Over the past year, almost everyone who has looked for a job has told me the same thing: The job market is brutal right now. They applied to dozens, if not hundreds, of open positions, only to receive a callback or two. Nobody is hiringThey tell me. I’ve never seen him so bad.
Listening to them, you might think we are in the middle of a recession. But the confusing thing is that we are far from being one. Unemployment is near its lowest level in five decades. The economy creates hundreds of thousands of jobs every month. Wages are rising faster than inflation. By all standard measures, the job market is doing very well. So why am I hearing such a different story from people on the ground?
The dissonance finally started to make sense to me when Vanguard, the investment management company, released its latest hiring report. Looking at Based on the enrollment and contribution rates of its 401(k) retirement plans, Vanguard is able to calculate a national hiring rate broken down by income level. And what the numbers show is a two-tier labor market: a market split between a blue-collar boom and a white-collar bust.
Among Vanguard’s lowest earners — those making less than $55,000 — the hiring rate has held up well. At 1.5%, it remains above pre-pandemic levels. But among those earning more than $96,000? It’s quite depressing. Hiring has slowed to a dismal 0.5%, less than half of the peak reached in mid-2022. Excluding the decline in the early months of the pandemic, this is the worst since 2014. If you earn a six-figure salary, it’s a really bad time to be looking for a job.
The question here is Why. Why are companies hiring so few white-collar workers these days? Several possible explanations come to mind. It could be that fewer people working at companies are quitting now, which would mean companies would have fewer vacancies to fill. It could be that the sectors that are struggling the most – technology and finance – are those that employ the most well-paid professionals. Or it could be that CEOs follow through on their threats to reduce what they see as corporate bloat – what Mark Zuckerberg called “managers managing managers, managers managing, managers managing, managing people who do the work.”
But there may be a bigger, more worrying explanation for the slowdown in white-collar recruiting. Perhaps companies are anticipating tough times and cutting budgets accordingly. “If you need to cut costs,” says Fiona Greig, global head of research and investor policy at Vanguard, “removing high-cost workers will reduce costs to a greater extent than removing low-income workers.” . Translation: The more you earn when budgets are tight, the less likely an employer is to hire you.
Now, one could argue that a slowdown in white-collar hiring doesn’t really matter in today’s economy, even for white-collar workers. Of course, Vanguard data shows that things are tough for professionals looking for work. But there aren’t many people who need a new job right now: The unemployment rate for people with a college degree is 2.1% and the national layoff rate is lower than it was before the pandemic. While the vast majority of professionals already have jobs – and are able to keep their jobs – it is perhaps normal for companies not to be hiring.
But this argument ignores an important factor: What happens if the job you have is one you hate? I have several friends who are unhappy with their current jobs, but they can’t quit because no one is hiring. Some observers have called this combination of lower hiring and fewer resignations the “Great Stay,” suggesting a sort of equilibrium after the chaos of the Great Resignation. But my colleague Emily Stewart has a better name for it: the “stuck in place” economy. I think that professionals feel this confinement particularly keenly. After all, it wasn’t that long ago that they enjoyed a “take this job and push it” bluster, which was fun to watch. During the Great Resignation, they knew it would be easy to find a new job, which meant it would be easy to leave their current job. Even if they had no intention of leaving, the job market gave them a feeling of freedom: the feeling of no longer having to put up with a bad boss, a brutal workload or an arbitrary mandate to return to work. power.
This, I think, explains what people call “vibecession”: the strange state of feeling as if we were in a recession even though all standard indicators show that this is not the case. What we are experiencing is actually a slowdown white collar hiring – and white-collar workers (me and my angsty friends) are the ones shaping the public discourse on the economy. “People feel like things are going in the wrong direction,” says Guy Berger, director of economic research at the Burning Glass Institute, which analyzes the labor market.
And for the most elite professionals, things could get worse before they get better. Berger tells me he doesn’t expect a full-blown recession anytime soon. But he keeps an eye on the unemployment rate for people with advanced degrees. Almost everyone is doing well, work-wise, but there has been an uptick for all the smart pants with master’s and doctorate degrees. They’re not really in trouble right now. “We always talk about the people who have the highest salaries in the labor market and the lowest unemployment rate,” Berger explains. But for them, hiring is going in the wrong direction. And as AI tools increasingly encroach on the tasks of professionals – writing, coding, coordinating, analyzing – we will likely see many more weaknesses at the upper end of the income scale than at the bottom. lower end.
This is not the story we are used to hearing about jobs. For decades, the economy left workers behind with lower incomes and less education while professionals reaped all the gains. But today, these roles are reversed and it is high incomes who suffer. It’s no wonder that not everyone knows how the economy is doing. “We’re having a hard time digesting this collectively,” Berger says. And the longer the lull in white-collar hiring continues, he warns, the more resentment will grow.
“Even if there’s not a big increase in layoffs, people are just going to get more and more grumpy and dissatisfied,” Berger says. “If this continues for another three or four years, it’s going to cause a lot of discontent and lower morale among American businesses.”
Aki Ito is chief correspondent for Business Insider.
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