Middle management job cuts raise fears of a “white-collar recession” in the US

A wave of layoffs in middle management has fueled fears the US is heading for a “white-collar recession,” according to economists and recruiters.

In previous downturns, blue collars workers including construction workers and truck drivers are usually the first to lose their jobs, but this time American companies have focused their downsizing on middle managers who work in office jobs.

In recent weeks, Walmart, Ford, Gap, Zillow and Stanley Black & Decker, among others, have announced plans to cut head office jobs.

William Lee, an economist at the Milken Institute, suggested that companies may now have more people in managerial roles than they need or can afford after hiring as much professional talent as possible. the economy It bounced back from the Covid-19 pandemic.

In the past two months, Challenger, Gray & Christmas, a recruiting firm that specializes in helping laid-off middle managers find jobs, has seen an uptick in job vacancies.

“Those big, big salaries catch people’s eyes when they have to make those terrible decisions about who to let go,” said senior vice president Andy Challenger.

Although layoffs have been near record lows for more than a year, some economists suspect the job cuts seen by Challenger are the first sign of a “white-collar recession,” in which middle-level office workers are shedding their jobs at a higher rate than their counterparts. it works in manufacturing, services and transportation.

“People say this will affect white-collar workers more than past recessions because of rising interest rates and lower stock price valuations,” said Julia Polla, chief economist at jobs site ZipRecruiter.

He added: “Because there is still a labor shortage in many blue-collar industries, there are many industries that could not lay off workers because they are already understaffed.”

More than half of U.S. CEOs say they are considering downsizing in the next six months to prepare for a potential recession, according to a KPMG report.

“I wouldn’t be at all surprised if white-collar workers end up being the first to be laid off in a recession,” said Dave Gilbertson, vice president of HR software maker UKG.

“If you look at where the layoffs have already been, it hasn’t moved into the blue-collar markets yet. That’s because there’s a serious labor shortage in these blue-collar roles.”

Meanwhile, Silicon Valley and Wall Street companies that employ large numbers of people in professional jobs have started to implement layoffs. Netflix has laid off nearly 500 employees this year, most recently 30 members of its animation team in September. Snap cut 20 percent of its workforce, about 1,300 workers, in August.

Elon Musk thousands fired Twitter employees Friday after closing the acquisition of the social media company. Before the cutbacks began, Musk said he planned to reach out to middle management. “Seems like 10 people ‘manage’ for every person who codes,” the self-proclaimed “Chief Twit” wrote on the platform.

Meta is also planning its first large-scale releases, The Wall Street Journal reported Monday.

Denis Coleman, chief financial officer at Goldman Sachs, said in July that the bank “probably [be] reinstate the annual performance review of our workforce at the end of the year,” after suspending the scheme before the pandemic.

They have been extended cuts For realtors, mortgage brokers and appraisers, home sales have slowed since interest rates rose in March.

In contrast, job cuts have been less pronounced for white-collar workers and other lower-wage workers in leisure and hospitality.

Low-wage workers in shops, restaurants and hotels were the first to lose their jobs after the Covid crisis took hold in March 2020. But now those are the poor people.

The leisure and hospitality sector employs 1.1 million fewer workers compared to February 2020 levels.

Many CEOs were considering downsizing before persistent inflation heightened recession fears and prompted them to cut costs.

Stereotypes of helpless bureaucrats inspired what McKinsey senior fellow Bill Schaninger calls the “30-year onslaught” of middle managers. The pandemic accelerated it by demonstrating that senior leaders could make strategic and operational changes quickly without the support of their broader teams, he said.

UKG’s Gilbertson said: “There is a significant segment of the population that will have to put the American dream on hold because they can’t find the role they want.”

But even if new management roles dry up, Gilbertson expects employers to continue hiring for blue-collar roles. He said the so-called laptop class may find those jobs more attractive than before the pandemic, as wages have grown significantly over the past two years.

“As an economy, there should be a lot of jobs available,” Gilbertson said. “They may not be the types of jobs that workers want.”