What's your concern when you look at the labor market and you see people describe it as healthy, robust, full? based on

what you just talked about? You know, the big picture numbers are those things.

It is robust.

It is healthy.

It is solid.

It's only when you look under the hood that you actually see what's really going on and how it amplifies the case shape that we're seeing.

So what are we seeing? In terms of base pay, everybody's getting about the same amount of base pay.

But how do you see the sort of shifting under the hood tied to AI, given the fact that you have big tech companies that are cutting thousands of workers, and you have other companies saying, well, how do we save money, given the fact that we're spending so much on cybersecurity, let alone anything that could improve efficiency?

yeah.

Like a little vibration.

But these aren't little vibrations, let's be honest.

These are sweeping changes in how policy has been executed.

And they're being felt in a really deep way around the world.

This is part of that global connectivity, whether it's policy, whether it's an extreme climate event, whether it's an amazing, new, promising technology that we call AI.

All of it connects all of us.

And I think probably we're not ready for that, you know? Kai,

yeah.

Like a little vibration.

But these aren't little vibrations, let's be honest.

These are sweeping changes in how policy has been executed.

And they're being felt in a really deep way around the world.

This is part of that global connectivity, whether it's policy, whether it's an extreme climate event, whether it's an amazing, new, promising technology that we call AI.

All of it connects all of us.

And I think probably we're not ready for that, you know? Kai,

Remind us

... corner unit, and there's a perfect view, gorgeous view of the Arabian Sea.

It's like India is reaching out to the rest of the world, and on the side view is a abandoned slum-type building, where people are living on the rooftop, and the curtain was firmly closed on that view.

I don't wanna end, uh, this story in Mumbai on a downer, but what happens if they don't get it right?

Well, I, I don't wanna end on a downer too, because I have faith that the economy always wins, and the economy demands infrastructure to grow.

But what happens if they, they get it wrong doesn't stay in India, and that's the whole point of this series.

I'm sorry to bother, were you waiting for us? There were around a dozen women, all of them Marketplace India artisans, in traditional dress, sitting in a big circle on the floor.

What does it mean for you all to have this circle and be able to go to these other women, I know you can't understand what I'm saying, and, and have this sisterhood, um, around you during the workday?

Yes.

What would it mean to India, to the country, if every woman had their own bank account, their own way of making, earning money, and were independent? What would change?

It's currently working on Dune 3, as well as another big blockbuster we're gonna get to in a minute.

minute.I saw the trailer for this movie

Mm-hmm

... you, will you be able to get promoted to a new job at the same company, or will you look for another job at a different company?

It's currently working on Dune III, as well as another big blockbuster we're gonna get to in a minute.

minute.I saw the trailer for this movie

Mm-hmm

... you, will you be able to get promoted to a new job at the same company, or will you look for another job at a different company?

Uh-huh.

But there's a lot of things infrastructure-wise that Vietnam had that India does not Um, but there's a lot of things that Vietnam was striving for that India has had for a very long time.

Until Anil gave him that reality check, and now Deshant's got some ideas for how to grow the family jewelry store.

If you think about your aspirations for your son in this business, what would you like to see him do after you've retired and you're enjoying life? Where would you like him to take this business forward?

And how does it differ from the Bureau of Labor Statistics data that puts out the monthly jobs report that we're all also very familiar with in terms of non-farm payrolls?

Yeah.

There's several differences to highlight.

So this is administrative data.

It comes from ADP's activities of paying people.

Um, and so you ask what our data set is, it's everything on your paychecks from, you know, the age of the employee, how long they've worked for the firm, how many hours, actual hours they worked.

We actually know that because we have to pay people by the hour.

But maybe I'd ask you, how is AI impacting the human resources department, and how you're thinking about AI and the labor market?

Just how resilient, how stable is this jobs market?

There's stability.

Um, we're seeing that.

We're seeing, uh, stability, but not across the board.

Healthcare s- continues to be the reliable indicator.

Um, but, uh, this number, this jobless claims number, yeah, it's consistent from week to week, but the context is changing a lot.

Um, I would note that the long-term unemployment rate is up to 27.1% in the last, uh, BLS employment report.

Nela, what does that tell you about the neutral rate right now? If you aren't seeing any kind of ramification when it comes to hiring plans of small firms from rates being at elevated levels currently relative to the past 20 years, does that suggest to you a higher neutral rate, that this economy is less rate sensitive, even in some of the areas that traditionally have been more rate sensitive?

cboe.com/us_disclaimers.What does AI do, do you think, to, like, inequality in America in terms of, like, income distribution, concentration of wealth, given what you're seeing in the data?

