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Chapter 1: What are the current challenges in the labor market?
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More and more Americans are finding themselves taking care of their kids and their parents at the same time. Well, you know, I joke that there's a dark game, which I was playing, which family member will I disappoint today? How to care for others without burning out in the process. That's this week on Explain It To Me. Find new episodes Sundays wherever you get your podcasts.
Today is number 13. That's the percentage of U.S. adults who believe Bigfoot is real. Ed, what do they call Bigfoot in Europe? I don't know. Big meter. Some people have been complaining about how pornographic my jokes are, so I'm going to get them to beg for the dirty jokes, which is bad dad jokes. I like that. I think that's a good idea. How does Bigfoot tell time? How? He's got a Sasquatch.
Welcome to Profiting Markets.
It's dad minus the vulgarity.
Ed, how are you? I'm doing well. It's a beautiful day here in New York. It's finally spring here, so everyone's in a good mood. Everyone's feeling happy again. So am I, so I'm doing well.
You're looking very fall.
It's the spring. You need some quince. It's funny you say that. This actually is quince, but I need some new spring collection. So yeah, I'm doing well. How are you doing? Where are you? How was spring break? Lots of questions.
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Chapter 2: How is AI influencing layoffs and employment?
I was in Florida, a ton of time with the boys. Beautiful there. Love my place there. And then I went to Palm Springs to go to Coachella. And now I'm in Los Angeles at my second home at the Beverly Hills Hotel where I just had a really fattening breakfast. And I'm talking to you and I'm waiting for my agent to come meet with me and have lunch. Jesus Christ, I'm a douchebag.
Ask me about Coachella, Ed. I was just going to ask you that. I did not know that you went to Coachella. How was Coachella?
I figured out the ultimate hack for Coachella. Every three years I go and I realize I'm too old and I hate going to the fucking festival and you walk for three hours and it's like crowded and someone bumps me and I get all bummed out. And so this year I did it exactly right.
I would, my friend has a beautiful home there and I just hang out by the pool and then I go and I get great Mexican food at some dive Mexican restaurant and I don't go to Coachella. And if David Byrne is playing, I go home and I take an edible and I listen to David Byrne, which is almost as good. And then I go to the after parties because I get invited to these fun after parties.
So I do Coachella, but I don't go to Coachella. Is that sad? Is that sad?
Is it genius or is it sad? No, it's not sad. It's not genius. I think it's a little genius.
I think it's genius-ish.
Yeah.
It's a little douchey. Well, have you met me? Yeah. And I go with a bunch of friends from LA and I meet up with them after at some like branded tequila party or nylon magazine or there's something called Neon, which is a carnival, which I don't get. And I think I'm the only person there, not an MDMA. But, yeah, it's nice, and I love Palm Springs. What did you do this weekend?
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Chapter 3: What impact do immigration trends have on the job market?
and you might know what I'm talking about, and that is that we are officially going on tour. And we are officially announcing it today. We are taking Profiteer Markets live. We're going live in cities across the US at the end of May. We're hitting San Francisco, LA, Miami, Chicago, and of course, we're gonna hit the hometown, New York. We hope you'll join us.
You can go get your tickets at ProfiteerMarketsTour.com. You can do that right now. I encourage you to do it. I hope to see you there. Scott, what do you make of taking this show on the road?
Everybody's going to show up and want to set you up with their daughter. So it's going to be a bunch of baby boomer parents with 24-year-old daughters who are fed up with dating in New York. and complain, and they're like, I know how to do that. That's young Ed Elson must be rich. He's talking about the markets every day. And he wears all these sweaters. I get the sense. And he went to Princeton.
Hello, son-in-law. You're literally every mother's and every dad's dream. That's going to be the crowd? Okay. I bet we sell out in the next 72 hours. I think that I can just feel it. Yeah, we'll see.
This is just an incredible promotion for our new show.
Yeah. No, I mean this sincerely. It's like, there's so much shit in our business I worry about. I'm not worried about the property market store. I think that, what cities are we going to be in?
I just want to point out, professor of brand strategy, this is just about the worst promotional monologue I've ever heard. I'm not worried about this one.
Yeah. Yeah. I'm not worried about this one. What cities are we doing? The ones I just read. San Francisco, L.A., Miami, Chicago, and New York. Wow. Other than Chicago, I've lived in all those cities, I think. Which city are you most excited about, Ed? I'm most excited about L.A., personally.
Okay.
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Chapter 4: How do layoffs correlate with economic downturns?
I think that's going to be epic. Why is that? It's Hollywood. It's exciting. It's sexy. It's fun. I think that's going to be very fun. I'm not sure how I feel about San Francisco. Either they're going to love us there, or it's going to be a bunch of tech bros and VCs who hate us, and they're going to throw tomatoes at us.
Well, I think they hate you. I'm actually very popular in that community. No, I'm a big supporter of the venture capital community, and I just think that guys who would fuck their sister for a nickel are kind of my heroes. Yeah. Yeah, property market store. It's going to be amazing. There's going to be merchandise, dancing girls and boys, magic tricks. It's going to be outstanding.
