Latest news with #BradDeLong
Time of India
6 days ago
- Business
- Time of India
Goldman Sachs economist warns: "AI will replace Gen Z tech workers at first"
As artificial intelligence reshapes industries at breakneck speed, young tech workers may be the first to face its disruptive force. Joseph Briggs, a senior economist at Goldman Sachs, has warned that Gen Z professionals, especially those in junior tech roles, are at the frontlines of job displacement as companies rapidly automate entry-level tasks. His comments align with rising unemployment data and massive layoffs in 2025, painting a troubling picture for the next generation of coders and engineers. Although AI adoption is still in its early stages, its impact is already visible. Companies are using generative AI to perform routine tasks, reduce overheads, and restructure departments, often starting with roles filled by recent college graduates. For Gen Z, the AI revolution may feel less like an opportunity and more like an existential threat. AI, layoffs, and shrinking career pathways for Gen Z According to data from Goldman Sachs, unemployment among tech workers aged 20 to 30 has increased by around 3 percentage points since early 2025. This spike is notably higher than that of older workers or younger professionals in other sectors. The tech industry alone has seen over 50,000 layoffs this year, with Microsoft, Meta, and Google among the biggest contributors. Many of these cuts are linked to AI taking over repetitive or entry-level tasks traditionally assigned to junior employees. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Use an AI Writing Tool That Actually Understands Your Voice Grammarly Install Now Undo Job listings for such roles have also fallen sharply, with US postings down 35 percent since 2023. Despite only about 9 percent of companies currently using AI in core production, the roles being targeted are precisely those that younger workers usually fill. This is making it significantly harder for recent graduates to enter the field or gain upward mobility. Nearly half of Gen Z job seekers now believe that AI has diminished the value of their college degrees, raising questions about the future of traditional education in a rapidly evolving job market. Economic uncertainty compounds AI disruption While AI is often blamed for job losses, some economists argue the picture is more complicated. Brad DeLong, a leading economic historian, suggests that weak productivity growth, economic uncertainty, and policy inertia are also playing a major role in reducing hiring. Companies are moving cautiously in the current climate and may be using AI as a convenient justification for limiting headcount. This has created a difficult environment where job creation is slow, but firing is also restrained. As a result, young professionals are stuck between shrinking opportunities and elevated expectations. Federal Reserve data backs this up, showing an unemployment rate of around 5.8 percent for recent college graduates and about 6.9 percent for young workers overall, many of whom are now underemployed. These structural challenges suggest that the Gen Z workforce is entering a transformed labor market, where adaptability, emotional intelligence, and hands-on problem-solving may be just as vital as technical proficiency.
Yahoo
02-08-2025
- Business
- Yahoo
Top economist Brad DeLong to recent college grads: Don't blame AI for job struggles—blame the sputtering economy
As recent college graduates face one of the toughest job markets in years, Berkeley economist and voluble Substacker Brad DeLong has a message for those struggling to land their first full-time gig: Artificial intelligence (AI) and automation are not to blame. Larger forces are at work. DeLong, a professor at UC Berkeley and former Deputy Assistant Secretary of the Treasury, argued in a recent essay that the challenges confronting young job-seekers today are primarily driven by widespread policy uncertainty and a sluggish economy—not by the rapid rise of AI tools like ChatGPT or data-crunching robots. DeLong offered his analysis on July 23, roughly 10 days before the July jobs report stunned markets, revealing that the economy has been much weaker than previously thought for several months. Prominent business leaders had also flagged troubling signs in the economy before the July jobs report dropped. IBM Vice Chair and former Trump advisor Gary Cohn went on CNBC a day before the jobs data, noting 'warning signs below the surface.' Cohn said he pays close attention to the quits rate in the monthly JOLTS data, arguing that 150,000 fewer quits was an ominous sign of poor economic health. DeLong sounded a prophetic note, writing that 'policy uncertainty' over trade, immigration, inflation, and technology has 'paralyzed business planning,' leading to a self-reinforcing cycle of hiring freezes. New entrants to the job market are bearing the brunt of the retreat to risk aversion. In other words, the college graduate class of 2025 is really unlucky. The economist argued that the uncertainty causes companies to delay major decisions—including hiring—in the face of an unpredictable policy environment. 