One Type Of Worker Will Be Hit Hardest If There Is A Recession?
White-collar office workers are at the most risk of losing their jobs if the Federal Reserve's attempts to stabilize the economy fail and the country drops into a period of economic decline.
September’s jobs statistics cooled the markets last week. Stocks fell sharply as investors evaluated the report, which indicated that more jobs were added to the United States economy than expected. This means that further interest rate hikes from the Federal Reserve lie ahead, but a data breakdown shows that the agency’s inflation-fighting plan to weaken the labor market may already be working, just not for white-collar workers.
According to CNN Business, white-collar office workers are bearing the brunt of the Federal Reserve’s actions. Last month, the financial and business sector saw a large drop in employment. While legal and advertising services also experienced a decline.
Service and construction workers, however, are still thriving. Leading the gain in jobs is the leisure and hospitality industry, which added 83,000 jobs in September. Employment in food services and drinking places has also increased. Meanwhile, the largest non-government job losses came from the financial sector, which lost 8,000 white-collar workers between August and September.
Financial institutions are hiring in cycles, extending offers to new graduates. This makes last month’s drop particularly significant. Business support services like telemarketing, accounting, administrative and clerical are also bleeding jobs. The sector lost 12,000 in September, while legal and advertising services lost 5,000.
The data essentially indicates that the Federal Reserve’s policy to combat inflation appears to be cooling some parts of the economy, but not others. As a result, white-collar finance workers are probably starting to worry as their industry depends on equity markets and lending which have been hit particularly hard by the agency’s actions. And last week’s numbers show that its impact can be seen in employment data.
For now, it remains to be seen if the Federal Reserve can stabilize the economy by cutting off employment for white-collar workers, or whether those losses will trickle down to other industries, hurting low-income employees. Since earnings season starts soon with banks like JPMorgan, Citigroup, Morgan Stanley, and BlackRock reporting, investors will be watching closely for any direction change in hiring and layoff plans.
Additionally, a panel of leading U.S economists released their economic outlook for next year, and it’s not great. A panel of 45 forecasters, led by the National Association for Business Economics, said it expected slower growth, higher inflation, higher interest rates, and weakening white-collar worker employment in 2022 and 2023. Most of the concerns come from the Federal Reserve’s interest rate policy which is straining the entire job market.
“More than three-quarters of those polled think the odds are 50 to 50 or less than the economy will make a soft landing,” NABE Vice President Julia Coronado told CNN Business. “More than half the panelists indicate that the biggest downside risk to the U.S. economic outlook is too much monetary tightening.” NABE panelists lowered their median real GDP forecast for the fourth quarter of 2022 to an increase of 0.1%, from a 1.8% increase in the May survey earlier this year. So it remains to be seen what the future holds for white-collar workers.
