WSJ What’s News - Meta Freezes AI Hiring After Talent Spending Blitz

Episode Date: August 21, 2025

A.M. Edition for Aug 21. After months of spending big to hire more than 50 researchers and engineers, Meta Platforms says it’s taking a breather on adding to its artificial-intelligence division. Plus, Nick Timiraos details how Federal Reserve Chair Jerome Powell is navigating growing economic and political pressures as central bank governors gather for their annual meeting in Jackson Hole. And, in our Price of Parenting series, WSJ’s Sandra Kilhof and Te-Ping Chen unpack the soaring cost of childcare. Azhar Sukri hosts. Sign up for the WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Meta hits pause on its blockbuster AI hiring spree. Plus Eric Prince, the former head of Blackwater, has a new Guns for Hire outfit, moving in where the US is stepping back. Now it's no longer the Bush era of foreign adventures. It's more an era of American retreat from the world and the Trump. And we look at how soaring childcare costs are impacting the economy, the latest in our parenting series. It's Thursday, August 21st. I'm Azhar Sukri for the Wall Street Journal. Here is the AM edition of What's News, the top headlines and business stories moving your world today. We are exclusively reporting that Meta Platforms is pumping the brakes on its fierce AI hiring spree

after months of scooping up more than 50 artificial intelligence researchers and engineers. According to people familiar with the matter, a hiring freeze for the company's AI Division went into effect last week, coinciding with a broader restructuring of the group, which also blocks current staffers from moving across teams inside the division. The arms race for AI talent has escalated in recent months, and META has most often pushed the pace, offering prize researchers' ultra-lucrative pay packages. As of mid-August, the company has hired more than 20. researchers and engineers from Open AI and picked up other hires from major tech companies including

Google, Apple, XAI and Anthropic. A meta spokesperson confirmed the freeze. And speaking of tech companies, yesterday tech stocks fell for a second straight day. Journal Markets reporter Caitlin McCabe has more on what's behind the recent slide. Traders are saying there isn't one super clear catalyst for the sell-off, but I think one possible culprit is just growing anxieties that AI is becoming a bit frothy. Sam Altman, the CEO of OpenAI, said recently that AI has some bubble-like characteristics, and there are some broader concerns about what tech giants are spending in this AI arms race. Analyst at Morgan Stanley said in a recent note that the kind of stock-based compensation offered by companies right now, like Meta and Google, to lure AI

talent, could eventually threaten their ability to do things that investors really like, like share by backs. Federal Reserve Chair Jerome Powell and central bank governors are converging on Jackson Hole, Wyoming for their annual conference. It's a gathering that will be closely watched by investors and Washington policy makers for clues about the Fed strategy for the U.S. economy. And with just nine months left in the top job, Powell will give his final Jackson Hole speech tomorrow following months of President Trump.

pressuring him to cut interest rates or resign. The journal's chief economics correspondent Nick Timmeros says Powell has been facing a siege on multiple fronts. First take the economy. You have economic outlooks right now that are consistent with something kind of stagflation adjacent. What do I mean by that? Prices are rising. Inflation has picked back up. But growth is slowing. And the layer market looks like, if anything, it's getting weaker before it gets stronger. On top of that, you put on this pretty unprecedented political pressure. You have the president calling on Fed individuals now to resign. You have all of these attacks on Powell saying that he's incompetence, saying that

he can't be trusted, which really are trying to undermine the institution and undercut the Fed's traditional independence. And then the Fed's rate-setting committee is legitimately torn over what they should do given the economic outlook. And given these pressures, Nick explains how Powell is navigating such a turbulent period in the top job. Well, people who work with them, associates of his that I've talked to have said he's just completely focused on finishing his job and on getting the policy right because all of the pressure that the Fed is facing right now will get a lot worse if things sort of get away from the Fed. He wants to turn over the job next spring to his successor with inflation under control and the economy in a good position. And it's getting harder to do that

because of some of these other policy changes. But that's the job. Ahead of Powell's speech tomorrow, investors will receive a wave of fresh economic data. On deck today, initial jobless claims and a survey on manufacturing from the Philly Fed due out at 8.30 a.m. Eastern. readings from S&P Global on business activity at 9.45 a.m. and a look at Existing home sales at 10 a.m. President Trump has ordered the Pentagon to send three Navy warships to intercept drug cartels off the coast of South America, including near Venezuela.

The move is an expansion of the Pentagon's role in combating illegal narcotic smuggling and intensifies a U.S. confrontation with the country's president, Nicolas Maduro. Trump has designated, Latin American drug cartels as foreign terrorist organizations. Eric Prince, the founder and former leader of Blackwater, is back in the White House's good graces and believes his new guns for hire firm can pick up the slack for international

security jobs the Trump administration would prefer not to pay for. Blackwater was once America's largest mercenary force, but lost its standing in the U.S. after the disclosure of violent excesses during former President George W. Bush's War on Terror. The former Navy SEAL has a new venture, Vectus Global, a collective of companies contracted to do security work in Ecuador, the Democratic Republic of Congo and Haiti. And journal correspondent Benoit Foucault reports that the work aligns with Trump's foreign policy goals of curbing illegal immigration and opening access to critical minerals. So it's very different from the Bush era where the U.S. government would foot the bill for security operations abroad.