'This risk aversion is particularly damaging for those at the start of their careers, who rely on a steady flow of entry-level openings to get a foot in the door,' he wrote. DeLong has sounded similar warnings of a slowdown for years. He talked to Fortune in 2022 about his theory of the economy starting to sputter from his book Slouching Towards Utopia. In 2025, he wrote, the big story in the jobs market is not actually AI, but something different. Policy paralysis So, what's really keeping freshly minted graduates from clinching that all-important first job? DeLong cited Bloomberg BusinessWeek's Amanda Mull and her theory about 'stochastic uncertainty'—a cocktail of unpredictability around government policies, trade, immigration, and inflation. Companies aren't firing; instead, they're just waiting. And many are delaying new hires in anticipation of possible sudden shifts in tariffs, inflation rates, and regulatory environments. The result is a wait-and-see climate where employers, worried about future economic shocks, have selected caution over expansion. The holding pattern hits new entrants to the workforce especially hard. While overall unemployment in the U.S. remains low, the situation is uniquely difficult for new graduates relative to the rest of the workforce. Citing economists including Paul Krugman, DeLong noted that while the absolute unemployment rate for college graduates isn't alarming, the gap between graduate unemployment and general unemployment rates is at record highs. In the past, higher education reliably led to lower unemployment, but now recent grads are struggling 'by a large margin' compared to previous generations. As previously reported by Fortune Intelligence, Goldman Sachs has argued that the college degree 'safety premium' is mostly gone. The team, led by Goldman's chief economist Jan Hatzius, wrote: 'Recent data suggests that the labor market for recent college graduates has weakened at a time when the broader labor market has appeared healthy.' It also found that since 1997, young workers without a college degree have become much less likely to even look for work, with their participation rate dropping by seven percentage points. Mull cited an analysis by the Federal Reserve Bank of New York which found that tech and design fields, including computer science, computer engineering, and graphic design, are seeing unemployment rates above 7% for new graduates. Why the AI hype misses the mark Although the tech sector is buzzing about AI's potential to replace junior analysts or automate entry-level tasks, DeLong urged caution in assigning blame. In his typical style, he noted, 'there is still [no] hard and not even a semi-convincing soft narrative that 'AI is to blame' for entry-level job scarcity.' Hiring slowdowns, he pointed out, are driven by broader economic forces: uncertainty, risk aversion, and changes in how companies invest. Here again, DeLong's analysis rhymes and aligns with recent research from Goldman's Hatzius. The bank's quarterly 'AI Adoption Tracker,' issued in July, found that the unemployment rate for AI-exposed occupations had reconciled with the wider economy, which contradicts fears of mass displacement. They also noted there have been no recent layoff announcements explicitly citing AI as the cause, underscoring that it's contained to disruption of specific functions, not entire industries. Crucially, he argued, rather than hiring people, companies in the tech sector are splurging on 'the hardware that powers artificial intelligence'—notably Nvidia's high-performance chips—fueling a boom in capital investment while sidelining junior hires. 'For firms, the calculus is straightforward: Investing in AI infrastructure is seen as a ticket to future competitiveness, while hiring junior staff is a cost that can be postponed.' Underpinning these trends is a shift away from any and all risk. Employers prefer to hire for specific short-term needs and are less willing to invest in developing new talent—leaving young applicants caught in a cycle where 'just getting your foot in the door' is more difficult than ever. Incumbent workers, worried about job market uncertainty, are less likely to change jobs, leading to fewer openings and greater stagnation. DeLong's analysis harmonized with Goldman Sachs' findings about the declining premium attached with a college degree: 'For the longer-run, the rise in the college wage premium is over, and a decline has (probably) begun.' For decades, he continued, a college degree was a ticket to higher earnings, and the labor market rewarded those with advanced skills and credentials. In recent years, though, 'this has plateaued and may even be falling.' The causes are complex, he added, but the takeaway: While degrees remain valuable, they are no longer the ever-ascending ticket to prosperity they once were. These comments confirm the gloomy remarks of University of Connecticut professor emeritus Peter Turchin, who recently talked with Fortune about the declining status of the upper middle class in 21st century America. When asked where else he sees this manifesting in modern life, Turchin said, 'It's actually everywhere you look. 'Look at the overproduction of university degrees,' he said, arguing that the decreasing premium that Goldman and DeLong write about shows up in declining rates of college enrollment and high rates of recent graduate unemployment. 'There is overproduction of university degrees and the value of a university degree actually declines.' DeLong's bottom line for recent grads: Blame a risk-averse business climate, not technology, for today's job woes. And now that we know the economy may have been much more risk-averse in 2025 than previously, DeLong's warnings are worth revisiting. DeLong did not respond to a request for comment. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
