Are white-collar professionals going to get Engels Paused?
AI will boost corporate profits long before it improves the lives of the professionals it displaces
This automation wave will kick millions of white-collar workers to the curb in the next 12 - 18 months. As one company starts to streamline, all of their competitors will follow suit. It will become a competition because the stock market will reward you if you cut headcount and punish you if you don’t. As one investor put it, “Sell anything that consists of people sitting at a desk looking at a computer.”
Andrew Yang, Andrew Yang Newsletter, 16/2/26
We’re reducing Block by nearly half, from over 10,000 people to just under 6,000… 2025 was a strong year for us. Gross profit growth more than doubled… So why are we changing how we operate going forward?
The core thesis is simple. Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally. A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.
I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes.
Jack Dorsey, letter to shareholders, 26/2/26
Software development has experienced its most significant shift in decades. I am prepared to say this clearly: the era of manually writing code as the core act of engineering is over… software development and product creation… We expect our AI transformation journey to deliver: A leaner, more efficient AI-led organization supporting a structurally lower cost base and improved scalability.
WiseTech CEO Zubin Appoo, ASX announcement, 25/2/26
We are, in my view, so close to these models reaching human-level intelligence, and yet there doesn’t seem to be a wider recognition in society of what’s about to happen. It’s as if this tsunami is coming at us, and it’s so close we can see it on the horizon. And yet people are coming up with these explanations, “Oh, it’s not actually a tsunami… that’s just a trick of the light.”
Anthropic CEO Dario Amodei, WTF podcast, 25/2/26
A few months ago, in a rare and regrettable lapse into self-doubt, I wondered whether AI might not start mangling the white-collar labour market quite as soon, or quite as comprehensively, as I and plenty of others have been predicting.
Given recent events, I’m back in full doomer mode.
Granted, a few restructures and some ominous CEO quotes don’t, on their own, prove much.
But as the quotes above proclaim, we seem to have reached a tipping point.
Not necessarily with the technology, though that continues to improve rapidly. It’s more the permission structure around it.
CEOs, investors and commentators have started saying out loud what many people suspected they already believed privately – AI now makes it possible, and increasingly commercially necessary, to run large companies with significantly fewer people.
The Fuckening Cometh
Andrew Yang, who has taken to calling the coming displacement wave “the Fuckening”, insists things aren’t looking promising for white-collar workers.
For the last year or so, the official line has been that tech and tech-adjacent firms were cutting staff because they had overhired during or just after Covid.
That explanation may account for some of the restructuring currently underway. Erstwhile Twitter owner Dorsey is not exactly a stranger to bloated headcount.
But the over-hiring story is starting to look like cope.
When prominent CEOs start explicitly linking AI capability to lower headcount, leaner structures and a “structurally lower cost base”, we’re no longer in TED-talk territory. This is the bosses explaining, in plain English, why redundancies are now pending.
Are we in for a 21st-century version of the Engels Pause?
The Engels Pause refers to the early phase of the Industrial Revolution in Britain – roughly from the late eighteenth century into the mid-nineteenth – when output and productivity rose, but ordinary workers’ wages barely did.
The economy got richer long before workers did and Capital pulled away from Labour.
The optimistic case for AI automation has been well-ventilated. It will almost certainly be, in the Arthur C. Clarke sense, a magical technology.
One capable of driving huge gains in productivity, accelerating scientific research, lowering the cost of many goods and services, and unlocking world-changing advances in medicine, materials and logistics.
Marc Andreessen and his fellow techno-optimists are correct when they insist powerful new technologies have consistently made humanity richer, healthier and longer-lived in the long run.
The problem lies in the last four words of the preceding sentence.
The Industrial Revolution was, ultimately, a triumph. It created the modern world. If you like air conditioning, anaesthesia, antibiotics, automobiles, cheap mass-produced goods, clean water, computers, dentistry, electricity, phones, refrigeration and sub-40 per cent child mortality rates, you’re not in a strong position to complain about technological progress.
But it remains the case that the gains from the industrial revolution were, initially, almost entirely captured by factory owners and their investors.
It took decades – and no small amount of Dickensian misery played out in dark, Satanic mills – before those benefits spread more broadly.
If AI sharply increases the productive capacity of firms, then profits will rise while wages will, at best, stagnate.
The early winners of the fourth industrial revolution will likely be shareholders, founders and the owners of the models, platforms, data and compute.
The new ‘left behind’ could be the millions of professionals whose work can suddenly be done faster, cheaper and by far fewer people.
For some time, the productivity gains of a new technology will be distributed in the traditional way – unevenly.
Cui bono?
AI will generate immense wealth in the coming years.
The pertinent questions are who captures that wealth, whether it ever ‘trickles down’, and what exactly happens to the workers who are displaced in the meantime.
A society composed of a small class or big winners a large mass of losers was the central political issue of the first industrial age. One that ultimately gave rise to Communism, which in turn begat Fascism.
After two World Wars interspersed with a severe economic downturn, the powers-that-be decided to share the wealth around for a period of three decades or so. (See the bottom left corner of the graph below.)
Of course, they ultimately realised they should go back to the pre-Keynesian era arrangement, albeit with the ‘winner’ class being expanded somewhat with the inclusion of the professional-managerial class. (See the top right half of the graph above.)
But now the members of that class, “who did all the right things” in terms of studying and working hard, are about to discover that being a white-collar professional no longer guarantees what they assumed it always would – economic security and social status.
There is no reason to assume the Andreessens, Bezoses and Musks of the current industrial revolution will prove more self-denying or civically minded than their counterparts were during the first one.
Which seems to suggest that white-collar professionals really are in for a fuckening.