Wide pants, a Middle Eastern oil crisis, and pesky inflation. It almost feels like the 1970s, but don’t expect this decade’s labor crisis to hit Americans who work with their hands.
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Instead, the AI-revolution labor squeeze will come for office workers, Marc Rowan, the CEO of private markets giant Apollo, said.
“This will be very, very far-reaching, almost every job will be enhanced or replaced,” Rowan said, noting this was “certainly” the biggest tech cycle of his career.
“We’re going to see, in our opinion, a complete flip of blue-collar ascendancy and white-collar stress,” he said.
“If you are an Ivy League graduate who’s in the liberal arts and certain things, you’re 10 years out of school, you’re making 60 grand,” Rowan, the former chair of Ivy League business school UPenn Wharton’s board, said. “If you can level a concrete floor, you’re making 250 grand.”
This will have “unknown” consequences on politics and beyond, he said, because “we have no political history” of this sort of change. Rowan, a prolific GOP donor who was floated as a potential Treasury Secretary in Trump’s second term, is watching “blue cities” where many of these white-collar workers are, and he expects “some amount of political upheaval” in these cities here and in Europe.
The loss of white-collar coastal workers could be to the gain of blue-collar workers. Jobs may be more plentiful outside the cities, as “the middle of the country where the bulk of this physical investment is happening,” said Blackstone president Jon Gray at the Milken conference on Monday.
Blackstone, with $150 billion in data centers and massive investments in the power supporting digital infrastructure, has a front-row seat to the capital behind AI.
Gray predicted a “huge boom in blue-collar employment,” both in the economy and in his portfolio.
“Our company, QTS, and data centers — a year ago, it’s something like 10,000 people working at job sites,” Gray said. “By the end of this year, it’ll be 40,000. There is, between the energy, the physical infrastructure, the data centers, the reindustrialization, something very powerful happening.”
What it means for private equity
AI won’t just be affecting investors’ portfolio companies or their loans to software companies. Private equity and credit are, after all, white-collar jobs.
Early career private equity associates may be spared the brunt of the impact.
Anthony Tutrone, global head of private markets at Neuberger Berman, said the biggest benefit of AI is getting more work done, not hiring fewer people.
“In the beginning, we thought this was going to be mostly a cost game,” Tutrone said. “For us, it’s been more of a productivity and quality game and increasing our capacity to look at more transactions and to react quicker.”
That’s not to say it can’t lead to labor savings in back-office areas like legal and corporate finance, he said, with AI agents taking over the “hundreds of thousands” of NDAs the firm signs.
Mohsin Pirzada, the head of funds for the Qatari sovereign wealth fund, struck a more cautious tone. As an investor in funds managed by these firms, he’s concerned about the long-term talent picture.
“The replacement of jobs is something that I personally worry a great deal about,” Pirzada said, because firms that focus on just cutting costs and not increasing productivity are “going to have succession risks.”
“Without having juniors running around doing screening memos, investment diligence for you, they’re not going to be in a position to manage the organization 5 years from now,” Pirzada said.
David Golub, president of credit specialist Golub Capital, said that the industry’s “pyramidal structure” will prevent any issues with developing future private markets executives.
“When AI has been fully implemented, we’ll still have a pyramidal structure,” Golub said. “Maybe it’ll be a little steeper, but it’s not going to be a lot steeper.”
Junior workers will still be employed, but their jobs will be different and more productive, Golub said.
It will “enhance decision-making,” but Tutrone said he doesn’t think it’ll replace humans. After all, private markets are about who you know.
“It’s going to be tougher for an avatar to build relationships with CEOs,” Tutrone said.
Moderator Dan Primack, business editor at Axios, then asked if firms could have their two agents talk, and “you can get your summary on the beach.”
“Maybe my grandchildren will have to worry about that, but I don’t think I do,” Tutrone said.