This time, Prince is being funded by local governments. The Trump administration sees eye to eye in terms of the common goals that Prince has when he helped these foreign governments, basically making sure these countries are stable. And we have a good example with Haiti. What Prince is doing in Haiti is using drones that support policing efforts, targeting specific. specifically gang members. The second one is securing mineral resources. And that's what effectively is doing, but it's time in Congo, in Africa, which is a source of mineral resources that the US needs for its automotive and electronics industries. And it has become extremely insecure because

of a rebel forces that is taken a large part of the mining areas. So initially, Prince is helping really the government getting financial capacity to fight these groups. And, And as a result, export more of its production potentially for the US. The White House declined to comment on Prince's ties to the administration. Coming up in the latest installment in our Price of Parenting series, we hear how the rising cost of childcare is hitting family budgets and leading to a drag on the overall economy. That's after the break.

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Buy your online go pass ahead of the show at go-transit.com slash tickets. Now, this week, we're putting a special focus on all the tricky financial decisions that parents face in 2025. Not least, the soaring cost of child care globally. In the US, care for one child can easily top $10,000 or $15,000 a year. The costs keep climbing, too, outpacing wage growth in most states. And the effects are tangible. A disproportionate number of women never returned to the workforce after. having kids, leading to a drag on economic productivity and growth.

So what can be done to fix the cost of childcare? Economics reporter Tipping Chen spoke to our supervising producer and mother of two, Sandra Kilhoff. Fipping, firstly, how did childcare in the US get so expensive? Fundamentally, childcare is expensive and has gotten even more so because childcare relies on people. So if you are running a daycare centre, you have very strict staff. regulations that you have to abide by. And so you are just really constrained in terms of what you can do with payroll. And you are going to have to spend a lot on people to take care of the people

that you are charged with. And so in a lot of places, that might mean a ratio of four to one in a baby room. Child care businesses are not like other businesses where they can skimp on their labor costs and find other ways to get more efficient or productive. You can't hire a robot to change a diaper or give a kid a hug. And so we have seen the cost of child care really sore in recent years. And a lot of that is because the cost of hiring workers has also gotten a lot more expensive. And I mean, it's not just that expensive in the U.S. It's really a problem across the globe in developed countries.

You've been speaking to a bunch of experts about what to do about those rising child care costs. What are some of the ideas that they have? It's expensive and also there often isn't availability. The wait list can often be really extensive. Many places aren't well served, period. This burden of paying for care falls most heavily on young parents who are often the least equipped to afford it because they're just starting out in their careers.

And so one way that a lot of researchers and economists say that the country could address it is if the government did more to finance it, which is the way a lot of other developed nations have gone about it. And that could take a lot of forms. It can mean expanding the threshold at which families could receive assistance up more into the middle class, which because child care is so expensive, it is often out of reach, even for people that we don't think of as living in poverty or really needing government assistance. You could go towards more of a universal system.

The government is absolutely one source that could step in and fill some of that gap. And so if we want to ultimately make child care more accessible, that definitely takes resources. And in today's political climate, especially, that might not be so feasible. That said, if you look at the landscape here in the U.S., you do see a lot of experimentation at the state level trying to figure out how to make this work because child care is, of course, an issue that affects family, and it also very much affects local economies. And so you do see a lot of businesses in different states trying to figure out solutions and different policymakers experimenting with efforts to make child care more excited.

So New Mexico, for example, is paying for its program through oil and gas revenue. One of the proposals that you will hear from economists and others to try and address what is really a fundamental imbalance in the system is actually to try and pay workers more because it's by doing that that you can, in some cases, actually manage to keep centers open and increase the access to child care and try and shorten some of those wait lists, which in areas can. be for an infant, could be years. There are certainly other things that we could do as a country and governments can do that don't necessarily involve throwing more money into the system. Some of those efforts could look like giving breaks on property taxes to entrepreneurs who want to start daycares in their own homes, which is a really common way that a lot of child care is provided. I wonder, is there a role here for the private sector in which we could potentially see more employers having child care options as a part of their benefit system.

Absolutely. And we have seen that already in recent years, seeing more employers, including more blue-collar employers, starting to offer more child care options or backup options. Because businesses do recognize that child care or the lack of it can really be a crippling factor. If you have a workforce who can't come to work sometimes because the child care has fallen through and if you are struggling to hire because you have so many people who are staying home. There's a clear benefit for a lot of employees here. Tipping Chen is an economics reporter for the journal. Tipping, thank you so much for joining me today. Thank you for having me. And that's it for what's news for this Thursday morning. Today's shows produced by Kate

Bullivant and Caitlin McCabe. Our supervising producer was Daniel Bark. I'm Azhar Sukri for the Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening. Thank you.