The Impact of the AI Revolution and 200k Layoffs

Last year, around 200,000 people were fired from the tech industry, and software engineering job postings decreased by 24%. However, Chad GPT GitHub copilot, and several other AI tools were released. The media, YouTube channels, and people on Twitter have a doom and gloom sentiment about the situation, but if you take a closer look at the jobs data, you'll find that the situation is not as dire as people believe.

There is a single graph that tells the real story, and it shows the hiring and layoffs from Yahoo Finance over the past three years. The layoffs are in orange, while the hiring since the pandemic in 2019 is in purple. Most companies hired 3 to 10 times more people than they just laid off. The economics of why this happened is pretty simple. Lower interest rates mean more money because the same money is getting lent out more and more times. Companies like hedge funds were sponging up all this money because of their traditionally high returns, and consumers were spending more money on tech-related items due to being at home and receiving government aid. Naturally, in divisions like consumer tech and risky new ventures, when money is cheap, companies are going to be hiring aggressively and over-hiring. This is the perfect time for companies to build risky moonshot ideas like metaverse, crypto gaming, and more.

However, things are starting to reverse. The CEO of Microsoft said customers are learning to do more with less, and the CEO of Google said the economic reality has changed compared to the past two years. Over-hiring deserves criticism because these are people's lives, but here's the larger point: due to a bias towards focusing on negative things, the news tells the doomsday story rather than a more balanced narrative.

It's essential to note that the economy will go up and down, but AI is here to stay, and it's moving in permanently. In fact, 33% of software engineers are now using AI tools at work. People on Twitter say that because of AI, the jobs that were laid off are not coming back. However, it's more positive than people are talking about. Tech is not brand new, so it won't be the overnight industry breaker that many people expect. GitHub Copilot has been around for a while, and before that, GPT-3 was out for nearly two years. Although it's improving rapidly, changes will take a considerable amount of time.

Furthermore, every time in history that a large productivity breakthrough has come to the software industry, it has created an explosion of jobs and wealth and not a contraction. For example, when a language like C came out, assembly programmers could have been considered screwed, and since C could be written faster, the number of jobs was going to decrease. However, what people couldn't anticipate is that now, a single person could write an operating system on their own, moving the whole industry and creating a vast new amount of wealth and opportunity.

The web framework revolution is another example. Look at the year Ruby on Rails came out, and at the same time, so many web-based companies were built on Ruby on Rails. The industry was exploding from all sides, and a single developer with a framework could do the work of three or four companies that could not exist before because you needed so much money to hire the initial team of developers to build the first version.

AI is significant, and it could be the exception to the pattern. However, AI could also be the same effect on steroids because the AI tech itself will create more companies. In fact, Sam Altman, the founder of OpenAI, has said that he thinks there will be more companies started in the next 10 years due to AI than in the past 30 years. Therefore he believes that AI will be the single biggest technological breakthrough in human history, and that it will create a massive amount of wealth and opportunity for those who can harness its power. So, while it's true that AI may lead to some job displacement in the short term, the long-term effects are likely to be overwhelmingly positive.

In conclusion, the tech industry is not burning, and the future is not as bleak as some might think. While there may be some temporary job displacement due to the rise of AI and other technologies, history has shown us that these breakthroughs ultimately lead to greater innovation, wealth, and opportunity. The key is to stay informed, keep learning, and be open to new possibilities. As AI becomes more prevalent, those who can leverage its power will be well-positioned for success in the years ahead.