Some may describe the job market as being "hot", "strong", and "robust". However, closer examination shows a better description might be“slower”, “shakey”, and “fragile”.   

The most recent labor report from early July shows people have been unemployed for longer. The median (a more representative measure that smooths out extremes) shows the duration of unemployment rose to 9.8 weeks, the highest it's been all year according to the Bureau of Labor Statistics.

Less widely reported is more layoffs and fewer hiring among white collar workers being described as a white collar recession with companies commonly citing restructuring and cost-cutting measures​. In contrast, demand for blue-collar workers has been robust, 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.

A recent Vanguard’s report on hiring shows the hiring rate for people who make less than $55K has held up while for people making more than $96K, has slowed dramatically. Except for a few months at the start of the pandemic, it’s the worst it has been since 2014. 

The recent shift in fortunes, where higher earners are encountering more pronounced employment challenges while lower-income workers experience stability or growth, marks a departure from the longstanding trends of recent decades.

What could be the catalyst driving the downturn in white collar work? While there’s no single reason below are clues that may help shed light on what’s happening:

1. Cost-Cutting: Senior company officials, concerned about an economic slowdown, are “trimming the fat”, which usually results in cutting high-wage jobs deemed less essential.
2. Struggling Industries: Industries such as technology, finance and media, traditionally staffed by well-compensated professionals, are hitting snags.
3. Stagnant Job Movement: Those higher up in corporate hierarchies aren’t leaving their positions, we’re seeing this in smaller quit rates resulting in fewer openings. Economist have started to refer to this as the “Big Stay”.

If left unresolved, this disconnect could lead to growing dissatisfaction and declining morale among white-collar professionals. Such discontent could potentially have broader economic and social implications if not addressed.

What is currently unfolding serves as a cautionary tale, no sector has immunity to upheaval, and adaptability is vital. As these trends become clearer, the importance of recalibrating strategies in career planning becomes more evident.

At Savvy we help clients who are wrestling with these issues from a planning perspective and how best to navigate these situations. Please reach out to a Savvy team member who can help you. 

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