Well, I...

First of all, this is already present, right? The...

We're looking at inequality.

Um, we actually track this.

We look at, uh, quartiles of income and what's growing fastest and what's going... growing slowest.

And I think there's a couple things that, that you can say, and not all of this is AI-driven, but maybe there's an AI solution or an AI effect.

How should governments and students, you know, prospective early career starters be preparing?

So, um, tell us more about, um, how this, uh, particular category, the, the young workers between 2020, 22 and 2025 are affected, especially, um, compared to other categories.

Yeah.

It's a great pleasure to do that because right now, AI is a lot of forecasts and guesses, and our attempt with Stanford in partnership was to really look at ADP payroll data.

We pay 26 million people in the United States, and so we have a really strong lens on what's going on with AI.

The first thing to note is overall, AI's not having, uh, much of an effect on the US labor market.

It's quite modest.

But that's when it's time to peek under the hood and look in a more granular way, and we can do that by career stages.

Is that, is that what's going on?

Tell us a little bit about how those pressures are developing And as you've seen in the latest outlook, there is definitely some concern on the part of chief economists as to what's likely to happen, particularly in terms of that combination of increasing inflation, relatively high and elevated prices and wages that are not quite keeping pace.

Yeah, well, first of all, thank you for having me, Sadia.

Thank you to the World Economic Forum.

Wages are really the bridge between the labor market and inflation.

And I think there are two really important points to be made when we're talking about the global view of inflation.

The first is inflation's likely divergence when it comes to monetary policy.

We saw three major central banks make a move in the last couple of weeks to raise interest rates, and that might hint at a coordinated central bank policy.

So what has led to this uptick in sentiment among chief economists?

How do you read into this kind of development?

You know, first of all, s- the restaurant industry is a hard industry, and not every restaurant, even a franchise, is an access- successful franchise.

But when I talk to restaurant owners, it seems to be that fast casual segment that's doing better.

Um, but one of the things that surprised me when I talked to, to these real restaurant conglomerates at the fast food level is that they're really concerned about affordable housing.

Now, you think about where these restaurants are located, location drives the consumer-

Really?

If you're in retail or leisure and hospitality, the restaurant business that we were just talking about, you'll actually see negative earnings for the typical w- worker, negative growth from switching jobs, because that is an industry that rewards loyalty and service over fast switching.

So it really depends, uh, where you are.

Does changing jobs still produce a pay bump? What are you guys seeing in ADP on that?

Yes, it does still produce a pay bump, but the premium for that pay bump has narrowed significantly.

How much? We're looking at about 2% between switching and just changing for the average worker.

Now, it matters a lot what kind of industry you're in.

If you're a construction worker, expect almost 14%.

increase from your old job to your new job.

Really? If you're in retail or leisure and hospitality, the restaurant business that we were just talking about, you'll actually see negative earnings for the typical worker, negative growth from switching jobs because that is an industry that rewards loyalty and service over fast switching.

Are you kind of a set it and forget it investor? Or are you making adjustments on a regular basis, a quarterly basis or annual basis? How do you think about it?

Can you see an absorption of additional price increases if you don't have wages keeping pace?

Yeah.

My colleague, Lee Sze Wing, and, and professors Eric Hurst and Christina Patterson looked into 16 million workers between 21, 2021 and 2024 to answer just that question.

You know, when wages soared, uh, pay did not keep pace, and that's because employers, so those very employers that the Fed is listening to, tend to have structural, uh, s- uh, permanence in their wage increases.

They all tend to give about the same amount of wages to the same amount of people.

It's usually about 3%.

It's usually whole numbers.

Nida, what happens when you include people who change jobs and maybe got a pay increase?

Are you seeing some confidence pick up slowly?

Well, a little bit.

I mean, that 7% number is remarkable.

We haven't seen that level of pay growth for job changers since August of 2025.

So when we saw that number, it jumped out to us.

It was the biggest number in that report in our view.

I know a lot of people looked at the 44,000 and said, "Oh, that's a miss." Um, it's not a miss for us, because we've been tracking it every week, so if people were paying attention [laughs], that's where you would've landed.

Has that started to shift at all?

Please.

Okay.

So we've had enormous stability in jobless claims, but the health of the labor market is how it's treating new entrants, so let's go there.

Um, if you look at very early career, I wrote a blog this week about teenage unemployment.

It's the highest unemployment rate we'd seen outside the pandemic period in the last decade.

It's around 14.5 point- 14.6%.

It's harder for these inexperienced workers to get a job.