Ed, what do we got on the docket today?
Excitement is palpable. We're talking to our friend, Catherine Ann Edwards, labor economist. Oh, we love her. So let's get into it. Last week, Mark Zandi told us that the biggest risk to the economy right now is the labor market. In fact, when we asked him what he's watching most closely over the next six months, his answer was simple, layoffs.
Several forces are converging that could reshape employment in a meaningful way. First, AI is already starting to show up in the data, emerging as the top cited reason for planned layoffs last month. Second, the Trump administration is tightening immigration, which has historically been a key driver of growth. for the US labor force.
And then there is the added uncertainty of the war with Iran, which is already pushing inflation higher. Consumer prices rose 3.3% year over year in March. That is the biggest increase we've seen since 2024. And if inflation continues to climb, the Fed may have to respond by raising rates, which would only add more strain.
So with all eyes on the labor market, we thought it was a great time to bring in our resident labor market expert. Catherine Ann Edwards, PhD economist, economic policy consultant, and columnist for Bloomberg News. Catherine, it's always good to see you. I'm going to jump right in here.
When you look at the labor market right now, which appears to be weakening, and you can correct me if I'm wrong there, and when you look at the cracks that seem to be emerging, which stand out to you as the biggest, and which are you most concerned about right now?
Zandi, I think, hit the nail right on the head. Layoffs are the biggest concern. What we're seeing in the labor market is a slowdown of the gears. If you think of the back of a watch and you turn it over and you see the gears rotating and the cogs hitting, that's... how you should picture the labor market, if workers go from job to job to unemployment to job again.
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Chapter 5: What sectors are experiencing job growth or decline?
You can look at hiring. You can look at quits. You can look at the three-month growth in wages. They all point to a decline in labor market mobility. Layoffs would just dump enough workers into unemployment in a labor market that's already slowly churning, and it could lead to a terrible recession quite quickly.
How close to that scenario do we think that we are at this point? I mean, we had the March jobs report, which showed that we had actually plenty of jobs added, added 178,000. But we also know that these numbers keep on getting revised down. And then you look at February, the previous month, which was like the total opposite story. We lost 133,000 jobs.
So it's hard to tell how close we are to that point and if we're actually approaching it. I mean, do you think that layoffs are about to come in this economy in a big way?
One data point, one jobs report does not make or break the labor market. What's more concerning for me is that the economy shed jobs in four months of last year. And in fact, we've been on track. Every other month since June, we've lost jobs. So let's see if I can do this on the fly. June, August, October, December, February, we lost jobs.
That's, I mean, I don't know how to say this more plainly. That's not good. That's indications of an economy in a labor market that's slowing down. I mean, to say that we're, we cannot come closer to teetering on the edge as we've been over the last 12 months. And we haven't moved really in either direction.
But I think one figure that shows this in a really just truly striking way, easy enough to pull up, just the total number of jobs in the economy, payroll employment. Go back to 1939, I believe, when the statistics begin. And you can see it's just a solid line going up. And then every so often you have a little divot and a little divot. And every little divot is a recession.
What makes the last five years so remarkable is it's the first time this measure of basic size of our labor market has shown a flat line. We've never just plateaued. You know, we get to the top and we fall. We get to the top and we fall. The idea that we would plateau for one to two years is absolutely historically unprecedented, but that's what we're doing.
So what do we think is the cause of that? I mean, this also fits with what Mark Zandi was saying when we spoke with him last week, which is like, we're not seeing job loss yet, but basically we're seeing that a lot of businesses just aren't hiring people. It's just completely flat. And then we spoke with
David Solomon, the CEO of Goldman Sachs, who I think pretty much speaks for the entire industry when he told us that the long-term projection for the business is to keep headcount flat. Just don't hire and don't really fire either. Why do you think that that is happening right now? Like, what are some of the forces that might be contributing to this plateau effect that you describe?
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Chapter 6: How does the current administration's policy affect employment?
We can only hit the economy so many times before it falls down. We've been watching it be punched over and over again. It's been resilient, more resilient than a lot of people expected it would be, but that doesn't mean that it's impervious to economic policy that's meant to cause harm. Policy like deportation, policy like gutting the federal government, policy like tariffs.
And now, add to the mix, policy like Iran.
We have a tendency to focus on this headline number of unemployment, but we don't spend enough time talking about which pockets of the job sector or which individuals are faring the best or the worst.
I read that there's been a spike in unemployment among women in their late 20s, and that the story there was the effects of Doge and the cutting of government jobs, which disproportionately affect young women. Can you give us a little bit more color on which types of people or sectors are faring the best and worst?
Health and education are doing great. Everybody else is doing some type of bad. Health and education jobs tend to be educated women. Not necessarily highly educated women, but at least a high school degree. You'll have lots of technical occupations, master's degrees, all the way up to doctors. That is the only sector of the economy that is showing consistent and reliable strength.
Everybody else is on some form of decline, either holding steady or outright shedding jobs for the last 12 months. Now, men and women don't hold the same job, and neither do people of different ages or different races. And so a lot of the pain in the economy is proxied through the type of job you are more likely to hold.
