Marc Rowan: AI Favors Blue-Collar Workers, Threatens White-Collar Jobs

The Impact of AI According to Marc Rowan: A Revolution for Blue-Collar Workers

Marc Rowan, the CEO of Apollo, recently shared his vision on the impact of artificial intelligence (AI) on the job market. According to him, this emerging technology could transform employment dynamics, favoring manual workers, often referred to as "blue-collar" workers, while creating challenges for office employees, or "white-collar" workers. In the private equity sector, this evolution could bring both opportunities and succession risks, according to some market experts.

Drawing parallels with the 1970s, Rowan emphasized that the current crisis would not affect American manual workers. On the contrary, the AI revolution could exert increased pressure on office jobs. He described this transformation as the largest technological cycle of his career, predicting a complete upheaval of traditional dynamics between blue-collar and white-collar workers. Rowan stated that almost every job will be enhanced or replaced by AI, highlighting the magnitude of this change.

Rowan, who was formerly the chairman of the UPenn Wharton business school and mentioned as a potential Treasury Secretary during Trump's second term, illustrated this change with a striking comparison of salaries. He noted that a graduate from a prestigious liberal arts university might earn around $60,000 per year, while a skilled worker capable of leveling a concrete floor could earn up to $250,000. This reversal of salary values could have unpredictable political consequences, as there is no historical precedent for such a shift. Rowan, who has been an influential donor to the Republican Party, also mentioned the possibility of political upheavals in "blue cities" where white-collar workers are predominant, both in the United States and Europe.

An Economic Boom for Rural Areas

Jon Gray, president of Blackstone, also shared his insights at the Milken conference. He emphasized that the rise of blue-collar jobs could be concentrated outside major cities. According to him, "the center of the country, where most of this physical investment is concentrated, is booming." Blackstone, with its $150 billion invested in data centers and energy infrastructure, is well-positioned to observe these changes. Gray predicted significant job growth in these sectors, citing the example of QTS, a data center company that plans to quadruple its workforce in one year, increasing from 10,000 to 40,000 people by the end of this year.

Consequences for Private Equity

The impact of AI is not limited to portfolio companies or software company loans. The private equity sector, which largely relies on white-collar jobs, could also be transformed. Anthony Tutrone, global head of private markets at Neuberger Berman, stated that AI would enhance productivity rather than reduce headcount. He explained that AI has been more about productivity and quality, increasing their ability to review more transactions and respond more quickly, without necessarily decreasing the number of employees.

However, Tutrone acknowledged that AI could lead to labor savings in certain areas, such as legal and corporate finance, where intelligent agents could handle repetitive tasks. Mohsin Pirzada, from the Qatari sovereign fund, expressed concerns about the long-term impact on talent, stating that "job replacement is something that worries me a lot." He emphasized the importance of juniors in drafting selection memos and conducting due diligence, warning that companies focusing solely on cost reduction without increasing productivity "will face succession risks."

The Future of Junior Workers

David Golub, president of Golub Capital, highlighted that the pyramid structure of the private equity industry should mitigate risks associated with developing future leaders. He asserted that "when AI is fully implemented, we will still have a pyramid structure." He added that even with AI, junior workers will continue to be employed, although their roles will evolve to become more productive. According to him, AI will enhance decision-making but will not replace the essential human interactions in private markets.

Finally, during a lively discussion moderated by Dan Primack of Axios, Tutrone downplayed the possibility that AI could completely replace human relationships in the industry. He concluded that while AI may automate certain tasks, it cannot replace the complexity of human relationships, which are essential in the private equity sector.