02-08-2025
- Business
- Yahoo
Top economist Brad DeLong to recent college grads: Don't blame AI for job struggles—blame the sputtering economy
As recent college graduates face one of the toughest job markets in years, Berkeley economist and voluble Substacker Brad DeLong has a message for those struggling to land their first full-time gig: Artificial intelligence (AI) and automation are not to blame. Larger forces are at work. DeLong, a professor at UC Berkeley and former Deputy Assistant Secretary of the Treasury, argued in a recent essay that the challenges confronting young job-seekers today are primarily driven by widespread policy uncertainty and a sluggish economy—not by the rapid rise of AI tools like ChatGPT or data-crunching robots. DeLong offered his analysis on July 23, roughly 10 days before the July jobs report stunned markets, revealing that the economy has been much weaker than previously thought for several months. Prominent business leaders had also flagged troubling signs in the economy before the July jobs report dropped. IBM Vice Chair and former Trump advisor Gary Cohn went on CNBC a day before the jobs data, noting 'warning signs below the surface.' Cohn said he pays close attention to the quits rate in the monthly JOLTS data, arguing that 150,000 fewer quits was an ominous sign of poor economic health. DeLong sounded a prophetic note, writing that 'policy uncertainty' over trade, immigration, inflation, and technology has 'paralyzed business planning,' leading to a self-reinforcing cycle of hiring freezes. New entrants to the job market are bearing the brunt of the retreat to risk aversion. In other words, the college graduate class of 2025 is really unlucky. The economist argued that the uncertainty causes companies to delay major decisions—including hiring—in the face of an unpredictable policy environment. 'This risk aversion is particularly damaging for those at the start of their careers, who rely on a steady flow of entry-level openings to get a foot in the door,' he wrote. DeLong has sounded similar warnings of a slowdown for years. He talked to Fortune in 2022 about his theory of the economy starting to sputter from his book Slouching Towards Utopia. In 2025, he wrote, the big story in the jobs market is not actually AI, but something different. Policy paralysis So, what's really keeping freshly minted graduates from clinching that all-important first job? DeLong cited Bloomberg BusinessWeek's Amanda Mull and her theory about 'stochastic uncertainty'—a cocktail of unpredictability around government policies, trade, immigration, and inflation. Companies aren't firing; instead, they're just waiting. And many are delaying new hires in anticipation of possible sudden shifts in tariffs, inflation rates, and regulatory environments. The result is a wait-and-see climate where employers, worried about future economic shocks, have selected caution over expansion. The holding pattern hits new entrants to the workforce especially hard. While overall unemployment in the U.S. remains low, the situation is uniquely difficult for new graduates relative to the rest of the workforce. Citing economists including Paul Krugman, DeLong noted that while the absolute unemployment rate for college graduates isn't alarming, the gap between graduate unemployment and general unemployment rates is at record highs. In the past, higher education reliably led to lower unemployment, but now recent grads are struggling 'by a large margin' compared to previous generations. As previously reported by Fortune Intelligence, Goldman Sachs has argued that the college degree 'safety premium' is mostly gone. The team, led by Goldman's chief economist Jan Hatzius, wrote: 'Recent data suggests that the labor market for recent college graduates has weakened at a time when the broader labor market has appeared healthy.' It also found that since 1997, young workers without a college degree have become much less likely to even look for work, with their participation rate dropping by seven percentage points. Mull cited an analysis by the Federal Reserve Bank of New York which found that tech and design fields, including computer science, computer engineering, and graphic design, are seeing unemployment rates above 7% for new graduates. Why the AI hype misses the mark Although the tech sector is buzzing about AI's potential to replace junior analysts or automate entry-level tasks, DeLong urged caution in assigning blame. In his typical style, he noted, 'there is still [no] hard and not even a semi-convincing soft narrative that 'AI is to blame' for entry-level job scarcity.' Hiring slowdowns, he pointed out, are driven by broader economic forces: uncertainty, risk aversion, and changes in how companies invest. Here again, DeLong's analysis rhymes and aligns with recent research from Goldman's Hatzius. The bank's quarterly 'AI Adoption Tracker,' issued in July, found that the unemployment rate for AI-exposed occupations had reconciled with the wider economy, which contradicts fears of mass displacement. They also noted there have been no recent layoff announcements explicitly citing AI as the cause, underscoring that it's contained to disruption of specific functions, not entire industries. Crucially, he argued, rather than hiring people, companies in the tech sector are splurging on 'the hardware that powers artificial intelligence'—notably Nvidia's high-performance chips—fueling a boom in capital investment while sidelining junior hires. 