A laid-off YouTube employee is down to his last paycheck. A former startup worker has to borrow money from his family to pay his mortgage. A veteran financial consultant can barely land an interview.
They’re all victims of a stall out in white-collar hiring across much of the US. Industries such as finance, technology and media, and professional services like law and accounting, have turned into a pocket of weakness in a still-robust labor market, with the national unemployment rate hovering near historic lows.
Almost 120,000 corporate positions have vanished from Chicago, Los Angeles, and San Francisco combined during the past year, a Bloomberg News analysis of government data found. White-collar payrolls also declined in smaller hubs such as Phoenix and Seattle. Even pandemic boomtowns Austin and Miami are seeing growth in this segment of the labor market flatline.
White-Collar Payrolls
Source: US Bureau of Labor Statistics figures compiled by the Federal Reserve Bank of St. Louis
Figures are seasonally adjusted and are for metropolitan statistical areas. White-collar payrolls include jobs in professional and business services, financial activities, and information.
Nationally, payrolls for white-collar types of jobs were up just 0.6% from a year ago in March, about a third of the overall pace of job creation, according to data published by the Bureau of Labor Statistics. Wage growth for high-paid workers has also largely cooled from its peaks.
Banks, consulting firms, and tech companies all went on hiring sprees at the height of the pandemic, when low-interest rates, easy access to credit, and government support made it easier to expand. Many of those incentives have since faded, paving the way for layoffs. Citigroup, McKinsey, and Tesla are among the high-profile employers slashing jobs in recent weeks.
“We’re not seeing the big post-Covid booms anymore,” says Alexandra-Dana Gusita, who heads the New York office of Tiger Recruitment. “Employers are more cautious in hiring.”
US Nonfarm Payrolls
Year-over-year change
Source: US Bureau of Labor Statistics figures compiled by the Federal Reserve Bank of St. Louis
Figures are seasonally adjusted. White-collar payrolls include jobs in professional and business services, financial activities and information.
Jack Benedict, 25, learned that he and the rest of the 43-person staff at YouTube Music had been laid off in February while speaking at the Austin City Council in support of the team’s unionization efforts. By that time, he’d already been notified that another contract job with Alphabet Inc. would be ending in March.
“Even though the labor market looks strong, there’s a lack of job security, especially in tech,” Benedict says. “All these massive companies are trying to downsize or replace people with AI.” He worries that having a college degree is “not enough when companies are asking for 10 years of experience.”
On the jobs website Indeed, the number of listings for roles in banking and finance, media and communications, and software development are all running below the levels seen in February 2020, immediately before the start of the pandemic.
Part of the weakness in white-collar sectors is a result of a sizable pullback in the BLS subcategory called temporary-help employment, which is regarded as something of an economic bellwether. That’s because when times get tough, businesses tend to shed part-time positions before full-time ones. More than 420,000 of those jobs have vanished since the sector peaked two years ago.
Daniel Lapin, a 48-year-old financial management consultant in Boca Raton, Florida, has struggled to find a job after his contract with a pharmaceutical company was cut short in February. Lapin says he’s applied for more than 100 jobs, many of which have 200 people going for the same position. In two months, he’s mostly received automated rejection letters and a handful of interview offers.
The available work tends to be blue-collar, he says: “People might say the job market is great. But what is great? The jobs that are being created are low-paying.”
Lapin’s experience lines up with what Joe Davis, Vanguard’s chief global economist, wrote about in a note last month: namely, that demand is greatest for workers making less than $55,000 a year.
Indeed Job Postings Index for the US
Seven-day moving average
Source: Indeed
Feb. 1, 2020 = 100
Hiring rates for those in the bottom third of the US income distribution exceed those of higher-income workers, according to Vanguard data based on employer 401(k) plans. The analysis also found faster wage growth for lower-income workers.
“Many higher-income workers accepted slower wage growth as a trade-off for remote work flexibility,” Davis wrote. “These dynamics have all contributed to the faster rise in wages for lower-income workers.”
David Napeloni, a vice president and senior client partner at Korn Ferry who specializes in life science, sees the white-collar job market improving. Companies seem to have been more willing to hire for those roles in the past few months than they were at the end of last year, he says: “Clients are starting to pull the trigger and start putting out new offers again.”
A turnaround could not come soon enough for André Julien of Austin, who was laid off from his job as director of operations at a media startup in December. The 36-year-old has applied to more than 100 jobs to no avail and is working with five headhunters across the country.
His only solid prospect so far has been a lower-tier manager position that pays 25% less than his previous role. But with dwindling savings, his severance long gone and a mortgage to pay, he’s seriously considering the job.
“I’m looking down the barrel of losing a home that I worked so hard for,” says Julien, who lined up a loan from a family member to help with his mortgage next month. “This was my American dream, and now I might have to give it up.”