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  • - [Narrator] Amazon, Ford,

  • Pepsi, and more from Amazon.

  • These are just a few of the companies

  • that have said they were starting big layoffs

  • in the last year.

  • Some job cuts are expected

  • when the economy hits a rough patch,

  • but this is different,

  • not because of the number of people being laid off,

  • but because of who.

  • - We're seeing a really unusual situation

  • where white-collar professionals are being laid off

  • in greater numbers relative to the rest of the workforce.

  • - [Narrator] Here's why white-collar jobs

  • are getting cut first,

  • and why that's a departure from slowdowns in the past.

  • (gentle instrumental music)

  • Ever since this wave of job cuts started last year,

  • experts have said that this downturn could spell trouble

  • for professional workers.

  • - This recession is gonna be really bad,

  • not only for white-collar workers,

  • but white Patagonia vested workers.

  • - [Narrator] But to understand why those cuts are happening,

  • we have to go back even further

  • to the beginning of the pandemic.

  • As the economy went into crisis mode,

  • layoffs hit a lot of industries,

  • but ones that are not predominantly white-collar

  • were some of the most affected.

  • Entertainment, and leisure,

  • and retail which hire a lot of low wage

  • and frontline staff made up most of the job cuts

  • in the first seven months of 2020.

  • - In-person workplaces, everybody got sent home,

  • and so you had a lot of white-collar workers

  • who could do the kinds of jobs that companies still needed

  • in great quantity.

  • And companies like Zoom boomed,

  • companies like Google and Microsoft,

  • suddenly their products were in much greater demand.

  • - [Narrator] As the economy started to recover,

  • some industry saw the average number of employees grow

  • from pre-pandemic levels, while others,

  • especially those with frontline workers,

  • grew only a little bit or were left at a deficit.

  • But as employers are now making job cuts

  • amid rising interest rates,

  • they're facing two major problems.

  • For some, it's an excess of white-collar workers

  • who may have been hired for special projects

  • or company expansions during the pandemic.

  • - Some of those projects have been closed, or pulled back,

  • or narrowed, and so companies that hired a lot

  • during the pandemic are just finding

  • they don't need as many people.

  • - [Narrator] But elsewhere,

  • there's an unmet demand for workers,

  • namely in blue-collar,

  • low wage, and frontline jobs.

  • - It feels like we have

  • a structural labor shortage out there where there are,

  • you know, 4 million fewer people,

  • a little more than 4 million,

  • who are in the workforce available to work

  • than there's demand for workforce.

  • - [Narrator] The Fed says the shortage has multiple causes.

  • Some of it is due to more people going into retirement,

  • but other factors like slowing immigration

  • are also playing a role.

  • Some economists also say that mindsets

  • about work have shifted amid COVID-19 for these workers.

  • If we look back at that change in employees on payroll,

  • some of the industries that have had

  • a harder time recovering are ones

  • that a lot of workers didn't return to.

  • - And companies don't want to risk being unable

  • to fill important jobs as the economy speeds up again.

  • So they're being careful about keeping those workers,

  • some people call it labor hoarding,

  • they're actually holding onto these people,

  • trying to keep them from leaving,

  • even if they don't need them all right now.

  • - [Narrator] As hiring has started to slow,

  • ads for jobs in white-collar industries

  • have fallen the most.

  • And as for layoffs.

  • - White-collar workers are there, they're paid more,

  • so job cuts can save you more money with fewer people,

  • and you don't risk giving up

  • those hard to find frontline workers

  • that you're gonna need when the economy improves.

  • - [Narrator] But this breaks from the norm

  • of what has happened in many other economic slowdowns.

  • Usually.

  • - First capital intensive industries lay people off,

  • factories and construction companies,

  • then you see companies with large low wage workforces,

  • retailers, hospitality companies,

  • restaurants and hotels.

  • And only later, as the economy really starts to slow

  • and as a recession looms or kicks in

  • are professional workers

  • and white-collar workers usually laid off.

  • - [Narrator] Just look at the recession in the early 1980s

  • where blue-collar workers made up 75% of layoffs.

  • - It's few and far between, jobs are hard to come.

  • But how about you, you hiring?

  • - [Narrator] And even more recently, in 2007,

  • just before the start of the great recession,

  • blue-collar industries like construction and manufacturing,

  • were some of the first to start losing jobs.

  • By the end of 2008 when mass layoffs were gaining steam,

  • industries that are not predominantly white-collar

  • were some that had the most job cut announcements,

  • that's excluding finance, which was in a crisis.

  • - So the classic model we've seen over

  • the past 38 to 40 years is that when companies

  • see a slowdown coming, they shed workers.

  • They figure, you know,

  • we can always hire them back once business picks up again.

  • But that didn't happen after the pandemic.

  • - [Narrator] But even if white-collar workers

  • are mostly affected by this downturn,

  • they don't typically stay unemployed for long.

  • The majority of tech workers who were laid off

  • this year landed a new job

  • within three months of starting their search.

  • - Some smaller companies are finding it easier to hire now,

  • because you know, there's more people on the market.

  • So just because there's a lot of layoffs

  • doesn't mean no one's hiring.

  • - [Narrator] Despite the layoffs,

  • the job market remains strong by historical standards.

  • The Fed is still looking for it to cool further.

  • - The economists I've spoken with expect more layoffs.

  • They don't expect it to be like in the financial crisis

  • when you saw pretty widespread layoffs,

  • but they do expect layoffs to spread from, you know,

  • tech and the white-collar

  • to other areas where the economy may slow down next.

  • - [Narrator] Some economists say that layoffs

  • could become more precisely targeted at underperformers,

  • as companies try to hold on to

  • their most valuable employees.

  • (gentle instrumental music)

- [Narrator] Amazon, Ford,

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