Corporations are not going to admit it.
We hear a lot of reasons for the layoffs of late. Many point to the economy weakening as the reason for people losing their jobs. Naturally, this is going to have an impact. Globally, we see the economy suffering. China is in bad shape; Germany is mired in a recession.
Overall, economic optimism going into 2026 and 2027 might be misguided.
That said, it does not tell the entire story. In fact, it might provide CEOs cover for what is really taking place. We saw a few instances where internal memos differ from the public narrative. Executives are well aware of what is taking place. Of course, to admit this would cause some pushback.
It is better to mislead everyone, blaming the job losses on restructuring, the economy, or whatever corporate speak they come up with.
AI Is Already Taking Jobs
Understanding the basic essence of the economy is crucial.
Basically, there are three components that we can look at.
The first is general economy. This is people who provide services such as bartenders, retail workers, plumbers, and other services. It also includes those who work in manufacturing. In other words, we are dealing with anyone who provides a product or service.
Then we have the management. These are people who make this possible. They are the ones who ensure the work gets done. Here we have a much smaller percentage of people yet they are responsible for a larger portion of GDP. This goes all the way up the ladder to CEOs.
Finally, there are the innovators. Here we have the Elon Musk and Jeff Bezos types. Entrepreneurs are also included in this. While they can serve as CEOs, they tend to be the ones who shape the direction of society. This can be funders such as Marc Andreeson or the ones who take his money and for their start ups.
Our final section is the smallest in terms of numbers, with a fraction of a percent of the total population falling under this. It does, however, produce an outsized portion of GDP relative to their overall size.
When it comes to AI, these three sections make it clear who is at risk.
Second Section Then First
The second section is going to be obliterated. When we talk about white collar jobs, this is the sweet spot for elimination. This work is not genius level. Mostly we have people looking at spreadsheets and making decisions. Over the next couple years, AI will take over much of this. That means jobs elimination on a massive scale.
Again, this is not as large as the first group in numbers. It is a lot harder to replace a fast food worker. Someone in HR is much easier to digitize. Those who provide physical service (or a product) are not under as large a threat until robots start to impact the labor market in large numbers. It is something that will likely not occur under a few years into the next decade (2032).
Knowledge works is under first due to the advancement of LLMs. These are becoming commoditized with the cost per token dropping every quarter. A paralegal who prepares legal documents is in the high risk category. To be honest, a computer can likely due a better jobs, increasing output and reducing errors.
The world is not prepared for this.
My prediction is that 2026 is a jumping off point. Major corporations are not going to be able to hide what is taking place with their corporate PRs and misdirection. I would expect the job numbers to consistently underperform, with lower readings than projected. We saw this the last few months as the media ignores the impact AI is having.
We have a choice: believe the corporate talking points or call bull crap. If it is in the media, it is likely a narrative meant to deceive. The financial media is no different than any of the other legacy outlets.
With the advancement of the AI curve, we are seeing massive jumps on a quarterly basis. This is something that we never saw before. The speed is what is so different this time.
AI is already having an impact on jobs.
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I'm really against the zero sum game that has installed people about AI and jobs.
The whole south park (they taking our jeeebs) thing.
Most recession companies do layoff, with our without AI. On the flip side, companies need to reinvent themselves. In the 90's it was computers, in the 00s was, 'get online', in the 2010 was 'go mobile', and on the 2020's was "go remote". All with smaller revolutions in between like paperless office, cloud systems and even Blockchain.
All those revolutions caused companies to do massive hires and layoffs. We are already mid 2020s and the cycle is repeating. After a very good decade for the global economy, it's slowing down and people are looking for who to blame.
Hi Task. Excellent article, as always. I also believe that the main victims in the short term will be office workers and knowledge workers, who seem to be the most easily automated. It's unlikely that AI will take jobs away from manual workers for now. There will be tensions in the labor market in the future, and one thing that worries me is that our Italian politicians aren't very good at understanding how AI will change the welfare state.