Current layoffs are driven less by AI-driven automation and more by financial strategy. Companies are cutting labor costs to free up budget for necessary AI investments and to project an image of being technologically advanced to investors.

Firms are attributing job cuts to AI, but this may be a performative narrative for the stock market rather than a reflection of current technological displacement. Experts are skeptical that AI is mature enough to be the primary driver of large-scale layoffs, suggesting it's more likely a convenient cover for post-pandemic rebalancing.

Top AI labs face a difficult talent problem: if they restrict employee equity liquidity, top talent leaves for higher salaries. If they provide too much liquidity, newly-wealthy researchers leave to found their own competing startups, creating a constant churn that seeds the ecosystem with new rivals.

While high-profile layoffs make headlines, the more widespread effect of AI is that companies are maintaining or reducing headcount through attrition rather than active firing. They are leveraging AI to grow their business without expanding their workforce, creating a challenging hiring environment for new entrants.

Fears of AI-driven mass unemployment overlook basic capitalism. Any company that fires staff to boost margins will be out-competed by a rival that uses AI to empower its workforce for greater output and market share, ensuring AI augments jobs rather than eliminates them.

The idea that AI will enable billion-dollar companies with tiny teams is a myth. Increased productivity from AI raises the competitive bar and opens up more opportunities, compelling ambitious companies to hire more people to build more product and win.

Experience alone no longer determines engineering productivity. An engineer's value is now a function of their experience plus their fluency with AI tools. Experienced coders who haven't adapted are now less valuable than AI-native recent graduates, who are in high demand.

Despite high-profile tech layoffs, Mayor Lurie sees a net benefit from AI because of the broader ecosystem it fosters. The job growth isn't just at giants like OpenAI, but in the enabling startups and entrepreneurs in healthcare and other sectors that are building on top of the core AI technology.

Instead of immediate, widespread job cuts, the initial effect of AI on employment is a reduction in hiring for roles like entry-level software engineers. Companies realize AI tools boost existing staff productivity, thus slowing the need for new hires, which acts as a leading indicator of labor shifts.