More Evidence of a ‘White-Collar Recession’

It’s not often that a mundane revision to government statistics makes news, but in a market where most job candidates and hiring firms aren’t particularly satisfied, everything gets noticed.

Last week the US government announced that the country actually added 818,000 fewer jobs in March of this year than initially reported. More than 500,000, or more than 60%, of those disappearing jobs were in professional roles. The numbers back up much of the anecdotal evidence that suggests that the market for professional jobs in most industries has throttled back considerably. “We basically have a white-collar recession across the board,” says Alan Guarino, vice chairman in Korn Ferry’s CEO and Board Services practice.

Nearly half of the adjusted losses were in the professional and business services industry, which was revised downward by 358,000. In information roles, the revision was minus 68,000 jobs; in financial activities, it was minus 76,000. 

A total decline of 818,000 jobs in an economy that has 158 million of them might not seem like much. Plus, revisions to these numbers happen routinely as the federal government reconciles its preliminary survey of business payrolls with state tax data, which is only available several months later. But this particular revision highlights a disturbing problem that many white-collar workers and recruiters have been noticing for more than a year—that well-qualified candidates are not getting hired the way they once were.

Experts say firms have slowed down white-collar hiring for an assortment of reasons. For instance, those roles, on average, pay considerably more than blue-collar positions. Some firms have made a sustained push to increase productivity, and one of their tactics has been to remove layers of primarily white-collar management roles. These days many firms will fill out customer-facing roles, while leaving white-collar management roles vacant, says John Long, Korn Ferry’s North America Retail sector leader. “It’s a simple way to cut expenses.”

Instead of shedding even more employees, some companies have also reorganized, reassigning thousands of workers from slow-growing areas to others with higher growth potential. Other firms have let non-critical roles sit open for months, without replacing departing employees.

A big question for organizations, experts say, is whether the reduction in professional roles may inadvertently diminish both experience and talent levels. “When you have gotten rid of upper middle ranks, you have less of a bench,” says JP Sniffen, practice leader in Korn Ferry’s Military Center of Expertise. It might take a future crisis for leaders to know whether or not they’ve made the right move, he says.

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