Dispatch from the Front March 27, 2023

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Newsletter 03/27/2023 Back to Contents

But This Time They Are Putting Folks Who Vote Out To Pasture

On November 24, 2023, I posted about the Coming Crash of the Tech Economy. My thesis was that negative cash flows; continuing layoffs throughout the sector; and the emergence of new technology that will make many white collar IT jobs obsolete, all point to major contraction across all sectors of the information industry. My observation was the current economic that have contributed to this significant contraction in the tech sector mirrors in many ways previous crashed of the etch economy. Five months later, all the trends are discouraging for struggling IT workers.

The staggering amount of losses, 4 Trillion in USD, cannot be ignored when considering how things got to be where they are right now. It is probably correct to assume that a significant number of those individuals whose capital investment in crypto currency simply vanished are also IT workers whose jobs and livelihoods are now most at risk.

Besides the almost daily news of layoffs from the biggest names in the IT industry, a most telling sign of the turmoil in tech is those who may have once been The Angel Investor for an IT focused startup are demanding certain fledgling firms simply close up shop. Entities whose products lack "product-market fit," Product-market fit "describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability." So if a startup does not have a viable product, then that startup may well not only receive no additional funding, but the principles of that startup could find themselves on the hook for are fund due investors.

With demand of startups software products waning, and the days of easy money now over, any startup still operating is very likely running out of cash. Elan Gil, a noted investment entrepreneur, estimates that these startup business failures will accelerate in late 2023 through 2024.

There is likely a mix of companies who have raised anywhere from 2-4 years of cash in 2021 that will not grow into prior valuations, and will need to find an exit or shut down. As such Q3 2023 through end of 2024 (and maybe part of 2025) seems roughly when these companies will start to seek exits and or shut down.

Adding to the Liquidity Crisis, a year of steady interests rate increases have hit tech especially hard. Across the spectrum, it has been declared that the "Days of Easy Money" are over. As the Business Standard explained, January 10, 2023:

Cheap money—an incredibly popular and influential feature of finance that led to a surge of wealth, speculative trading and booms in ridiculous investments such as meme stocks and digital images of cartoon monkeys—died suddenly in 2022. It was 14 years old. Cheap money is survived by its estranged relative, expensive money.

As the confluence of related and unrelated events overwhelm the industry, displaced IT workers, who have only known the recent boom years, will likely find themselves in dire straights. With fewer possible employers to chose from, and certainly intense competition for available positions, unemployment among this class of Americans will place stresses on many other segments of the American economy. Entering into this murky near future employment situation for many white collar workers, is the AI.

A widely quoted research study recently released, March 18, 2023, [pdf will open here] by Cornell University, using quantitative measurements estimates those professions most likely to be impacted by the current generations of the Large Language Models, also known as Artificial Intelligence (AI). The emphasis is rightfully on language. Those professions that will become in far less demand over time are those that require written and or verbal language skills. Among those skills is included computer code writing.

Top 20 Occupations most impacted by AI ¹

Telemarketers
English Language and Literature Teachers, Postsecondary
Foreign Language and Literature Teachers, Postsecondary
History Teachers, Postsecondary
Law Teachers, Postsecondary
Philosophy and Religion Teachers, Postsecondary
Sociology Teachers, Postsecondary
Political Science Teachers, Postsecondary
Criminal Justice and Law Enforcement Teachers, Postsecondary
Sociologists
Social Work Teachers, Postsecondary
Psychology Teachers, Postsecondary
Communications Teachers, Postsecondary
Political Scientists
Area, Ethnic, and Cultural Studies Teachers, Postsecondary
Arbitrators, Mediators, and Conciliators
Judges, Magistrate Judges, and Magistrates
Geography Teachers, Postsecondary
Library Science Teachers, Postsecondary
Clinical, Counseling, and School Psychologists

¹. https://doi.org/10.48550/arXiv.2303.01157; pg. 14, Fig 1

². https://doi.org/10.48550/arXiv.2303.01157; pg. 15, Fig 2

Top 20 Industries most impacted by AI ²

Securities, Commodity Contracts, and Other Financial Investments and Related Activities
Agencies, Brokerages, and Other Insurance Related Activities
Insurance and Employee Benefit Funds
Nondepoiitory Credit Intermediation
Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures
Insurance Carriers
Other Investment Pools and Funds
Accounting, Tax Preparation, Bookkeeping, and Payroll Services
Business Support Services
Software Publishers
Lessors of Nonfinancial Intangible Assets (except Copyrighted Works)
Business Schools and Computer and Management Training
Credit Intermediation and Related Activities
Grantmaking and Giving Services
Travel Arrangement and Reservation Services
Junior Colleges
Computer Systems Design and Related Services
Management, Scientific, and Technical Consulting Services
Other Information Services

The White House released a thorough study of the short term and long term impacts of AI in the workplace. Using data points from Europe and the US, and across all economic sectors, the White House authors paint a picture of

Certainly, not all the professionals employed in any one of these industries will lose their jobs all at once. The adoption of AI will be a gradual but eventual fait accompli. One firm, expert.ai, offers Language Model Training across many different fields. There is a certain business logic to the notion of why have a human read what is on the computer screen, when the computer itself will be able to that same task just as well.

