Lazy Leverage The Death of Cover Letters: AI, Costly Signals, and the Broken Job Market | Lazy Leverage #86
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Dec 15, 2025 AI is shaking up the job market by making traditional signals of candidate quality, like cover letters, obsolete. The hosts discuss how easily AI can generate fraudulent rental applications and legal documents. They critique job marketplaces for increasing hiring costs and advocate for tailored hiring processes. The idea of a new social contract emerges: making applications tougher in exchange for valuable feedback. Role-specific assessments, like real project tests, are proposed to truly gauge a candidate's skills.
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Writing Signals Are Broken
- Large language models have collapsed the cost of writing, breaking writing-based costly signals like cover letters and college essays.
- This forces markets that relied on written signals to find new ways to distinguish candidate quality.
Fraudulent Rental Applications Rise
- Peter Lohmann explains AI makes it trivial to generate fraudulent rental applications and fake documents promoted on TikTok.
- He contrasts that with long-standing application fees used to deter mass low-quality submissions.
Cheap Aggressive Claims Create Defense Burden
- AI makes it cheap to produce aggressive legal-sounding letters, shifting the cost to defendants who must refute them.
- That asymmetry multiplies downstream workload because rebuttal costs far exceed creation costs.
