The immediate threat of AI isn't mass layoffs, but rather its impact on future hiring. During the next economic upswing, companies may opt to invest in AI-driven restructuring and reorganization instead of rehiring laid-off white-collar professionals, permanently reducing job opportunities.

Beyond displacing current workers, AI will lead to hiring "abatement," where companies proactively eliminate roles from their hiring plans altogether. This is a subtle but profound workforce shift, as entire job categories may vanish from the market before employees can be retrained.

While the economic disruption from COVID saw a relatively quick bounce-back in employment, the changes brought by AI will be permanent. Many job functions and industries will not recover, representing a fundamental, one-way shift in the economy rather than a temporary downturn.

Historically, humans moved from manual to cognitive labor as technology automated physical tasks. Emad Mostaque argues AI now automates cognitive work, creating an "intelligence inversion." There's no obvious higher-value domain left for human labor to escape to, unlike previous technological shifts.

Contrary to long-held predictions, AI is disrupting high-status, cognitive professions like law and software engineering before manual labor jobs. This surprising reversal upends the perceived value of higher education and traditional career paths, as the jobs requiring expensive degrees are among the first to be threatened by automation.

The decline of white-collar jobs, which form the backbone of discretionary spending and credit markets, will create a contagion effect impacting every asset class worldwide, as the system was built on the assumption of their stability.

Historically, technological advancements primarily displaced blue-collar workers first. The current AI revolution is unique because its most immediate and realized disruptions are targeting white-collar, knowledge-based roles, breaking a long-standing pattern of technological impact on the labor market.

Historically, economic downturns accelerate technological displacement. During a recession, companies lay off workers and then use the subsequent recovery to evaluate how many roles can be permanently replaced by new technology like AI. The next recession could therefore trigger a significant wave of structural unemployment.

Contrary to popular belief, highly compensated cognitive work (lawyers, software engineers, financiers) is the most exposed to AI disruption. If a job can be done remotely with just a laptop, an advanced AI can likely operate in that same space. Physical jobs requiring robotics will be protected for longer due to cost and complexity.