Is the rise of ChatGPT really the direct cause of the decrease in job openings?

Last week, Scott Tirrett, Founder of Venture for Canada, Author of The Uncertainty Advantage, posted an intruiging graphic on LinkedIn showing how the value of the S&P 500 grew pretty in lock step with the growth of US job openings over the past twenty years.  But right about the time where OpenAI introduced the world to ChatGPT, a divergence bewtween those two metrics took place with S&P 500's growth accelerating upward the past three years, while job openings decreasing significantly over the same time period.

Now many people are saying AI is the main reason for this divergence.  So we invited Clint Oram, co-founder of CRM, investor and startup advisor, to join us on our CRM Playaz show to share what he saw when he looked at this graphic.  And then  on another show I host called the Small Biz Breakdown, a weekly show with a smalll business thought leaders and exports, I asked the following folks what they say viewed the image:

• Leland McFarland - Publisher and CEO of SmallBizTrends.com
• Ramon Ray - CEO and Publisher of ZoneofGenius.com
• Shashi Bellamkonda - Principal Research Director - Marketing & AI Research and Advisory, Info-Tech Research Group · Full-time
• Ivana Taylor - CEO and Publisher of DIY Marketers
• Pierre DeBois - Founder and CEO, Zimana Analytics

As you will see in the clip below, there were lots of different takes and opinions about what each of these folks saw when they looked at this graphic.  So check out the clip and the edited transcript below

Summary of transcript (by Gemini)

The panelists discuss a market chart showing a divergence between the S&P 500 (rising) and Total Job Openings (falling) since 2023. They interpret this split as a mix of factors, including the end of a hiring frenzy fueled by pandemic stimulus money, which led to an unsustainable "bubble" and a necessary "right-sizing" by technology companies.

Macroeconomic uncertainty, such as tariffs and inflation, is also causing companies to be uncertain about the future and reduce their workforce. The role of AI is debated, with some arguing that AI is a "convenient scapegoat" for layoffs, noting that companies like Twitter demonstrated they could cut a large percentage of employees without AI's full autonomy.

However, Private Equity firms are actively tracking cost-saving metrics from "Agentic AI" introductions, confirming that it is leading to a legitimate reduction in workforce and "cataclysmic transformations" in business operations. Concerns were raised about the S&P 500's stock gains feeling "bubbly," as the revenue might be inflated by interconnected deals between large companies, while consumer confidence is dropping and people are going into debt.

Edited transcript

Brent Leary: Tell us what you see in this. This is like a Rorschach, a Rorschach diagram or something like that.

Clint Oram: Yeah, the Rorschach.

Brent Leary: What do you see when you look at this?

Clint Oram: I see a couple of things in here. Is part of the story that it's trying to push forward, which is AI is impacting jobs. I think that's absolutely happening, but nowhere near to the scale I think might be implied in this.
I think there's a pandemic story in there. A lot of stimulus money got pumped into the economy. A lot of companies were spending stimulus money on technology. It fueled a lot of growth in technology companies coming from that stimulus money and technology companies were hiring people right and left. There was a flat out war for talent.

I remember looking at that and going, that is not sustainable. We're popping a bubble here, is what is really what it comes down to to a large degree.

Brent Leary: They seem to be tracking pretty closely up until 2023, and then they completely diverged.

Clint Oram: It's both those stories. I do think companies as they look at a tight economy, look at the macroeconomics going on right now, a lot of companies are uncertain about the future, whether it's tariffs, inflation, or you know, there's just a lot of uncertainty in the economy.
So I think you look at all those pieces together and what I see is a a bit of a right-sizing in the market right now in terms of the number of employees that certainly technology companies have. That's where I've got my most visibility. And then I'll see a lot of companies that are that are using AI as a convenient scapegoat. All the stuff happening around AI, I'll call it, it feels bullish.

Brent Leary: What do you think what he said? You agree, disagree, why?

Leland McFarland: That is a really good point and there is a sharp sharp increase right after the COVID kind of lockdown started subsiding. A hiring frenzy does actually increase stocks as well. So it could inflate your your your value of your company. And then I think we have the Elon Musk situation kind of coming in with Twitter, where he just axed, what is it, like 75% or something like that of his company and it worked just fine without 75% of his employees.

Freelance websites, I think it's Upwork who is pushing a lot into AI, and that's going to affect what the freelancers do on Upwork. They make videos, they shoot pictures, they do the menial small labor, and Upwork is trying to be like, well, we we got AI that can do exactly that and so we're just going to cut out the middle man and you just pay us directly.

So I think that there's a little from A, a little from B and it's just caused that perfect dip storm.

Ramon Ray: I’m taking the PE example. The private equity conference I was at, I don't think it's fluff. We don't know what fluff is yet. I think of it as in a few years this will be like the internet, people will stop saying, "The internet's here,".

Salesforce was there talking about Agentic AI; They had a full presentation talking very openly about, "Hey, do this or that," and it saved 400 people or $232,000 a month and whatever.

PE firms don't mess around with their money. They don't mess around with stats. They track this stuff. It's all about valuation. I believe, from what I'm seeing, just at the conferences. Robert Smith [CEO and founder of Vista Partners], said the same thing. He's talking about AI is the real deal.
We are seeing cataclysmic transformations in how companies are working. So whatever it is, I do think there's a big part of it that is legitimately reducing workforce.

Shashi Bellamkonda: AI hasn't taken away any jobs in my opinion. The companies that say that have the headlines, but for every place where AI has been introduced, they've actually had an excessive amount of human beings in the loop because companies still don't trust AI to be autonomous.

One thing that we have to also look at is the Fed rates. They went from zero to whatever is the latest percentage, 3.5 or 4. That also affects whether people are going to employ more people or not, or are they going to lay off. The companies that are catering to Wall Street are actually reducing it irrespective of whether AI is taking over their jobs or not. That's my view.

Ivana Taylor: Thinking about these AI companies, and these people are all making deals with each other. If I gave Brent $100, he's like, I got $100 of income. And then Brent says, hey, I usually do that too. And then we pass that $100 around this panel. That's that same $100, but each one of us is listing that as revenue. And now they're making these agreements and all this stuff. I'm getting flashbacks to the internet bubble part is like, who's going to buy this stuff? I'm asking, cuz people are unemployed, new graduates who are about to be unemployed are coming in, consumer confidence is dropping, people are putting stuff on credit cards. I want to talk about these interconnected systems, because the bubble doesn't have to pop, but somebody's gotta buy those chips. And if Amazon buys the chips and everybody, these big companies buy the chips, who's gonna buy the stuff?

Pierre DeBois: Amazon actually said that, hey, we hired during the pandemic and we're trying to correct. And I think that correction is coming in just right now as AI, you know, getting more into Agentic AI and more into devices. I think the challenge I have with that chart just a little bit is that it's it's still almost a simplified correlation just saying, "Okay, AI happened here in 2023 and, and you know, the stock market's going up but we need to, we need to see some job losses." It depends on the industry. Agentic AI really, it's here but it's not here in terms of guiding, you know, completely for operations. There's some spots of it, but I think that wave is still developing. And I think what companies tend to do is they just over-adjust. So, this is going to be an adjustment for sure.