February’s jobs report revealed a loss of 92,000 jobs, but according to RedBalloon CEO Andrew Crapuchettes, the real economic rot isn’t just in the numbers. in technology.
Crapuchettes warns that an invisible layoff is happening as artificial intelligence algorithms effectively remove qualified American workers from the candidate pool, creating a huge gap that he says is fueling the jump to a 4.4% unemployment rate and short-term economic “pain.”
“Overall it is still a very disappointing figure. We would like to see continued employment growth,” he continued. “But there are a lot of different factors that cause this. It’s not just the headline that we see.”
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The Ministry of Labor reported Friday that employers cut 92,000 jobs in February. That figure was well below expectations of economists surveyed by LSEG, who estimated the economy would add 59,000 jobs. The unemployment rate was 4.4%, slightly higher than economists’ expectations of 4.3%.
Two men attend a job fair in Culver City, California. (Getty Images)
There were also significant reductions in government payrolls, manufacturing, information, construction, transportation and warehousing, as well as health care employment due to strike activity.
“What’s happening is that job seekers are using AI and applying for maybe 100 jobs a day with their resume and cover letter looking perfect, and regurgitating their resume into the marketplace,” Crapuchettes explains. “And guess what? AI likes the AI-written resumes better. And the problem is that the AI-written resumes end up at the top of the pile, and then they bring those people in for interviews, and it turns out… that a perfect resume and a perfect employee are not the same thing.”
“AI is good at doing boring work, but actually having wisdom about a specific person is something that should be a distinctly human activity,” he continued. “Most of HR technology today is going to AI for everything, and that’s causing these kinds of wild disruptions. So it’s becoming increasingly difficult for people to find jobs because what’s essentially happening is you’re taking a very complex human being… and you’re taking it down to a piece of paper called a resume, and then AI is making decisions based on that.”
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Crapuchettes admits that even at RedBalloon, AI has enabled his team to produce three times as much work without adding a single person – a micro look at the macroeconomic shift.
“I actually tripled my engineering department without adding any more staff because of the way we’re using AI effectively. And that’s a good thing, but in the short term that’s… a bunch of engineers who weren’t hired at RedBalloon because we’re using AI effectively,” he said.
Additionally, BLS data showed that federal government employment is down 330,000 jobs, or 11%, from its October 2024 peak. Crapuchettes describes this as a “handcuff” being removed from the private sector, which he said has historically struggled to compete with government benefits.
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“I know I’ve talked to employers over the years and they felt like they were always competing with the federal and state government for talent… Because it was their money that they were putting into the government, and then they were hiring the people that they really needed to be able to grow their business,” the CEO noted.
“It will be a short-term pain if you lose all those government jobs,” he reiterated. “They lose that income, but if they enter the private sector, there will be economic activity that, I think, will be very beneficial to America in the long run.”
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His best advice to American workers facing a tightening labor market is to stay “AI-enabled,” arguing that even construction workers and truck drivers need to adopt AI as a tool for survival.
“I hate to jump back on the AI bandwagon, but the reality is that the most in-demand thing in all jobs, all industries at RedBalloon right now, is AI-enabled workers. So employers are looking for people who aren’t afraid to figure out how to use AI to be more effective and efficient in their jobs. And of course that feels weird… Well, the reality is that technology is enabling productivity gains in those areas.”
