Welcome to the white-collar recession

🌈 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.

🙋 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.