The Job Market is Rolling Over

Hello, I hope that your summer is going well.

Friday brought with it a staggeringly negative jobs report. May and June job growth numbers were revised down by 258,000 and the most recent July report was very weak, with only 73,000 jobs created instead of the expected 104,000 and 75% of new jobs coming from one industry - health care. One analyst summed it up: “The labor market is deteriorating quickly.”

This means that the last 3 months have been the weakest job creation period since COVID. Markets suffered. An angry President Trump fired the head of the Bureau of Labor Statistics on Friday after the lousy job report. I don’t think that’s going to solve the problem.

There are a number of factors at work, including the Trump tariffs and AI. I’m going to dwell on the latter, particularly its impact on entry-level white collar workers, otherwise known as recent college graduates. I had dinner with the CEO of a tech company last week. He said, “We just cut almost 20% of our workers, and chances are we’re going to be doing it again in the next year or two. There are a lot of efficiencies we are getting with AI. At the same time, my daughter is in college and she’s looking for a job. She’s trying to avoid tech because she sees what I’m doing. I’m not sure what her classmates are going to do for jobs in a few years.”

A partner at a prominent law firm told me, “AI is now doing work that used to be done by 1^st to 3^rd year associates. AI can generate a motion in an hour that might take an associate a week. And the work is better. Someone should tell the folks applying to law school right now.” I posted this quote on X and it went viral, getting 7 million views. Also this year, law school applications surged 21% - there’s a flight to safety, though in this case it’s not so safe. 3 years from now, how many lawyers are going to be getting hired?

A professor at a prestigious university shared, “For the first time I have alums calling me saying they’re still without a job, and they’re driving an Uber to make ends meet.” Recent data from the Federal Reserve showed that the unemployment rate for men with a college degree has crept up and is now roughly the same as for those without a college degree. The college premium is evaporating.

Back when I ran for President, I talked about AI taking the jobs of truckers as well as customer service representatives. Both of those things are now happening, as robot trucks are now taking routes and AI is replacing customer service reps.

Microsoft came out with a study last week showing the jobs most and least subject to automation via AI. The top 4 by number were customer service representatives, sales representatives, marketing analysts and management analysts. In total, those 4 jobs comprise 5.6 million jobs, many of which are done by entry-level college graduates. You can easily see at least half of those jobs disappearing in the next several years.

Microsoft also documented which jobs are least subject to AI automation. That list includes dredge operators, maids and housekeepers, hazardous material removers, roofers, housepainters, phlebotomists, and nursing assistants. Not a lot of office workers on this list.

In essence, what happened to manufacturing workers when robots started hitting the assembly lines 30 years ago is now happening to knowledge workers. Offices are going to be emptied out.

I always thought this day would come. I spent 5 months as an unhappy corporate attorney doing document review in my mid-20s. It was 100% the kind of work that AI could do faster and more effectively. I wasn’t even very good at it, as I would lose focus after the third hour of reviewing leases for change of control provisions. This was a job that theoretically required a law degree – imagine all of the information review, synthesis and summary jobs out there in the bowels of insurance companies, banks, call centers, government and so on.

There’s a reason that Dario Amodei said that AI will automate half of entry-level white collar jobs. Anyone who has roamed the systems of a big company or talked recently to a CEO or founder can see it.

I get people telling me almost every day, “Well, you called it!” My book The War on Normal People projected many of these trends. It’s cold comfort because my goal was always to galvanize energy around solutions. I believe our economy requires large scale overhauling if it’s going to work for most Americans. I proposed Universal Basic Income. I’m distressed and angry that we are screwing over so many workers, particularly the next generation who will have the rug pulled out from under them or never even have a ladder to climb.

So what are the solutions for our young people?

First, we should acknowledge that a lot of knowledge work is going away. This is real. Just as we saw robots hit factories, we are seeing AI hit offices and corporations.

Second, to the extent it is possible, we should start channeling young people to resilient opportunities that will exist in the real world for years to come. My kids want to be YouTubers. I’m trying to talk them out of it. I know for most of the people reading this, you or your kid being an HVAC repairperson may not be realistic, but if there’s something they have an interest in that’s going to be needed in this era they should pursue it.

The recent job report indicates that health care jobs may continue to grow. An aging population and the difficulty of automating phlebotomy or home health care and an ongoing nursing shortage suggest that maybe if you head to this field your job will be safe. I certainly would feel more confident in someone pursuing a nursing degree than, say, a law degree. It’s unclear to me though that the amount of resources to pay healthcare providers will continue to go up indefinitely as that money often comes from the government, which seems like it will be retrenching.

It's going to get hairy out there. August 1^st, 2025 may go down as the date that AI started to show up in the jobs data. It will only speed up, as AI models are doubling in power every 7 months. Even I am shocked by the rate of change. Do all you can to prepare accordingly, and help others do the same. A lot of us may have to become more handy.

For the next no-phones Offline Party in New York City August 21st, click here. For my interview with Thomas Chatterton Williams on his new book The Summer of Our Discontent click here. To see what Forward is doing in your area, click here. Remember to look up.