]: I recommend downloading the PDF here: https://www.unitedforalice.org/Attachments/Methodology/ALICE...
Here's the explaining:
- Unemployment has increased.
- Long-Term unemployment has increased.
- Number of gig workers is at an all time high.
- Layoffs have continued.
- Personal household dept is at an all time high.
- Polls show most people have financial anxiety and feel squeezed.
- Inflation is not under control.
- Buy now pay later usage is up as much as consumer spending is.
- Income and wealth inequality are near records high.
- GDP and consumer spending were also seen peaking before the last 5 recessions as well...
I just don't understand where the squeeze is coming from. Either companies figured out how to do more with less people, or they started the cycle with too many people, or they don't know what they are doing. Undoubtedly they are laying people off, especially in tech. But I he symptoms you list don't explain it to me.
> Even unemployment, which is your top line, seems... fine
My lines were in no particular order. The issue with unemployment data is it counts gig workers as "employed." What doesn't add up is that there are fewer job openings, mass layoffs, and rising long-term unemployment (people who can't find work past 6 months).
> I just don't understand where the squeeze is coming from.
Nobody really knows. It's hard to model the economy and identify cause and effect. But likely candidates are low competition, businesses with coercive leverage on pricing/pay since buyers and workers have no alternatives. Essentials like housing, health, and food have skyrocketed, and we haven't scaled them as demand grew. Companies have abandoned stakeholders, they only care about shareholders. They're squeezing record profits, sustained because buyers are supplementing with gig work, have all adults working, are taking on more debt (and there are more ways to get credit than before), or are abandoning their savings (YOLO).
> Undoubtedly they are laying people off, especially in tech. But the symptoms you list don't explain it to me.
My list wasn't about layoffs, just signals the economy may be doing poorly. One reason for layoffs is companies believe the economy is at risk. They're avoiding hyper-growth and cutting fat. In tech specifically, I think a lot of it is undoing the mess of Covid, such as ventures that didn't profit, hiring before knowing what to use people for, workers distributed across too many places. Even if one part is growing, redistributing is hard. Easier to lay off and rehire where needed. There's probably some offshoring too. But in general, cost-cutting happens when companies feel they need to be conservative.
The unemployment one is interesting because if you look at that graph, the universal pre-2022 pattern is basically a spike of unemployment during recessions followed by a gradual drop.
The recent pattern is a gradual increase.
I'm not a big fan of "numerical only / shape of graphs" analyses, but this does seem strange. Of course, the 2020 Covid spike is also unusual, so...
(Well, at least the GPs 1st number. The 2nd ends in 2024, and the 3rd has questionable precision after September.)
This is quite likely a big part of it. There's a lot of herd behavior in the financial markets. A few companies fire a bunch of people, stock price goes up, others follow suit.
Also, in many cases, this isn't something that anyone pays attention to on an ongoing basis, because very few execs have the mandate to do it at a large scale, and their attention is scarce. So in practice, it tends to be done at intervals, and doing it when other companies are also doing it gives cover.
I agree this is the root cause, also a big reason for inflation are all these do-nothing white collar management/tech jobs subsidized by the post-pandemic money printer with fat paychecks burning holes in their pockets. Of course these companies tried to use the free money to grow when they could, now they want to fix the balance sheets. And AI is a great excuse, especially if you're in the business of selling AI products!
It's why Trump wants to turn the money printer back on, inflation be damned, because mass unemployment due to belt tightening would be politically even worse than inflation.
The same way they hire so many people for so much money to work on AI projects and build datacenter which haven't produced actual revenue for any customers (corporate or otherwise). I'd rather light money on fire to employ people tbh.
I say this as someone who has the 200 dollar Claude sub.
Salaries did not double in that same time.
That's why they're doing this. They can. Laissez-faire is the current regime of capitalism we live in.
This specific company is now the 5th most profitable company on the planet and its FOSS projects are pitiful and 99% fully self serving.
This causes companies to constantly review costs and look for ways to trim, which they're doing.
Now those bonds are all coming up for renewal at much higher interest rates, and the companies don't have the growth to organically support the higher head-count (in addition to the interest payments), and so are cutting.
Was this all wildly irresponsible? Yes. But the people who made those decision are never going to personally pay for any of it.
that's 3-4 years ago now
This is the very first time I saw anyone with a straight face talking about Amazon workers and mentioning "people do zero work, quite visible".
Certain sectors are high performing centers of excellence whose staff write blog posts that get posted to HN, publish papers, get put on the covers of hiring media and give speeches. The majority of the company is somewhere in the middle holding down their relatively uneventful but important functions, and probably a larger chunk than Corporate leadership would like to acknowledge are deadweight hiding in the cracks.
Maybe these employees are actually doing things--just things you don't see or appreciate?
I've been on 10+ projects at big companies and have begged to do work. Mostly it was showing up to 3-5 meetings/week while managers try and figure things out, and their VPs reconfigure budgets, priorities, and resources. Sometimes I do the work and hold it until someone wants it.
There's usually no standard top-down view about what happens when 3 VPs change the scope on 5 projects. But in reality, that usually means 10-30 people downstream are paralyzed. This is also where the tension between "new work" and "scalable processes" comes into play (need a consultant?).
Add regulatory compliance and approval gates, and then..
But there's also just bad hires who can get through interviews, they won't just leave, and building a case to fire those people takes time and management that gives a shit. At a large enough program at a large enough company with uninvolved management (and they can afford to be uninvolved because the program's doing well on all tracked metrics), you can get away with being negligible deadweight for a shocking amount of time. I wouldn't recommend it because your team will hate you, you'll build no skills or relationships, and you'll be the first to go when cuts happen, but some people are fine with that trade for whatever reason.
We always tend to think that others have it easier than us, as we do not have the full picture.
People generally don't like losing their jobs, and will put a positive spin on every report that might be good enough to pass muster with middle management bureaucracy at a large firm. All it takes is for enough people in the chain of command to shrug, sign whatever docs are needed and move onto something they care about more.
Not in the sense that AI is replacing current jobs, but that they would rather invest that money in Anthropic or on Data Center buildouts
They also always claim the layoff will enable more efficiency.
Insurance providers are also doing it.
AI is also used in the legal space too.