White Collar Workers, Welcome to the Revolution

There’s a new reserve army of labour - and they’ve got MBAs.

by Aaron Bastani

13 February 2023

Banks are undergoing the biggest wave of job cuts since the financial crisis. Mary Turner/Reuters

Banks are undergoing the biggest wave of job cuts since the financial crisis. Last month, Goldman Sachs fired 3,000 employees with half an hour’s notice. Morgan Stanley has laid off 1,800 staff, just over 2% of its workforce, while Credit Suisse has announced it will axe 9,000 roles from its 52,000-strong workforce over the next three years.

Things are even worse in the tech industry, where approximately 200,000 people have lost their jobs in the last year. In November, Meta announced 11,000 redundancies, while Alphabet declared it would scrap 12,000 jobs. Not to be outdone, Amazon spent $640m on severance payments in the final quarter of 2022. Other US household names announcing job losses or hiring freezes include Johnson & Johnson and the Walt Disney company. In Britain, employees at the UK offices of Alphabet and Meta expect cuts to arrive by March, while Vodafone is also looking at hundreds of layoffs – mostly at its London HQ.

Though the numbers are smaller (due to the relative size of the industry), the axe is also being swung in journalism. In December, Buzzfeed announced it would be laying off 12% of employees – and this only four years after it reduced its global staff by 15%. Vox Media, NBC and MSNBC also announced job losses, as did Reach in the UK – with 200 workers set to be let go by the publisher. 

Why so many redundancies at once? The answer, in part, is because of digital ad revenues. While these grew by 25% in 2021 as a result of pandemic-related internet use, the gold rush is over – with even Meta experiencing a 3% decline. These falling revenues, combined with higher inflation, explain job losses at tech and media firms, while in finance redundancies are primarily the result of an economic downturn. 

At the start of the century, these industries were supposed to provide the jobs of the future. For the most part, this didn’t happen – and when it did, the work was geographically concentrated, offering little benefit to post-industrial communities. The jobs that did materialise, however, now seem to be disappearing. 

This is a major shift from recent years. After all, the industries now shedding jobs had a comparatively good pandemic, with finance, tech and media workers part of a privileged section of the labour market (as long as they weren’t freelance). Not only were ad revenues up, and so jobs secure, but people in these industries could work from home – unlike teachers, nurses, or those in logistics.

Indeed, this period marked the zenith of a golden era for tech in particular, with low interest rates and quantitative easing permitting the ‘new economy’ to expand far more after 2010 than it would have otherwise. If those TikToks by millennial and Gen Z employees in New York and London felt strange, their lunch dates, limitless sushi buffets, and meetings about meetings seeming to generate little discernible value, that’s because they didn’t. Low interest rates meant speculative bubbles galore, and the over-inflated stock valuations of the digital giants – peaking last year – was a particularly conspicuous consequence. As a result, tech companies massively increased their headcounts. Now comes the correction. 

2023’s fortunes could be just the start for workers in these sectors – even if they survive the redundancies at Meta, Microsoft and the rest. Higher costs, stagnant revenues and tightening monetary policy are about to collide with technological changes which, while not immediately transformational, will erode tasks, and then jobs, across all three industries.

Take ChatGPT, an AI powered chatbot developed by OpenAI. While far from perfect, the chatbot recently passed the interview to become a level 3 coding engineer at Google – a job with a salary of $183,000. ChatGPT is serious business: Microsoft invested $10bn in the technology, which will soon be integrated into the company’s search engine Bing, while its launch led Google to rush the release of its own rival AI product, Bard.

This doesn’t mean a robot (or AI) is coming for your job. Far more likely is that a single person armed with new technology will replace a whole team. In the short term, machine learning could prove disruptive in fields like content writing, proofreading, customer support and programming. With an advanced version of ChatGPT at their disposal, coders could automate some of the more tedious tasks of the job, such as debugging or translating code from one programming language to another, thus narrowing the number of entry-level positions in the field. We would still have coders, of course, just not as many. A similar trend is also widely predicted in other industries, from accountancy to legal services.

In 2017, entrepreneur Mark Cuban predicted that the world’s first trillionaire would emerge from artificial intelligence and machine learning precisely because it would prove so disruptive to high-value service industries. “I would not want to be an accountant right now,” he said. “I would rather be a philosophy major.”

Cuban wasn’t alone. In 2015, a paper by the Bank of England predicted 40% of jobs in the UK were at risk of automation in the following decades. A year later, Mark Carney claimed livelihoods would be “mercilessly destroyed” by technological change, and that this would only exacerbate inequality. With ChatGPT, it’s now possible to see how that process begins to unfold – particularly in those industries now discarding staff in significant numbers. 

As economic stagnation and rising inequality meet technological change, disaffected white collar workers could soon be at the forefront of a wider process of radicalisation. If so, these workers may quickly become converts to some of the ideas laid out in Fully Automated Luxury Communism, with low growth and automation re-shaping their assumptions, expectations, and politics. Welcome to the revolution, comrades.

Aaron Bastani is a Novara Media contributing editor and co-founder.

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