Is there a "white collar recession?"
The US job market in 2024 experienced a clear dichotomy: while the white-collar job market contracted, blue-collar jobs experienced increasing demand. This phenomenon has coined the term, “white-collar recession.”
As discussed in my November 2024 Money Matters TV show, some experts attribute the white-collar recession to factors like Artificial Intelligence and digital transformation reducing the need for certain roles.
A recent article by Pepper Foster Consulting stated that according to layoffs.fyi, tech companies Google, Meta, Amazon, Microsoft, Salesforce, SAP, Cisco, IBM, and Dell have all laid off thousands of workers as they adjust to a post-pandemic economy that demands different skill sets and focuses more on automation and efficiency.
Data published in Business Insider shows that in the financial sector, Goldman Sachs, Citigroup, and Wells Fargo have cut thousands of jobs due to restructuring and cost-cutting measures. Manufacturing and consumer products companies like Tesla, Dow, Nike, Miele, Siemens, Estee Lauder, and Toshiba have already, or are in the process of letting hundreds or thousands of white-collar workers go, as are companies like UPS, Paypal, Paramount and Expedia. Consulting firms like Deloitte, Ernst & Young, KPMG, and PwC have collectively shed over 9,000 jobs (Intellizence). Accenture has announced cuts affecting 19,000 employees, primarily targeting administrative roles (Going Concern)
Alternatively, the demand for blue-collar workers has remained strong, driven by a resurgence in the manufacturing, construction, and logistics sectors. According to the Bureau of Labor Statistics, job vacancies in these sectors have remained steady or even increased in some areas, reflecting ongoing infrastructure projects and a booming e-commerce market that requires a steady supply of labor for warehousing and delivery services.
Vanguard’s report on hiring shows the hiring rate for people who make less than $55,000/year has held up while for people making more than $96,000/year, it has slowed dramatically. Now more than ever, white-collar executives will need to rely upon their networks, and their negotiation skills, to leverage into quality new opportunities.