The AI Boom’s Unlikely Beneficiaries: Hard-Hatted Workers and Power Grids

The recent jobs report showed US employers shedding 23,000 jobs in July while construction firms added 22,000, a seeming paradox. However, the answer lies in the AI build-out driving demand for workers in industries far removed from Silicon Valley.

One of the most striking aspects of this trend is its geographical distribution. The tech industry is often associated with San Francisco and Seattle, but the AI boom is creating jobs in areas like data centers, factories, and power infrastructure – not typically hubs of high-tech innovation. Instead, these are the backbone of modern infrastructure, and they’re hiring.

The Bureau of Labor Statistics doesn’t label these workers “AI jobs,” but it’s clear that the investment boom in AI-related industries is having a ripple effect on employment. Nonresidential construction has added 126,000 jobs over the past year, with nearly all of those coming from nonresidential and infrastructure categories. Durable-goods manufacturing also saw an increase of 18,000 jobs.

Joe Brusuelas, chief economist at RSM, tracks this spending and its impact on labor markets. He describes it as a “historic cap-ex super cycle” supporting demand for construction and goods-producing workers. The scale is enormous: two-year run rates on AI infrastructure investment are estimated to reach $1.6 trillion, with projected spending of up to $5 trillion over the next five years.

This trend has far-reaching implications beyond just employment numbers. As AI moves further into the physical world, it’s creating a surge in demand for materials like copper, power equipment, and concrete – not to mention labor. Apollo chief economist Torsten Sløk points out that energy and grid companies are raking in operating profits of up to $0.41 for every dollar of revenue, while silicon and equipment companies earn around $0.34.

This creates a peculiar situation: the hard-hat economy is one of AI’s clearest beneficiaries – but it also leaves it dependent on continued financing. As investment in AI-related industries continues to boom, we’re left wondering what this means for the broader economy. Will the jobs created by AI be enough to offset losses elsewhere? And how will the power grid handle increased demand for electricity generated by data centers?

One thing is clear: as AI becomes increasingly intertwined with our physical world, it’s creating a new class of winners and losers. The hard-hatted workers building out this infrastructure are doing so at a time when other sectors – like manufacturing – struggle to adapt. This has significant implications for the future of work and the economy.

As the power grid becomes increasingly strained under the weight of data center electricity demand, we’re forced to confront the limits of our infrastructure. The AI boom’s unlikely beneficiaries are not just those who wear hard hats on construction sites but also the energy companies profiting from increased demand. The question is: what happens when this bubble bursts?