White-collar layoffs soar at brand-name companies amid economic slowdown

At the beginning of the pandemic, a wave of layoffs hit retailers, vacationers and hospitality workers – anyone whose job depends on interacting with people.

But now the epidemic has subsided, with fewer workers, and higher paid workers who are at the end of layoff notices.

Among the companies with names announcing job cuts or hiring recently, according to a list compiled by Reuters: Amazon, Citigroup, Intel, HP, Microsoft, Johnson & Johnson, Phillips 66 and Walt Disney Co.

It has a “white collar” design down. And while tech job cuts have grabbed the headlines, they’re no longer the only companies facing job cuts. Last Friday’s jobs report from the US Bureau of Labor Statistics showed a gradual decline or decline in employment across a variety of industries. In particular, business and professional jobs have fallen for four of the last five months, and in November the sector registered the second lowest number of jobs added during the pandemic, with only 6,000 jobs created nationwide.

Other sectors that fell sharply last month include labor services; administrative support roles; and other lending and other credit-related services.

On the other hand, demand for workers whose jobs are about to end has returned. That’s why catering jobs, as well as positions in hotels and restaurants, have seen significant wage increases – although often not large enough to keep up with inflation.

“What we’ve seen is a lot of hiring in tech, a lot of hiring over the last few years in the manufacturing sectors,” said James Knightley, global economist at investment firm ING. “And now because of the threat or the fear of a recession, some of these companies may have grown too much during the reopening period after the pandemic, and now they are facing uncertainty.”

Too big

So far this year, US employers have announced plans to cut 320,173 jobs, about a 6% increase from the 302,918 cuts announced in the first eleven months of 2021, according to Challenger, Gray & Christmas, a business consulting firm.

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Technology companies account for nearly a quarter of this year’s jobs, Challenger data show. Nearly two-thirds of the tech job cuts were announced in November alone.

“The technology sector was unique. It grew out of proportion,” said William Lee, an economist at the Milken Institute, a nonprofit, non-profit think tank. “They thought their ads would go on forever, and when they started getting cut after the pandemic, they said, ‘My God, we have a lot of people.’

But some white-collar industries are now being cut, especially those in high-interest sectors such as finance, real estate and autos, Challenger data show. This is largely due to the Federal Reserve’s aggressive rate hike campaign against inflation that has continued to hover around 8% for most of 2022.

Financial services companies announced 17,571 job cuts this year, compared to 8,568 at the same time last year, with an additional 8,125 cuts in the financial technology sector, according to Challenger data.

Financial firms across the state have announced reductions in investment banking divisions because sales have slowed, according to Andy Challenger, Challenger’s head of marketing and media. In November, Bloomberg reported that Citigroup was planning to cut more jobs in its banking division, while Reuters reported that Morgan Stanley was also planning new layoffs. These announcements follow those made by Goldman Sachs in September and Deutsche Bank in October.

The auto industry has 30,669 shares announced, compared to 10,277 until November 2021.

“When interest rates are high, Americans are spending less on big-ticket items,” Challenger said. “We’ve seen a lot of job cuts on the mortgage start-up and fintech companies in the mortgage industry. And then on the real estate side of things — a reduction in the acquisition, buying and selling of properties.”

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Some companies have also called for a smaller global economy to ensure they can continue to thrive. In October, Johnson & Johnson said it would focus on “healthy growth” of its business amid pressures from rising costs and a strong US dollar.

“We’re looking to make sure that our resources are used in these projects, initiatives, activities that add value to our business,” J&J CFO Joseph Wolk told Reuters.

And two energy companies, Phillips 66 and Chesapeake Energy Corp., are also cutting jobs, including other company positions. Reuters reported that the cuts at Phillips 66 would affect “salaried employees in management and senior staff at several locations,” while those at Chesapeake would affect geologists and geoscientists.

Challenger and ING’s Knightley suggest that we may be at the beginning of a recession due to the recession. US employers announced 76,835 layoffs in November alone, an increase of 33,843 announced in October and four times the number of cuts announced last November, Challenger data show.

“I think we were kind of at a starting point — we just came off the last two years being the lowest point in American history,” Challenger added. “We were in dire labor shortages, and now it’s the Fed raising rates, which is affecting all industries.”

The Conference Board’s survey of CEOs showed the lowest level of confidence among CEOs since 2009, with 98% saying they are planning for a US recession.

“The Fed says the unemployment rate could hit 4.4 to 4.5%, which means about 1.2 million Americans will lose their jobs,” Knightley said. “And the more they say there won’t be a recession, the more likely we’ll see more Americans out of a job than that.”

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Knightley said the tech boom more than 20 years ago, which had the same economic problems as today, put about 2 million Americans out of work.

“That may be the plan we’re talking about in this downturn, but it’s more focused on white-collar areas than manufacturing, where there’s no real shortage,” Knightley said.

Are the jobs over?

The surest way to keep a job is still going to college, at least in terms of the unemployment rate, which as of November stood at 2% for workers 25 and older with a bachelor’s degree or higher. Even for workers 25 and older with some college, the unemployment rate is still a low 3.2%.

But a different measure of American employment—the labor force—shows a more complex picture. Among college graduates age 25 and older, labor force growth has now slowed for three straight months after reaching 63.7 million, a loss of 648,000 workers. This is the biggest loss since the outbreak began.

These are workers who no longer want a job if they find themselves unemployed.

For those with only a college education, the situation is even more dire: The pandemic has reduced the workforce by 1.5 million workers to 35.9 million, and is now at a level not seen since April 2007.

“I think looking at the middle jobs — and what we think they are — there’s going to be a lot of challenges for these managers,” said Jane Oates, president of WorkingNation, a nonprofit that focuses on workforce development. “They may be taking a break to ease their stress.”

This could mean more sustainable economic growth than slowing economic growth, experts say.

“Companies are starting to restructure their businesses,” said Lee of the Milken Institute. “They want to be more productive in this time when labor is scarce and expensive, so they are incorporating technology.”

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