AI Transition Trap

A couple of years back, AI job displacement was my biggest concern. I waved it away—wishfully—thinking we’d adapt. (More frankly, I desperately wanted to give people hope.)

My wish was wrong. My gut was right.

It’s already happening. Everywhere I look, people are either losing jobs or watching openings close fast. Korea/US signals suggest AI-exposed entry hiring is freezing—depressing lifetime earnings and future demand even if indices stay buoyant.

AI isn’t just “taking jobs.”
It’s removing the first rungs of the ladder—and that scars income and demand for years.

GDP can look fine while purchasing power quietly leaks.

And the chilling part is this is just the start. It begins with junior/entry roles, then creeps up the pyramid. If I were running a cognitive-intensive business that used to require a dozen employees, I’d be tempted to go it alone—or with a single coordinator. That speaks volumes.

But another question lingers: Is AI ready for mass displacement? Is it sustainable? Employers and deployers seem complacent, assuming the transition will be seamless.

We’re already hitting hard walls—architectural and physical capacity limits. We’re still dealing with black boxes that can go awry anytime, anywhere. And the day will come when we outsource even mission-critical work to systems we can’t truly audit.

This is the grim preview people shrug at: “That’s evolution. Natural selection.”

What follows is predictable: more empty pockets. Many will quietly “save wages” with cheap AI until something breaks in the chain—and they’re suddenly at a loss what to do. That’s when the “AI productivity + new job creation” thesis loses its luster.

Frankly, I’m already experiencing this paradox.

The global economy is entering a Transition Trap: leaving the era of labor-intensive cognitive work, but not yet arriving at AI-generated abundance. In that gap, the “missing rung” becomes a direct threat to aggregate demand.

Yes, “new jobs replace old ones” may be true in the long run (10+ years).
It’s economically irrelevant over the next 24 months.

For entry-level job seekers—and for the economy—the near future is friction, dislocation, and a growing reliance on the spending power of the wealthy to keep the machine running.

Markets pricing perfection may soon have to price this reality: robots are excellent at producing supply. They cannot generate demand. If money velocity slows under wage suppression, the AI boom can morph into an economic bust—high profits, low employment, dwindling growth.

That’s what to worry about. Not just today’s tape.

Receipts right now: destruction is immediate and measurable; creation is vague and theoretical.