'For firms, the calculus is straightforward: Investing in AI infrastructure is seen as a ticket to future competitiveness, while hiring junior staff is a cost that can be postponed.' Underpinning these trends is a shift away from any and all risk. Employers prefer to hire for specific short-term needs and are less willing to invest in developing new talent—leaving young applicants caught in a cycle where 'just getting your foot in the door' is more difficult than ever. Incumbent workers, worried about job market uncertainty, are less likely to change jobs, leading to fewer openings and greater stagnation. DeLong's analysis harmonized with Goldman Sachs' findings about the declining premium attached with a college degree: 'For the longer-run, the rise in the college wage premium is over, and a decline has (probably) begun.' For decades, he continued, a college degree was a ticket to higher earnings, and the labor market rewarded those with advanced skills and credentials. In recent years, though, 'this has plateaued and may even be falling.' The causes are complex, he added, but the takeaway: While degrees remain valuable, they are no longer the ever-ascending ticket to prosperity they once were. These comments confirm the gloomy remarks of University of Connecticut professor emeritus Peter Turchin, who recently talked with Fortune about the declining status of the upper middle class in 21st century America. When asked where else he sees this manifesting in modern life, Turchin said, 'It's actually everywhere you look. 'Look at the overproduction of university degrees,' he said, arguing that the decreasing premium that Goldman and DeLong write about shows up in declining rates of college enrollment and high rates of recent graduate unemployment. 'There is overproduction of university degrees and the value of a university degree actually declines.' DeLong's bottom line for recent grads: Blame a risk-averse business climate, not technology, for today's job woes. And now that we know the economy may have been much more risk-averse in 2025 than previously, DeLong's warnings are worth revisiting. DeLong did not respond to a request for comment. For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing. This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
03-04-2025
- Business
- Yahoo
Trump says his tariffs are 'reciprocal.' Are they?
As with many of his political positions, President Trump's extraordinary new tariffs are based on the presumption that the United States is being treated unfairly by the rest of the world. He proclaims his tariffs are merely 'reciprocal.' 'They do it to us, and we do it to them,' Trump said. 'Very simple.' But are the new levies on foreign goods sold in the U.S. truly 'reciprocal"? No, not by any commonly agreed definition of the term. 'A 'reciprocal' tariff is one that is equal to the tariff rate charged on our exports to them,' Brad DeLong, a professor of economics at UC Berkeley, said via email. 'Vietnam's tariff on our exports . . . averages 10%. That is not the 46% rate that Trump has imposed' on Vietnam. Read more: Trump says tariffs are 'going very well' as markets plummet, countries aim to retaliate The Trump administration tariffs are not even based on the tariffs other countries impose. Instead, they are derived using a novel calculation that focuses on America's trade deficits with other nations. And the levies Trump said he intends to impose on goods will often be much higher than the ones they charge on American imports. Here's how the Trump administration calculated the new tariffs: It took the U.S. trade deficit with individual trading partners, then divided it by U.S. imports from that partner. It then divided that total in half. Thus, Trump claims that his tariffs are not only reciprocal but "discounted." Trump's acknowledgment that the calculations were not based on other nations' tariffs alone is demonstrated in one of his social media posts. A chart laying out the new tariffs contends the charges by other nations include 'currency manipulation and trade barriers.' To Trump, the new duties are "reciprocal" because they respond to another country's actions, even if the new U.S. tariffs are much higher. What the post does not acknowledge is that a substantial portion of the advantage other nations have in trade is tied to lower operating costs, particularly the lower wages and benefits that their workers earn, which are unrelated to tariffs. Trump Commerce Secretary Howard Lutnick insisted that the charges will pay dividends in the long run, as foreign companies — stung by the tariffs — decide