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Welcome to the white-collar recession

๐ŸŒˆ Abstract

The article discusses the current state of the job market, highlighting a two-tier divide between a booming blue-collar sector and a struggling white-collar sector. It explores possible reasons for the slowdown in white-collar hiring, such as fewer people quitting their jobs, the struggles of certain industries, and companies cutting costs by reducing hiring of higher-paid professionals. The article also touches on the psychological impact of this "vibecession" on white-collar workers who feel "trapped in place" despite being unhappy in their current jobs.

๐Ÿ™‹ Q&A

[01] The Dissonance in the Job Market

1. What does the data from Vanguard's 401(k) retirement plans reveal about the current job market?

  • The data shows a two-tier job market, with a booming hiring rate among lower-income earners (below $55,000) but a significant slowdown in hiring among higher-income earners (above $96,000).
  • Excluding the pandemic dip, hiring for those making six-figure salaries is at its worst level since 2014.

2. What are some possible explanations for the slowdown in white-collar hiring?

  • Fewer people in corporate jobs are quitting, leading to fewer openings to fill
  • The struggling industries (tech and finance) employ many high-earning professionals
  • Companies are cutting back on what they see as "corporate bloat" and reducing hiring of more expensive, higher-paid workers

3. What is the more worrisome explanation for the downturn in white-collar hiring?

  • Companies may be anticipating tough times ahead and trimming their budgets accordingly, with the goal of reducing costs by cutting back on hiring more expensive, higher-paid workers.

[02] The "Vibecession" and Its Impact

1. How does the slowdown in white-collar hiring affect professionals who are unhappy in their current jobs?

  • Many professionals feel "trapped in place" and unable to quit their current jobs because the job market is not as favorable for finding new opportunities.
  • This has led to a sense of "vibecession" - a weird state where the economy seems to be in a recession, even though standard metrics show it is not.

2. How might the situation for high-earning professionals worsen in the future?

  • As AI tools increasingly encroach on tasks typically performed by professionals, there may be more weakness at the higher end of the income scale compared to the lower end.
  • The unemployment rate for people with advanced degrees has seen a slight uptick, even though they still have the highest pay and lowest unemployment rates in the job market.

3. What are the potential consequences of the prolonged white-collar hiring lull?

  • It could lead to increased discontent and low morale in corporate America, as people become "grumpier and more dissatisfied" if the situation continues for several more years.
Shared by Daniel Chen ยท
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