How do I know AI will cost jobs? Because Microsoft has said so.
As the FT notes this morning:
Microsoft will offer buyout packages to up to 60,000 staff as the tech giant tries to keep costs under control and pare its workforce as it spends hundreds of billions of dollars on AI.
They add:
Microsoft, like its Big Tech rivals, has been spending hundreds of billions of dollars on AI, developing its own frontier-level models and constructing or leasing dozens of new data centres every quarter to meet surging internal and external demand.
Chief executive Satya Nadella has urged staff to incorporate AI into every part of their working lives to improve their productivity.
Now those staff are paying the price for that.
To contextualise this, Microsoft has around 220,000 staff. Around one quarter are being offered the chance to leave. The last time Microsoft did this, thirty per cent took the chance to go. They might lose around 20,000 people, or about ten per cent of their staff, as a result.
Now just extrapolate that across the companies that employ all those bright young things most associated with tech companies.
Then recall we already face three global crises from war with Iran, climate change and the AI stock market bubble bursting (of which this is not an indicator).
Then worry.
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The planet is being destroyed by disposable wages so perhaps it would be best to just let the market economy collapse and use rationing & universal basic services instead. Without all the useless consumer crap to produce we might actually end up with the much reduced working week technology always promised.
This seems to me to be the start of something quite horrific. Presumably these will include highly qualified people who may well find that unlike previous generations the very companies who they would expect to offer them jobs are also shedding personnel. What does the future then look like?
I can’t work out whether this is quite what you say. It seems to me that companies regularly go through phases of hiring and firing, and losing 10% of the workforce – however horrible it is for those affected – is something that happens as part of normal employment cycles.
The question is why. Your quote relates it to hundreds of billions being spent on AI, though to put that in context Microsoft is so big a company that most of their activities (including profits) are measured in hundreds of billions.
Now AI might increase productivity and thus need fewer staff, but that isn’t quite what your quote says. It depends on what those staff work on. They have developed an income stream that is automatable without AI, for example I have to pay an annual subscription for what used to be a one-off licence. It needs very few staff to maintain their legacy income.
If the jobs lost are specifically around AI then that is an important indicator. It seems to me that all the main players in AI including Microsoft are predicting future earnings on the basis of being a monopoly provider. They can’t all end up with 50% plus of the paid market which is one reason there will be serious drops in share valuation. The other reason is that they are all working on the Large Language Models which is the cutting edge, when 90% of current AI use is essentially advanced word processing (drafting documents from prompts) or automated web searches and those can now be done adequately with a much smaller and cheaper “small language model” which is where the Chinese are dominant. Job losses may be an indicator Microsoft realise their vulnerability.