America is well prepared for the AI shock that is underway in its entry-level positions.
It has sensibly reduced immigration to zero, ensuring that local youth are not competing with cheap foreign labour.
Even so, there is increasing evidence that AI is moving faster than the economy can keep up.
A few days ago, I posted a Goldman chart on rising youth unemployment, notably so in IT.
If we telescope in to the 20-24s age bracket, then the issue gets more concerning. At the recent graduate level, unemployment is roaring.
It is no surprise that productivity is not up yet. It is a lagging indicator.
There are numerous reports of hiring freezes for entry-level positions as well.
Such numbers are backed up by numerous news reports as well as comments from corporate executives on how they see AI transforming labor needs. Internship postings this spring were down. A recent Wall Street Journal report noted that the share of entry-level hires relative to all new hires has slumped by 50% since 2019 among the biggest technology companies, while another pointed to consultancy firm McKinsey putting together smaller but more experienced teams as it adds AI to the mix.
I have no issue with this. So long as America supports youth through the transition, then it is all part of the economic cycle.
Where it is going to be a much larger problem is Australia. AI is coming whether we like it or not. The moment one firm deploys it, all must to compete.
Youth unemployment is already on the march here as well. In fact, it is materially higher than the US. Some of this will be AI as the hiring of graduates stalls.
The duration of unemployment is marching higher as well.
Some of this is the economic cycle, with the Lunatic RBA failing to cut in time.
Most of it is the failure of the Albanese government to prepare the economy for the AI shock by cutting immigration, in particular international students who compete directly with local youth for entry-level jobs.
What did Aussie youth do to generate such hate in Albo?
After all, he was warned.
