Episode summary
Tech Jobs: Massive Job Cuts Now, Who's Next? | Eric Basmajian
The David Lin Report
· · 43 min · Hosts: David Lin · Guests: Eric Basmajian
Summary
Eric Basmajian argues that the U.S. labor market is best described as low layoffs but very weak hiring. He says Microsoft-style buyouts and other AI-related staffing cuts are showing up more as attrition than headline layoffs, and that younger workers are getting hit first because entry-level, repetitive tasks are the easiest to automate. In his view, the current pattern is more structural than cyclical for those roles, but it has not yet become large enough to drive a broad recession.
He also says the strongest part of the economy is still construction and manufacturing, especially non-residential construction tied to data centers and the AI buildout. That activity is supporting jobs in construction, durable goods manufacturing, and related supply chains, which is why he thinks near-term recession risk remains low. The main warning sign he keeps watching is residential construction, which is still soft.
On AI productivity, Eric says the early gains are concentrated in information technology, finance, and professional services, and that most of those gains are accruing to corporate profits rather than wages. With inflation still eating into pay gains, he thinks real wage growth remains depressed and housing and other big-ticket items are staying expensive.
Key takeaways
- Eric Basmajian says layoffs remain low, but hiring is extremely weak, especially for younger workers entering the labor market.
- He argues that AI is first displacing junior, repetitive white-collar tasks, but not yet enough to cause a broad recession.
- Basmajian says non-residential construction and durable goods manufacturing tied to data centers are still adding jobs and supporting the cycle.
- He estimates about 80% to 85% of current AI-driven productivity gains are accruing to corporate profits, not wages.
- He sees real wage growth stuck near 1% because wage gains are being swallowed by inflation and a weak bargaining environment.
- He says residential construction is the key area to watch for a possible turn in recession risk.
Notable quotes
“The jobs that tend to be automated away first are uh what seems like more of the junior roles where the tasks are more automated and repetitive”
“the data is very clear in saying that layoffs are low but hiring is extremely weak”
“I estimate um about 80 to 85% of the productivity gains are acrewing to corporate profits”
“I still think the key part of the labor market is going to be those bluecollar construction and manufacturing jobs”
“What we're really talking about or what's uh people are are are sort of afraid of is the structural unemployment where these jobs just disappear from the economy”
How the episode opens
People are afraid of is the structural unemployment where these jobs just disappear from the economy. The jobs that tend to be automated away first are uh what seems like more of the junior roles where the tasks are more automated and repetitive 80 to 85% of the productivity gains are acrewing to corporate profits and the remainder is acrewing to real income gains in the sectors that are generating the productivity.
Big companies are cutting staff in the name of AI. Again, Microsoft just offered buyouts earlier this week to as many as 60,000 workers. Now, this is voluntary, so it's not technically a layoff, but at the same time, American Express is cutting 5% of its workforce to quote unquote prepare for AI.
Interestingly, weekly jobless claims are near the lowest level since the late 1960s, and employers added just 29,000 jobs in September. How come there are so few people applying for jobless claims while at the same time so few new jobs being added? And ultimately, is your job safe?
Well, prices are up 3.7% from a year ago, while paychecks are up 3%, meaning real wage growth is stalling. What happens then when automation becomes even more prevalent? Well, right now on Kawashi, traders are predicting a 48% chance that there will be more white color layoffs in 2026 than in 2025.
If you agree with those odds, a $50 trade could yield $94 if you're correct. Our next guest will offer his outlook. Stay tuned.
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai layoffs
- weakened labor market
- white-collar vs blue-collar jobs
- housing risks
- fed rates and wage growth
Companies and tickers mentioned
- EPB Research
Watch the episode
Watch “Tech Jobs: Massive Job Cuts Now, Who's Next? | Eric Basmajian” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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