to move their factories to the U.S. "Global governments have backed taking our factories away from us," Lutnick told Newsmax. "But what you're going to see is the most modern factories of the world come back here." Trump has insisted that by effectively raising taxes on imports from other countries, he will help drive down America's trade deficit. Most economists polled on that notion aren't buying it. Fifty-eight percent of the economists surveyed by the Kent A. Clark Center for Global Markets at the University of Chicago disagreed with the claim that America's trade deficit would grow smaller because of the higher tariffs. Forty-one percent said they were unsure. Only 1% of economists said they thought the Trump move would improve America's balance of trade. Read more: Car buyers in Southern California scramble to beat 25% auto tariffs Trump's view of international trade is also overly simplistic in that it attends only to the material goods the U.S. sells overseas and how much other nations sell in the U.S. without accounting for professional services that America sells in other countries, said Jesse Rothstein, another UC Berkeley economist. 'With many of these countries, and generally with the world, we have a trade surplus when it comes to services,' Rothstein said. 'So they send us cheap clothing and we send them accounting services. It's a good deal. We would much rather be getting paid as accountants than getting paid as garment workers.' Sign up for Essential California for news, features and recommendations from the L.A. Times and beyond in your inbox six days a week. This story originally appeared in Los Angeles Times.
Los Angeles Times
03-04-2025
- Business
- Los Angeles Times
Trump says his tariffs are ‘reciprocal.' Are they?
As with many of his political positions, President Trump's extraordinary new tariffs are based on the presumption that the United States is being treated unfairly by the rest of the world. He proclaims his tariffs are merely 'reciprocal.' 'They do it to us, and we do it to them,' Trump said. 'Very simple.' But are the new levies on foreign goods sold in the U.S. truly 'reciprocal'? No, not by any commonly agreed definition of the term. 'A 'reciprocal' tariff is one that is equal to the tariff rate charged on our exports to them,' Brad DeLong, a professor of economics at UC Berkeley, said via email. 'Vietnam's tariff on our exports . . . averages 10%. That is not the 46% rate that Trump has imposed' on Vietnam. The Trump administration tariffs are not even based on the tariffs other countries impose. Instead, they are derived using a novel calculation that focuses on America's trade deficits with other nations. And the levies Trump said he intends to impose on goods will often be much higher than the ones they charge on American imports. Here's how the Trump administration calculated the new tariffs: It took the U.S. trade deficit with individual trading partners, then divided it by U.S. imports from that partner. It then divided that total in half. Thus, Trump claims that his tariffs are not only reciprocal but 'discounted.' Trump's acknowledgment that the calculations were not based on other nations' tariffs alone is demonstrated in one of his social media posts. A chart laying out the new tariffs contends the charges by other nations include 'currency manipulation and trade barriers.' To Trump, the new duties are 'reciprocal' because they respond to another country's actions, even if the new U.S. tariffs are much higher. What the post does not acknowledge is that a substantial portion of the advantage other nations have in trade is tied to lower operating costs, particularly the lower wages and benefits that their workers earn, which are unrelated to tariffs. Trump Commerce Secretary Howard Lutnick insisted that the charges will pay dividends in the long run, as foreign companies — stung by the tariffs — decide to move their factories to the U.S. 'Global governments have backed taking our factories away from us,' Lutnick told Newsmax. 'But what you're going to see is the most modern factories of the world come back here.' Trump has insisted that by effectively raising taxes on imports from other countries, he will help drive down America's trade deficit. Most economists polled on that notion aren't buying it. Fifty-eight percent of the economists surveyed by the Kent A. Clark Center for Global Markets at the University of Chicago disagreed with the claim that America's trade deficit would grow smaller because of the higher tariffs. Forty-one percent said they were unsure. Only 1% of economists said they thought the Trump move would improve America's balance of trade. Trump's view of international trade is also overly simplistic in that it attends only to the material goods the U.S. sells overseas and how much other nations sell in the U.S. without accounting for professional services that America sells in other countries, said Jesse Rothstein, another UC Berkeley economist. 'With many of these countries, and generally with the world, we have a trade surplus when it comes to services,' Rothstein said. 'So they send us cheap clothing and we send them accounting services. It's a good deal. We would much rather be getting paid as accountants than getting paid as garment workers.'
