AI Will Hit a Tipping Point Once This Key Trend Emerges in Labor Market

• In an interview with Insider, LinkedIn’s head of macroeconomics broke down labor market trends and AI.
• LinkedIn data shows the number of jobs on the site mentioning ChatGPT jumped by 51% from 2021 to 2022.
• AI’s impact is in its early days, he said, but once non-tech firms start using it, the productivity jump could be dramatic.

Artificial intelligence remains in its early days of adoption, but it has a transformative potential to boost worker productivity across sectors, according to LinkedIn’s principal economist and head of macroeconomics, Guy Berger.

AI language tools such as ChatGPT have gone viral, and workers are already using them for emails, marketing, and other written tasks. The key tipping point to watch will be how soon AI can seep into jobs outside of the technology sector.

“Big picture, when non-tech companies start implementing AI in a consistent way to improve their bottom line, and to augment their workers’ abilities and make them more productive, it will start to change the nature of jobs,” Berger told Insider in an interview. “That’s when this will have a big impact.”

Data suggests employers are clamoring to explore the nascent technology, with the number of jobs on LinkedIn mentioning “GPT” up 51% from 2021 to 2022. And in the week leading up to March 20, the number of postings mentioning generative AI keywords in the US saw a 38% weekly jump, and a 138% increase year over year.

Under-the-radar labor market trends 

Even though the labor market has slowed down over recent months as the Fed’s made nine consecutive interest rate hikes, it’s still robust by historical standards, Berger explained. Climbing jobless claims are one part of the story, in his view, but the key is the downtrend in hiring. 

“This is super normal in most cycles, since turning hiring on and off is a much more reversible thing than having to lay people off and rehire, which is what happened in 2021,” he said. “So companies are trying to avoid that this time by cutting hiring.”

LinkedIn data shows hiring declined by 28.3% in March 2023 compared to the same period a year ago, and the number of jobs offered on the platform has steadily dipped after peaking last May.

Tighter central bank policy has made businesses more cautious, and several under-the-radar trends have emerged as a result.

First is the rise of short-term contract work, which suggests firms want flexibility amid uncertainty, Berger said. 

“At the same time, while companies go for this flexibility, the job market is still hot enough that the number of people working two or more jobs is particularly elevated, which shows people that want a lot of work are able to get it,” he added.

The economist also pointed out that employers are pulling back on existing remote work, and hiring for new remote jobs is slowing down compared to non-remote jobs.

Last month, nearly 1 in 9 US job postings on LinkedIn offered remote work, down from 1 in 5 offered in March 2022.

“Comparing job openings to applicants, the cooling has been more aggressive in the remote part of work in terms of people interested in applications,” Berger said. “Those haven’t come down, just the availability has.”