Written by: Kieran Delamont, Associate Editor, London Inc. Originally published in WorkLife by London Inc.
Young and unemployed? Remote work, not AI, may be the problem
Everyone blames AI for the brutal job market for grads — but a new study points elsewhere
As the Tim Robinson-in-the-hot-dog-costume quote goes: “We’re all trying to find the guy who did this!”
In this instance, this is the degrading of the entry-level job market, and a surprising new paper came out late last month suggesting that while AI currently takes much of the blame for the tough job market for grads and juniors, work from home (WFH) might be a more important factor.
Two economists from the London School of Economics, Peter Lambert and Yannick Schindler, argue that, based on data covering more than 240 million new hires over eight years, plus over 400 million job postings, while AI is often blamed for the erosion of early-career hiring, “our findings point strongly towards WFH exposure as a better predictor of the decline in relative early-career hiring,” adding that “WFH adoption also strongly predicts a fall in the share of new hires going to juniors and job postings requiring no more than three years’ experience.”
Companies and sectors where adoption of WFH was strong “subsequently shifted away from early-career hiring,” their analysis found.
“The shift towards WFH arrangements, which was forced during the pandemic, and which persisted thereafter, is a robust predictor of declining relative demand for early-career workers.”
They argue that for early-career workers, training rates are slower, and firms are less inclined to hire people “whose productivity, reliability, and work habits are not yet known.”
In early June, their research was essentially repeated by the New York Federal Reserve, which looked at the employment data from one large Fortune 500 company and came to a near identical conclusion: “We estimate that remote work can explain 64 per cent of the recent increase in unemployment among young college graduates,” wrote economist Natalia Emanual. “For positions on distributed teams, the firm consistently hired more experienced workers, even after reopening. This divergence suggests that the firm’s hiring decisions were influenced by the complications of remote work rather than other macroeconomic trends.”
The findings, though, are not without their critics. Nick Bloom, a Stanford University professor who has been pro-WFH for many years, cautioned people against taking the claims completely at face value. “WFH expands labour supply,” he wrote in a LinkedIn post, citing the fact that labour force participation rate is higher now than it was pre-pandemic. “Do not confuse the negative employment impact of the Covid lockdown with the longer-run benefits of working from home.”
Still, the findings present an interesting disruption to common narratives. For one thing, economists seem to have converged (to some degree) on the position that, all things being equal, there is greater productivity and early-career benefits to in-office work. (The LSE economists do note that the arguments for WFH, in terms of work-life balance and other workplace frictions, remain strong.) For another, they argue that this is ultimately a good news finding.
“Compared to the AI doomer view, the fact that WFH plays a sizeable role in the junior-hiring decline is, we think, cause for optimism,” the LSE economists wrote. “The organizational frictions it creates around supervising and developing early-career workers are surmountable through the diffusion of managerial practices better suited to remote-work environments.”
Is your boss toxic?
For a growing number of employees, the biggest source of stress at work isn’t the job. It’s the person running it
When asked, six in 10 workers will say yes, they have a toxic boss. That’s according to a new survey from The Harris Poll, which surveyed around 1,300 employees, finding that “six in 10 employed adults currently have a toxic boss,” and “seven in 10 say they’ve had one at some point in their career.”
The survey claims its findings “paint a stark picture: toxic leadership isn’t a minor workplace irritant. It’s a significant driver of burnout, job loss and financial harm.”
Many media outlets covered this as being in line with long-term trends of workplace burnout, strife, stress, etc. (“How many more national surveys will it take for companies to take toxic bosses seriously?” asked the Dear Executives blog.)
But one management professor, interviewed by Human Resources Director magazine, cast doubt on the number, suggesting there is a much bigger picture here. “If you just ask people on a random basis if their boss is engaged in the behaviours that we characterize as toxic, bullying or abusive, it’s more like 15 per cent,” he told HRD.
Toxic managers are sometimes blamed for toxic environments, argued another professor, Heidi Brooks. “The framing of ‘toxic’ is finger-pointing and blaming,” Brooks said. “I want to call us to pay more attention to the system that’s afoot, while also remaining clear that people are responsible for their impact on others.”
But the other side of the coin suggests the number might truly be that high, and workers are just getting more comfortable with naming and expressing it. “Workers, and especially younger workers, are becoming more vocal about these situations,” wrote HR Dive, which also noted the survey suggested that workers want improvement, not shaming. “Workers want better relationships with their bosses, and 64 per cent said leadership training was the best way to reduce toxic behaviour,” contributor Lara Ewen wrote.
But whether you think the number is too high, too low or just about right, Sophia Rook believes the takeaway shouldn’t be the number itself, but the fact that the number isn’t really changing much, no matter how many surveys are conducted.
“What would it actually take for companies to notice and correct this?” she said. “Not another awareness month. Not another resilience workshop. And not another survey that gets summarized in a deck and then ignored. It would take executives treating toxic leadership as an operational and financial risk, not a personality quirk.”
