Latest / Minds, Bodies, and Terawatts / Goldman Says AI Will Displace One in Eleven American Workers, and the Layoffs Are Waiting for a Recession. The Same Morning, a Bank Whose Profits Rose 12% Cut 5,000 Jobs Without Waiting

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Goldman Says AI Will Displace One in Eleven American Workers, and the Layoffs Are Waiting for a Recession. The Same Morning, a Bank Whose Profits Rose 12% Cut 5,000 Jobs Without Waiting · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the layoffs have a date and the date is the next recession. Fortune reported on Thursday, October twenty-second, that Goldman Sachs now expects AI to push about nine percent of American workers out of their jobs, roughly fifteen million people, and that most of those firings will wait for a downturn.
• 0:19
  [Guest] The note is by Joseph Briggs, Goldman's economist on this. We covered this in August, when Goldman found the AI hiring drag landing on twenty-two-year-olds who hadn't gotten their first job yet. Back then the bank was measuring a draft under the door, and now it's forecasting the storm.
• 0:36
  [Host] That number isn't new, Goldman has been using it for months. What's actually new here?
• 0:41
  [Guest] What's new is the word, and the timing. Earlier this year, on the bank's own podcast, Briggs described those same workers as being reallocated to new positions. Thursday's note calls them displaced, and it says when.
• 0:53
  [Host] Hold on, nine percent of what? Is that where unemployment is going?
• 0:57
  [Guest] No, it isn't a jobless rate. It counts people pushed out of a job over a decade-long transition. Briggs has said that even on his own forecast, unemployment rises less than a point in any single year, because most people find something else or stop looking.
• 1:12
  [Host] Then why does the recession part matter? A slow bleed sounds survivable.
• 1:16
  [Guest] Because the bleed isn't slow, it comes in steps. Goldman charted the share of Americans in routine jobs, clerks and machine operators and the like, through the last four recessions. It held flat through every expansion, dropped in a step in each downturn, and never climbed back.
• 1:31
  [Host] So it's the recession that fires you, not the software?
• 1:35
  [Guest] The downturn takes the job and the machine takes the chair. In a good year, no manager cuts a person who is doing fine. In a bad year the cut is forced, and when revenue comes back, the manager buys software instead of rehiring.
• 1:49
  [Host] Has any of that shown up yet, or is this all forecast?
• 1:53
  [Guest] Barely, and Briggs says so. Most American businesses still haven't built AI into their daily work, and announced AI layoffs have fallen back sharply from their spring peak. The capability is spreading and the excuse hasn't arrived.
• 2:06
  [Host] Except the same morning a bank did it without an excuse.
• 2:09
  [Guest] The British bank Barclays. Its third-quarter results came out Thursday with pre-tax profit up twelve percent, and in the same statement it said it is cutting five thousand jobs by the end of the year.
• 2:21
  [Host] Profit up and thousands out, in the same breath. That's not a recession cut.
• 2:25
  [Guest] It's the reverse of one. Most of the cuts are support roles, and the bank named software developers. Its finance chief, Anna Cross, told analysts the cuts reflect impacts the bank is starting to see from AI, and the chief executive's line is that AI is the icing on the cake, not the cake.
• 2:43
  [Host] Icing on the cake sounds like the opposite of replacing people with it.
• 2:48
  [Guest] Read it the way a finance chief would. By the chief executive's own account, the infrastructure gets built first and the AI benefits come later. The cuts came now, and what they buy, in the bank's own words, is capacity for investment.
• 3:02
  [Host] So the jobs went to pay for machines the bank hasn't finished buying?
• 3:06
  [Guest] That's a first wave Goldman's note isn't about, because there are two waves. Goldman's is automation, which arrives when the machine can do the work and a downturn gives management cover. Barclays' is a plan, which arrives when a board decides to fund an AI build out of payroll, and it doesn't need the machine to work yet.
• 3:25
  [Host] What does that mean for someone in a back office in Ohio, not a developer at Barclays?
• 3:31
  [Guest] Pantheon Macroeconomics, a forecasting shop, counts AI already costing America about ten thousand jobs a month, in accounting, advertising, office admin and legal services. Those aren't recession numbers. That's the first wave in a year when the economy is fine.
• 3:44
  [Host] And when the second wave comes, the recession one?
• 3:47
  [Guest] Then Goldman's step down lands on people who already watched the first wave take the desk next to them, and nobody rehires on the way back up. The question hanging over Goldman's first note was whether this had started at all. It has, early and inside profitable companies, and the part that waits for the recession is the part that never comes back.
• 4:08
  [Host] So the forecast says wait for the downturn and the bank says don't. If you're pouring a floor under those people, which wave do you pour it for?
• 4:17
  [Guest] The first one, because it's already here. The floor Patrick Deglon calls the Foundation, housing and energy and care delivered as infrastructure rather than earned by a paycheck, has to be poured on Barclays' schedule, not Goldman's, because poured after the downturn it's a relief operation. For more on cuts that run ahead of the machines, and the floor that has to beat them, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.