There is a massive dislocation in American knowledge work coming

A Bloomberg headline recently declared, "The AI Hiring Pause Is Officially Here". Here are some data points:

• Microsoft just laid off 6,000 employees in product management and software engineering.
• Norway's sovereign wealth fund paused hiring, citing AI.
• Shopify's hiring philosophy is to try to use AI to do a job before expanding headcount.

The Bloomberg headline is overstated, because there are still plenty of software jobs out there. But this is indeed the beginning of a massive dislocation of knowledge workers generally, and its consequences will be vast.

If you're reading this you may already agree with this prediction. But here is a basic walkthrough of why this dislocation will happen in the coming years:

• Knowledge workers, especially ones in the United States, are expensive. They can cost six-figures or more per year.
• Knowledge workers get paid to produce information. Lawyers produce briefs. Coders produce code. Marketers produce ads. Etc.
• Language models allow computers to produce high-quality information, on any topic, on demand, instantly, for very cheap.
• Language models already do this well today, but they will get even better every few months unless we hit some sort of wall.

Companies typically care about maximizing revenue and minimizing expenses. Given this, they will be faced with the following choice:

• Hire a credentialed American knowledge worker for $100k+ per year plus benefits, including a hiring process that takes existing employees' time, a new hire onboarding period of a couple months, and an unknown tenure.
• Get a language model to do the thing right now really well for like $1.

Increasingly, companies will realize this is the choice before them. They will stop hiring knowledge workers – especially American ones. The AI hiring pause is not here, because hiring is still happening, but it is coming.