Staying put
A decline in quick quitting reflects shifting dynamics in Canada’s job market
Canadians are losing their love for job-hopping and quick quitting as they adjust to a low-hire, low-fire job market, according to a new report from Indeed’s Hiring Lab.
“Historically, employees who are new to their jobs (with tenure of one year or less) are over twice as likely to transition out of work in a given month, compared to longer tenured workers,” the report states — something we saw go into overdrive post-pandemic, when job-hopping became the dominant way to advance up the career and income ladder. This trend led to complaints from hiring managers in many sectors, saying the work that went into hiring and training people was being wasted, since they moved on to something better in matter of weeks or months.
But in the last year, the gap has narrowed considerably, Indeed stated. “This greater decline in separations among new hires reflects a plunge in quick quitting. While layoff and discharge rates were down about 13 per cent among both groups, quit rates of employees leaving work entirely were down 34 per cent among new hires, compared to just a four per cent decline among long-tenured workers.”
The report found the trend to be widespread across different age groups and sectors, which Indeed’s Brendon Bernard credited to an overall cooler job market. “The shift really kicks in in 2023 as the overall labour market starts to cool,” Bernard told The Globe and Mail. “One theory is that this is just part of a cyclical downturn in the job market, particularly the hiring market. It could also be a sign of a more pessimistic sentiment amongst job seekers.”
The decline in turnover rates at Canadian companies might also fit in with another trend: job hugging, where anyone with a job are doing everything they can to keep it — deciding that, even in a job they don’t like, to “hunker down and hang on to whatever we’ve got,” as economist Jim Stanford put it.
The other trend contributing to the decline in quick quitting is that, well, it doesn’t pay the way it used to. “People felt comfortable jumping to a new opportunity, because they knew they were good for a 10 to 20 per cent increase in salary,” Mike Shekhtman of Robert Half told the CBC.
But — and this is an optimistic spin on it, to be sure — Bernard thinks it’s possible people are choosing not to quit and not merely being discouraged to do so by a crappy job market. “This is speculative, but perhaps jobseekers have more information now than they used to about what kinds of jobs are out there,” he told the Globe. “So, they find jobs that they prefer, and hence don’t have to leave quickly.”
Either way, the trend means employers can breathe a bit easier. “Fewer new hires leaving means less time and money spent on recruiting and onboarding their replacements,” Bernard said. “For jobseekers, the impacts are more ambiguous.”
A new gold rush for construction talent
The explosion of AI investment is triggering a data centre building boom — and an urgent need for skilled construction workers
Once upon a time, anyone who posted online about losing their job in layoffs or downsizing were told, derisively, to “learn to code.” Now, those who learned to code are seeing their ranks thinned considerably in tech layoffs, and what are the tech giants (in some cases, their former bosses!) telling them?
Learn to…weld?
At least this time, the people saying it are putting some resources behind it. Earlier this month, two tech Giants, Meta and Google, announced plans to create data centre construction training programs as each tries to hyperscale their AI computing divisions. Meta said it will put $115 million USD to a program that would provide free five-week training and a guaranteed job to anyone who wanted to learn to build data centres.
“America needs hundreds of thousands of skilled tradespeople,” a company spokesperson said, “and this program creates clear, accessible pathways into those careers.” Google followed suit shortly after, last week announcing a $50-million skilled trades training programs for AI and energy sectors.
Here in Canada, we may have something similar brewing. Part of the federal government’s new ‘AI for All’ strategy includes vague references to “AI related jobs and work placement opportunities,” although neither offer is as clear (or enticing) a sales pitch as Meta’s guaranteed job.
Each announcement, including the Canadian government’s, reflects the realization that while anyone can say AI is the future, the technology comes with a substantial physical footprint that, at the moment, represents a significant bottleneck to AI expansion. “It’s not a new issue. It’s just gotten bigger and bigger,” said Todd Coleman, CEO of data centre company eStruxture, speaking to The Logic. “It’s forced companies like ours to go get creative on how we look for, attract, and train new skilled labour.”
This will also be good news if you’re an existing tradesworker, an industry which has been in a bit of a lull of late, with both residential and commercial construction activity in a decline over the last two years. Labour groups and unions might be likely to embrace a more direct AI construction training program both here and in the United States, because it will get some of their workers off the bench.
“For the first time, developers are telling me the trades are calling them for jobs,” said Benjamin Tel of CIBC Capital Markets. But he remains concerned about how well AI jobs can compete against bigger, longer-term projects (one of the major criticisms of the AI buildouts is that facilities don’t create that many ongoing jobs).
“It will be competing with the infrastructure projects,” Tal said, “and that would be a major issue slowing down the process of investment.” In other words, whether you’re Google, Meta or Mark Carney — if you want people to build the data centres, you might have to get ready to open your wallet.
