Non-Farm Friday – Is America Working?

We lost 23,000 jobs in July.

Unemployment ticked up to 4.2% and average hourly earnings went up 0.2%, costing employer’s about $1.5Bn per month (158.8M workers) in additional wages but that’s a number that accumulates over the year and we’re up 10% (now $7.5Bn/qtr) in the past 5 months. Keep that in mind when you are being told that the cost of AI labor is more than human labor – the AIs don’t get raises! 

Still, the fact that Wages are still rising and Unemployment is still relatively low indicates the Robots have not yet taken our jobs. Trump may not have created any jobs in the last two years but he’s certainly created job opening – kicking 605,000 human beings out of the country and forcing another 1.9M to “voluntarily self-deport” (picture mothers carrying children back over the boarder with ICE attack-dogs hot on their heels as “voluntary“). 

In fact it was the loss of 53,000 Government Jobs (who needs the CDC?) that put us negative in July. In one hour, having not seen dramatic Government layoffs and with an uptick in Travel over the summer – we expect maybe +50,000 jobs and that will run the odds of a Fed rate hike back from 30% to 50% or more and may tank the market again.

The Dollar is right on the 99 line and more workers with rising wages means more demand for Dollars and that too can put pressure on stocks and commodities but there’s no sense in speculating – we’ll see in an hour…

Meanwhile, let’s talk about the fact that 106M Americans are NOT in the Labor Force – and that’s not including 65M that are under 16 (I had a paper route when I was 10!). 55M (half) of those people are over 65, 15M are students (I delivered pizzas), 10M are full-time caregivers (a failure of child care AND elderly care), 10M are disabled (Trump calls them “lazy“) and 8M are “discouraged” or “marginally attached” – people who WOULD work but not for the insulting wages they are being offered.  

Keep that 106M number in mind and let’s consider what Anthropic is claiming.

Their $30 trillion TAM – the “full scope of work that could be completed with AI models” — assumes AI will do the job of every knowledge worker on Earth. That’s the entire GLOBAL wage bill for knowledge work, which is roughly the GDP of the United States. Roughly China’s GDP. Or, put another way, about 25% of everything humans produce in an entire year.

But look at who they’re addressing in the US alone: 169M in the labor force, 162M employed. 6.9M actively looking for work who can’t find it. And 106M adults sitting on the sidelines entirely – most of them not because they don’t want to work, but because the arithmetic of American life makes work impossible.

10M full-time caregivers because childcare costs more than a second income. 10M disabled who can’t get accommodations, or SSDI approval, or an employer willing to hire them. 8M “discouraged” workers who WOULD take a job at a living wage but not at the poverty-line garbage employers are still offering after five years of “labor shortage” hand-wringing.

These are the people Anthropic’s $30T TAM presumes to “address.” Not by employing them – by replacing the last of the jobs they’re still holding onto.

Here’s the punchline: If Anthropic actually captures that TAM, they destroy the customer base that pays for the output. This is what makes AI TAM different from every previous tech TAM. Google displaced newspapers but ad-buyers still had customers. Uber displaced taxis but riders still had jobs to commute to. Every prior “disruption” moved value between economic actors who remained economic actors. AI displacement, at scale, removes people from the economy entirely and adds them to the 106M pile – which means the addressable market shrinks as the “capture” grows.

This is the Finger-Watch Fallacy at civilizational scale. You can price a watch on every finger, every toe, every dog, every button-hole. You can also price AI as though every human hour of thinking is a subscription line item. Both calculations are arithmetically defensible. Neither describes a market that can actually clear.

The 30% probability Credibility Crack scenario from Wednesday’s Beige Book note gets more interesting through this lens. What breaks the AI narrative isn’t a technical failure. It’s the moment when someone at a Congressional hearing asks the Anthropic CFO: “Sir, if you address the $30 trillion market you claim, who exactly is paying you the $30 trillion? Do THEY have jobs?“

That question has no good answer. It also has no answer that keeps their valuation at $2Tn.