I'm just seriously curious about whether it's a skills mismatch here.

Joining us for more is one of the researchers involved in this project, Nela Richardson, chief economist at ADP, former senior economist actually at Bloomberg, and Nela, present, you are monitoring the present, not the past, but what data do you take in? How are you monitoring this?

Well, first of all, we are thrilled because AI is said to be one of the most consequential technologies the world has ever seen, and yet we have very limited ways of measuring impact.

And so this is why I'm so excited to partner with Stanford Digital Economy Lab, led by Erik Brynjolfsson, on these AI indicators, and namely the Canaries Dashboard, which tracks the impact of AI on occupations in almost real time.

This is about moving the conversation about AI's impact from what we think-

Are we talking about role elimination? Are we talking about, uh, a boost of productivity, which Caroline and I were told by SF Fed president Mary Daly last week isn't showing up in the data yet? Like, what, how do you read the corporate speak in this job market?

The way I read it is this: AI has the ability to reshape work, and yet it's still a tool.

That decision lies with the employer.

And so this data is about empowering employers to make that decision.

Is the state doing all right? Is this economy okay?

The headline numbers are all okay.

Um, you look at those retail sales, um, impervious in some, in some ways to recent shocks, impervious to downbeat sentiment.

Uh, you have a jobs market that's still functional, still producing jobs, um, and you have wage growth that's still holding its own.

The interesting part is, is underneath the surface always, so going a level deeper.

You know, just how much did energy prices impact retail sales? That iPhone is now a durable good, not something we switch out every two years, so there is some change in consumer spending.

And then you got some data from the BLS saying that real wages actually edged down, um, they declined.

At what point does it become more of a concern on the averages, not just a political problem, but a market problem?

Wow.

Three out of e-every four net new jobs.

And so you ask like, okay, what other industry besides this, um, industry tied so strongly to demographics and to an aging population? Well, we've seen construction hold up pretty well over the past year or so, um, maybe because of the need for, for housing, residential construction, uh, facilities, uh, infrastructure, and certainly data centers.

So, um, that, that has been, I think, a fairly consistently stable sector.

Um, we haven't seen growth in manufacturing.

Uh, it's been downbeat for several months.

There hasn't been a consistency.

[chuckles]

That is the way I run the company.

Sonny, I, I wonder if you could connect a dot for me.

How important is this new class of Vietnamese worker to the US consumer?

The fabric for those swimsuits, which is printed here at this factory in Vietnam, it's sewn together by workers in South Korea before being shipped to the United States, where Trang bought them at a Target.

Was it surprising to you how much of the products in the stores were made m-

Explain why that matters.

Because in every other advanced, wealthy country, that golden spot led to the wealth creation.

It led to economic growth.

It led to technological advancement.

In fact, you can't get there without having the kind of sweet spot that we're seeing in Vietnam right now.

Okay.

Because right now, this is the moment.

[xylophone music] This is the moment to take advantage of a working-age population, um, an advancement in technology that is coming, and skill up a workforce to drive this economy into the future.

But just tell us, tell us just if you may, before we go into other nuances about the U.S. economy, what do you think about the dollar and the historical perspective from various administrations? Karen, I'm desperate to hear your thoughts.

Well, I think what you both in your comments have underlined is the uncertainty of the policy right now.

And that uncertainty has marked the dollar markets at times the bond markets.

And certainly the uncertainty spills into the Fed decision today and the response to that Fed decision.

So if you capture the U.S. economy, if you knew nothing about the last year, but just saw the headline numbers, the unemployment rate, which is low, the third quarter GDP growth rate, which is high, productivity high, you would capture a very strong U.S. economy that would suggest a stronger dollar and an interest rate policy that was not going lower.

But that is not where we find ourselves today.

And I think what your comments reflect is the uncertainty of this moment.

How do we think about bracing for impact around AI?

What are you studying? What would you be studying right now if you were back in college?

engineering, I would be looking about how to produce things, how to figure out how to support AI infrastructure, whether it's circuits or electricity or energy demands or devices, because eventually if these AI tools are going to make money from a consumer point of view, They'll probably have to end up in devices.

So making things, but not the kind of manufacturing that my grandfather made a career out of.

The kind of manufacturing that is AI-based, totally different.

But still, I think that's how manufacturing gets repurposed in the economy of the future.

It's taking these advanced AI training and putting it in robots to do things like lift patients when humans are not strong enough.

in bedsheets and helping in a hospital, for example.

But what's your favorite obscure economic indicator that gives you a unique lens to the health of the economy? Which one that you look at that maybe not a lot of people look at that doesn't get a