A recession could hit white-collar workers the hardest. Here's why

White collar workers would be hit harder than blue collar workers if the United States enters a recession soon, according to one economist, who said businesses have undergone a dramatic restructuring after the pandemic.

“Covid shifted things around,” said William Lee, chief economist at the Milken Institute. The pandemic has accelerated automation, Lee said, and that’s pushing low-skilled white collar workers out of jobs.

“In this post-Covid environment, businesses are restructuring themselves. They’re changing the way they operate, they need to get more efficient. And what they’ve done is buy more software, deploy more technology, where they’re thinking ‘I need better-skilled people who work for me,’” Lee said.

The tech industry has seen a number of widely publicized layoffs in recent months as companies seek to rebalance their headcount after growing too rapidly during the pandemic and misjudging the length of that surge in demand.

The latest report from outplacement firm Challenger, Gray & Christmas shows tech companies have so far announced plans to cut 31,200 jobs in November, more than double the cuts announced from January to October this year.

In the past week alone, Facebook parent Meta announced it would be cutting 11,000 jobs and Amazon started its biggest layoff ever, which will see 10,000 people axed from its workforce.

Andrew Challenger, senior vice president and head of sales and media at Challenger, said he sees an uptick in the number of layoffs of middle managers and engineers in the sector.

“We are seeing some big layoffs out of the tech sector. Those tend to be high-paying, more white-collared jobs, Challenger said. “Tech companies hired a lot over the past year and a half and they’re going through what seems to be a correction,” he said.

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