The Compound
AI and the Labor Market
10/31/2025, 6:39:31 PM
Economic Summary
- AI is being adopted by companies to increase productivity, but that adoption requires a labor-market rebalancing as tasks shift from people to machines.
- A key challenge is upskilling: many displaced workers, particularly recent college graduates, are unlikely to retrain fast enough and become idle capacity in the near term.
- The speaker expects the displacement to be structural and long-term — roughly a 10-year transition rather than a one-year event.
- The initial impact is concentrated among young, white-collar tech job seekers (developers, programmers), while manual trades like HVAC and landscaping are currently experiencing strong demand; recovery depends on new use-cases or shifts in educational choices.
Bullish
- AI handoff boosts company productivity and output.
- New use-cases for tech skills will emerge over time, creating jobs.
- Workers can pivot to in-demand trades or change majors to match market needs.
Bearish
- Many workers cannot upskill fast enough, creating persistent idle labor capacity.
- Recent college grads seeking tech jobs face higher youth white-collar unemployment.
- The labor-market rebalancing from AI is a long, roughly 10-year disruption.