¯\_(ツ)_/¯
Gerald Reiff

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But This Time They Are Putting Folks Who Vote Out To Pasture On November 24, 2023, I posted about the Coming Crash of the Tech Economy. My thesis was that negative cash flows; continuing layoffs throughout the sector; and the emergence of new technology that will make many white collar IT jobs obsolete, all point to major contraction across all sectors of the information industry. My observation was the current economic that have contributed to this significant contraction in the tech sector mirrors in many ways previous crashed of the etch economy. Five months later, all the trends are discouraging for struggling IT workers. The staggering amount of losses, 4 Trillion in USD, cannot be ignored when considering how things got to be where they are right now. It is probably correct to assume that a significant number of those individuals whose capital investment in crypto currency simply vanished are also IT workers whose jobs and livelihoods are now most at risk. Besides the almost daily news of layoffs from the biggest names in the IT industry, a most telling sign of the turmoil in tech is those who may have once been The Angel Investor for an IT focused startup are demanding certain fledgling firms simply close up shop. Entities whose products lack "product-market fit," Product-market fit "describes a scenario in which a company’s target customers are buying, using, and telling others about the company’s product in numbers large enough to sustain that product’s growth and profitability." So if a startup does not have a viable product, then that startup may well not only receive no additional funding, but the principles of that startup could find themselves on the hook for are fund due investors. With demand of startups software products waning, and the days of easy money now over, any startup still operating is very likely running out of cash. Elan Gil, a noted investment entrepreneur, estimates that these startup business failures will accelerate in late 2023 through 2024. There is likely a mix of companies who have raised anywhere from 2-4 years of cash in 2021 that will not grow into prior valuations, and will need to find an exit or shut down. As such Q3 2023 through end of 2024 (and maybe part of 2025) seems roughly when these companies will start to seek exits and or shut down. Adding to the Liquidity Crisis, a year of steady interests rate increases have hit tech especially hard. Across the spectrum, it has been declared that the "Days of Easy Money" are over. As the Business Standard explained, January 10, 2023: Cheap money—an incredibly popular and influential feature of finance that led to a surge of wealth, speculative trading and booms in ridiculous investments such as meme stocks and digital images of cartoon monkeys—died suddenly in 2022. It was 14 years old. Cheap money is survived by its estranged relative, expensive money. As the confluence of related and unrelated events overwhelm the industry, displaced IT workers, who have only known the recent boom years, will likely find themselves in dire straights. With fewer possible employers to chose from, and certainly intense competition for available positions, unemployment among this class of Americans will place stresses on many other segments of the American economy. Entering into this murky near future employment situation for many white collar workers, is the AI. A widely quoted research study recently released, March 18, 2023, [pdf will open here] by Cornell University, using quantitative measurements estimates those professions most likely to be impacted by the current generations of the Large Language Models, also known as Artificial Intelligence (AI). The emphasis is rightfully on language. Those professions that will become in far less demand over time are those that require written and or verbal language skills. Among those skills is included computer code writing.
Top 20 Occupations most impacted by AI ¹ Telemarketers English Language and Literature Teachers, Postsecondary Foreign Language and Literature Teachers, Postsecondary History Teachers, Postsecondary Law Teachers, Postsecondary Philosophy and Religion Teachers, Postsecondary Sociology Teachers, Postsecondary Political Science Teachers, Postsecondary Criminal Justice and Law Enforcement Teachers, Postsecondary Sociologists Social Work Teachers, Postsecondary Psychology Teachers, Postsecondary Communications Teachers, Postsecondary Political Scientists Area, Ethnic, and Cultural Studies Teachers, Postsecondary Arbitrators, Mediators, and Conciliators Judges, Magistrate Judges, and Magistrates Geography Teachers, Postsecondary Library Science Teachers, Postsecondary Clinical, Counseling, and School Psychologists ¹. https://doi.org/10.48550/arXiv.2303.01157; pg. 14, Fig 1 ². https://doi.org/10.48550/arXiv.2303.01157; pg. 15, Fig 2	Top 20 Industries most impacted by AI ² Securities, Commodity Contracts, and Other Financial Investments and Related Activities Agencies, Brokerages, and Other Insurance Related Activities Insurance and Employee Benefit Funds Nondepoiitory Credit Intermediation Agents and Managers for Artists, Athletes, Entertainers, and Other Public Figures Insurance Carriers Other Investment Pools and Funds Accounting, Tax Preparation, Bookkeeping, and Payroll Services Business Support Services Software Publishers Lessors of Nonfinancial Intangible Assets (except Copyrighted Works) Business Schools and Computer and Management Training Credit Intermediation and Related Activities Grantmaking and Giving Services Travel Arrangement and Reservation Services Junior Colleges Computer Systems Design and Related Services Management, Scientific, and Technical Consulting Services Other Information Services
The White House released a thorough study of the short term and long term impacts of AI in the workplace. Using data points from Europe and the US, and across all economic sectors, the White House authors paint a picture of Certainly, not all the professionals employed in any one of these industries will lose their jobs all at once. The adoption of AI will be a gradual but eventual fait accompli. One firm, expert.ai, offers Language Model Training across many different fields. There is a certain business logic to the notion of why have a human read what is on the computer screen, when the computer itself will be able to that same task just as well.



¯\_(ツ)_/¯
Gerald Reiff