'NOT TAKING YOUR JOBS': New studies challenge AI employment fears

[00:00:00] Speaker 1: 2036 is now the year. A new era of North American trade with the U.S. declining to renew the U.S. MCA today. The stage is set for potentially a whole new set of relations with our closest trade partners in 10 years from now. [00:00:15] Speaker 2: Barron's Investor Circle newsletter editor Josh Schaefer is live on set with us to discuss all of these details. Josh, I'm so glad to have your insight and expertise. So welcome to the set. [00:00:25] Speaker 3: Yeah, thanks for having me. Appreciate it, Josh. [00:00:27] Speaker 2: So, Josh, you know, this is kind of, I think this is a pause. You know, we're still in this deal for the next 10 years. This is an opportunity to reimagine. You know, things are very different now than under the first Trump administration when we entered and negotiated this deal. What is your take on this, kind of where we are and where we could go? Is there a potential now that maybe we can make the trade deals better for the United States? [00:00:49] Speaker 3: I think there's certainly a chance that you can make them better. And I think from an economic perspective, thinking about how much room you sort of have to maneuver here. What's at stake for the U.S. economy if this deal, until you essentially get a new deal? And overall, the USMCA oversees about $2 trillion in trade annually. 18% of that is autos. So I think autos is sort of the thing to focus on here, what this means for Ford, GM, Stellantis, your big three in the U.S. I think largely people had expected no extension to be made today. If you just look at something like the stocks on those three companies, which is something I'm following all day, you didn't see a big reaction. This was largely anticipated. And then to sort of zoom out, I mentioned autos. But broad economy-wise, the economists over at Oxford Economics estimate that this could be a 0.02% drag on GDP, two basis points. Not a lot. So there's not a lot in terms of overall things to be worried about for now. The question becomes overall, you introduce uncertainty. We went through this with tariffs last year. That might freeze a little bit of business activity. But I also think the tariff experience of last year showed you maybe it freezes a little bit of business activity. But the economy has been doing pretty well for about 12 months now. So it hasn't really stopped the U.S. economy. [00:02:02] Speaker 1: Yeah, Josh, I think the president is actually pretty clever here to bifurcate the two countries and just say we're just going to have our own relationship. And the relationship with Mexico seems to be going a little better. How much do you think China and the auto of like BYD and those types of things and the love affair that seems to be brewing with Canada had to do with this? [00:02:21] Speaker 3: I think it definitely had something to do with that. I mean, it doesn't seem like there are many geopolitical trade things the U.S. is doing right now that doesn't have something to do with China. So I think that's definitely an aspect to watch moving forward. And to your point, Marcus, separating seems to be the key here, separating being able to negotiate with just Mexico, being able to negotiate with just Canada. If you just simply extended the agreement, that is not an option. So this opens up a lot more possibilities in terms of what could happen next. [00:02:49] Speaker 2: And when we think about China, you know, another issue is just making sure that China is playing by the rules, you know, that they're not circumventing our own trade agreements with Canada and Mexico by setting up shops here in North America to get around whatever trade deals we have with China as well. That's something else to keep in the back of our minds with all of this. I do want to move on to something else while we have you. We've got a new pair of studies from the Federal Reserve that show all of the fears and the talks about artificial intelligence, taking away jobs are completely overblown. I know you've been looking into this. So what are we finding out? [00:03:21] Speaker 3: It was the headline of my Substack newsletter a month ago, AI isn't taking your jobs. And in the last month, all we've gotten is more data showing that AI is not taking your jobs. So the St. Louis Fed and the New York Fed looking into this, the St. Louis Fed found essentially that what's happening with younger workers, so the undergraduate unemployment rate, unemployment rate in the U.S. is actually higher than the national unemployment rate. It's at about 5.5% compared to 4.3%. It's a big problem. You go back over 30 years, that is not normal. Normally, the unemployment rate for undergrads is actually lower than the national unemployment rate. But what's happening is there's just less jobs available right now. It doesn't really have to do with AI. Ramp actually had a private study that they did that found that companies that are investing in AI are hiring 10% more over the next two years. Because what they're realizing is, okay, we start investing in AI, we give this to you as an employee, you can drive my profits higher. If you can drive my profits higher while using AI, I'd love to keep you. That is the point of business, is to grow profits. Company executives are not looking to get rid of employees and replace them with AI. They're looking to have a better business. And whatever that solution ends up being with AI is the key. It's not just looking to replace workers. [00:04:34] Speaker 1: Yeah, let's double down on that a little bit. This idea that AI was going to take everybody's jobs is misplaced. But what's not misplaced is if you work somewhere and you decide that you don't want to adopt AI in your job, you don't want to have a more efficient process, you don't want to communicate more fluidly, you don't want to work with your coworkers, it's the same as somebody saying, I don't want to email, I still want to fax. At some point, the performance of that individual and their inability or their unwillingness to adopt AI is going to make them less efficient or less of a performer. That's what's going to lead to the unemployment. The second topic that I do want to also talk to you about is this idea that there's unemployment is bigger at the younger ages. I want you to be very bold here and say, why is that really the case? [00:05:20] Speaker 3: Why is it really the case that unemployment is, I think, partially because maybe the younger generation hasn't adopted to AI yet. So one of the things in that study, Marcus, that was interesting is you're seeing requirements now on entry-level job applications to be trained in AI the same way that I would put that I'm proficient in Microsoft Excel on my resume. Maybe the younger generation isn't quite there yet with that pivot. But I think overall, just the pivot to AI, when you're a younger person going into a job right now, the question in the C-suite is, how can AI make my business better? If I'm a young person, I want to be coming equipped with that answer, and I don't know if we've quite met that yet. [00:05:58] Speaker 1: I want to one-up her controversial ranch comment with, I wonder if part of it is that you have a young subset of the population that believes they should make 100 grand a year. They should be the president of the company on day one. They only want to work three days a week, and they want three of them to be at home. I wonder if that's a small part of it as well. Yeah. [00:06:16] Speaker 2: Maybe. You know, I've also read some headlines that as much as we may not like it, that work from home is here to stay in some capacity, and it is much more difficult to hire a younger workforce who is going to be trainable through work from home models that they also insist on. So that's, you know, they're not being considered for those types of jobs. [00:06:35] Speaker 3: I spent an early part of my career working from home during the pandemic. It is very hard to learn when you're not sitting next to experienced people and getting, being able to ask them. You couldn't work for me if you wanted to work from home. [00:06:46] Speaker 2: Well, there you go. You couldn't do it. Thank you very much, Josh Schaefer. [00:06:48] Speaker 3: Lydia, we've got to get you around on ranch. [00:06:51] Speaker 2: I've never been a ranch person my whole life, so I'm not sure that that will ever be. Okay. Okay. Be sure to catch Josh on Barron's Roundtable airing on a special night this week. That's tomorrow, 7.30 p.m. Eastern, right here on Fox Business. That's Do Not Miss TV.