I saw a Bank of America report—I don't know if you all had seen this, it was written up in the New York Times—of just how— Kind of ironically enough, beneficial the Biden administration was for men's employment, given that it had put so much money into manufacturing, as opposed to 2025, the first year of the second Trump administration, manufacturing shed a pretty remarkable number of jobs.
You see that pattern if you look hard enough at any job. So you're also going to see that, you know, middle-aged Black women in, like, the D.C. metro area were going to be hit hard by Doge versus, you know, younger graduates that have a doctorate are in health or education, you know, they'll do okay. Those patterns hold for a lot of reasons. Yeah.
I was reading today that a very prominent economist was saying that the answer to this puzzle of men's unemployment is to make certain jobs less feminine because they seem to be the ones that are growing for the future. It was an interesting note that kind of reflects what we all see, even if we can't describe, that men and women don't hold the same jobs.
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Chapter 7: What are the implications of rising inflation on the labor market?
I want to talk a little bit about AI, and I'll put forward a thesis and you respond to it, that everybody's AI-washing layoffs, that they blame AI because if you're a CEO who hasn't met his or her numbers, or you overhired during the pandemic, or just generally speaking, the underlying fundamentals of your business are weak, you can say, I overhired, or the fundamentals of our business demand are weak, or you can say,
We're using AI and we don't need all these people because I'm part of the Pepsi generation and you should take my stock up because that will directly result in greater EBITDA and a higher stock price. I feel as if this sort of kitchen sinking or whitewashing of AI and then everybody reports that AI is impacting the labor market. My thesis is that it's overstated. And by the way, that's not good.
It just means the underlying economy isn't strong. But do you buy into this notion or this thesis that AI is being used as sort of the boogeyman here to blame all layoffs on innovation around AI?
To a certain degree, yes. It's convenient and it's financially remunerative to corporations to say that they're laying off because of AI. It would be one thing if there was no penalty, but it appears to me there might be a reward for saying that you're utilizing AI. You know, it's not the first time this has happened.
The economy, we'd like to think that it's just numbers, but it's really so much narrative as much as it is hard data. And the narrative around... you know, companies blaming something else for layoffs, I mean, that's a tale as old as time, right?
We, you know, it's not that we want to cut jobs, it's just that the minimum wage is too high, and therefore we need to put all of your retail staff on an iPad. It's not that we, you know, don't want to raise your pay, it's that healthcare, you know, Obamacare made it required and now it's too expensive.
I mean, if you go back, every decade has a new person to blame, a new story that shifts the blame from employer, or rather corporate responsibility, onto some other factor in the economy where they say, you know, our hands are tied and this is a blameless way for me to make a decision I'd like to make anyway. Lots of candidates for that over time.
You know, we'll never really know the degree to which it's happening. We can only look to see what the data tells us with clear eyes. Those eyes are hard to keep clear.
I think it's certainly possible that AI is being used as an excuse to lay off workers and lay off young people and that there are other reasons to lay them off. But at the same time, I feel like the more we lean on that argument, the more we rule out the possibility that actually in a lot of cases, people are being laid off because of AI.
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Chapter 8: What solutions can improve the labor market and economy?
You'd never find computers. You couldn't point and say that's the year that the internet became mainstream or that's the year the personal computer sales took off. You would never see it because it takes a long time for that productivity to be adopted. So I think where we are right now is in a place where where we don't have enough data points to parse out a story.
And so we know what's going to happen. We don't know how it's going to happen or how quickly. That leaves room for both of these things. I mean, my instinct on this is that a lot of people are using AI on the job and that they've, you know, whether or not they told their employer, they've got ChachiBT or Claude going to help them work.
Could be to impress the boss, could be to prevent them being the one that gets laid off when something occurs. But people using it on the job versus adoption at the firm level, that would kind of be a clear cause and effect to layoffs. I don't think we've seen too much firm level adoption yet, which is what most economists would say when the layoffs would really start to roll in.
You know, this is the problem with new technology. It's just it leaves a lot of room for guessing. I think what we can rest on are certainties and things that we know are happening. The economy is slowing down. The administration has destructive economic policy.
And we have longstanding weaknesses in our labor market that can be exploited by new technology and would absolutely cause harm without having to guess.
The point about, you know, it takes a long time for these things to settle in, and only at that point can we look back at the data and be like, oh, yeah, that's why this happened. That's why this, you know, the internet occurred, and then that's why we saw these changes. But in order to do that, you have to, like, wait a really long time.
If you want to base it purely on the data, and, I mean, you have to look, both be backward-looking and also over a period of, like, several years. And so for me, this is where I get a little frustrated with the conversation because it's like, oh, well, we don't have the data yet that companies are using AI. And I'm like, well, they're telling us that they're using AI.
They're firing thousands of young employees at a time. Whether or not it's literally like the AI is doing their jobs right now, I don't know. But what I do know is that there is an expectation of incumbent on every large organization that if you're not laying off lots of people, if you're not reducing your workforce and you're not doing it in the name of AI, then you're getting something wrong.
And that to me is significant in and of itself.
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