A steady stream of layoff announcements targeting professionals working in technology, Wall Street, media and other sectors could signal the start of a white-collar recession. The downturn in the economy changes the worker-employer dynamic. Companies, having faced the Great Resignation and the resulting labor shortage, are now gaining the upper hand.
Bob Iger, the former and then-returned CEO of Disney, placed one of his first orders to bring workers back to the office four days a week starting March 1. Salesforce co-CEO Marc Benioff berated employees in a Slack message complaining that the company’s new hires aren’t productive by his standards. Acting Starbucks CEO Howard Schultz was upset that employees ignored his request to return to the office and is now asking office workers to return three days a week
The tide is turning on the professional class. In previous economic contractions, blue-collar workers and front-line workers have typically suffered the brunt of the job losses. This time it’s different. Highly paid white-collar professionals are currently the most affected by layoffs.
The shift in power dynamics
During the pandemic, employers flattered their workers because it was extremely difficult to recruit, onboard and retain people. Record inflation, rising interest rates, China’s restrictive Covid-19 policies and other factors contributed to a more challenging environment. Now, business leaders are focused on controlling spending, cutting costs and laying off employees.
Even the best-run companies face challenges in rapidly changing economic environments. In a letter to employees, Salesforce, San Francisco’s largest private employer, said it was laying off 10% of its roughly 80,000 workers. Benioff also asked why the subscription-as-a-service tech giant was facing a “productivity dip” from its newly hired employees.
He raised rhetorical questions, such as “Is this a reflection of our office policy? Aren’t we building tribal knowledge with new employees without office culture? Don’t our managers discuss productivity directly with their teams? Are we not investing enough time in our new employees? »
At Starbucks, Schultz said the global coffee chain should address the unintended consequences of remote working. He argues that the company loses the art of collaboration, that working in silos prevents real prioritization, and that its employees lose their connection to a common mission by not being together.
Iger asked Disney employees to work in the office four days a week, saying that “in a creative company like ours, nothing can replace the ability to connect, observe and create with peers that comes from to be physically together”.
The change of fortune between blue-collar and white-collar workers
According to wall street journal According to the recent jobs report, hospitality, leisure, manufacturing and retail laid off fewer workers than white-collar workers in September through November compared to a year earlier.
Average workforce reductions in the finance and insurance sectors from September to November have almost doubled since the same period last year. Real estate layoffs increased by more than 20% over the same period, and by 14% in the information technology sector. Job postings on Indeed.com for human resources and talent acquisition roles were down about 36% last month from a year earlier.
The the wall street journal predicts that blue-collar workers have a better chance than white-collar workers.
Jason Calacanis, a venture capitalist and the host of the All inclusive podcasttweeted about the white collar recession, “…the white collar recession is real [and] it will increase.
It doesn’t look like the outlook for white-collar workers will improve anytime soon. The World Bank has lowered its forecast for global growth and expects economic conditions to worsen, CNBC reported. According to the World Bank’s latest Global Economic Prospects report, conditions could result in the third weakest pace of growth in nearly three decades, ranking with global recessions caused by the pandemic and the global financial crisis.
The latest Conference Board survey indicates that most executives do not expect stronger economic growth in the near term. Over 50% of CEOs globally and 60% of US CEOs predict a lackluster 2023. On a positive note, the report shows that leaders believe there will be a resumption of economic growth by the end of the year or in the middle of the year. 2024. CEOs are worried about labor shortages and talent retention, which once again shows how the current downturn is starkly different from difficult times of the past.
Despite austerity measures, old habits are struggling to break. Despite Goldman Sachs’ announcement to lay off about 3,200 workers, CEO David Solomon and other senior executives have been asked about the costs of using private jet travel, according to the FinancialTimes.