White-collar workers are struggling to find work as the job market slows

The US labor market is cooling after months of rapid job growth, but some workers are feeling the slowdown more than others.

The latest data released by Vanguard shows that demand for higher-income workers is fading, painting a picture of a two-tier labor market that has seen employment boom for blue-collar workers and slack for white-collar workers. White.

Among the lowest earners — those earning less than $55,000 a year — the employment rate has remained above pre-pandemic levels, at 1.5%. But hiring for those earning more than $96,000 has slowed to just 0.5%, less than half the peak it reached in mid-2022, according to the report, which is based on new enrollments in Vanguard’s 401(k) plans. .

It marks the slowest rate of employment for high-income workers since 2014, barring a big drop during the pandemic.

JOB OPENINGS SUDDENLY DOWN TO LOWEST LEVEL IN 3 YEARS

More than 75 employers were taking resumes and talking to potential new hires at a career fair in Lake Forest, Calif., in February. 21, 2024. (Paul Bersebach/MediaNews Group/Orange County Register via Getty Images/Getty Images)

“This is partly a reflection of lower-wage service industries still trying to recover from the COVID shock, a challenge as many of those workers have moved on to higher-wage opportunities,” said Adam Schickling, a senior economist. of Vanguard.

There are several reasons why companies are hiring so few white-collar workers right now.

THE NUMBER OF HIGH-PAYING JOBS IS REGULAR

Some businesses, like tech companies, continued to hire during the pandemic, Julia Pollak, chief economist at ZipRecruiter, told FOX Business. But as the economy normalized and Americans returned to personal activities, those companies laid off scores of workers and stopped hiring young people.

Tech companies cut more than 47,000 jobs in April, a 58% drop from the roughly 114,000 cuts announced during the same period a year earlier, according to a separate analysis by Challenger, Gray & Christmas.

“It seems to be a bit of an ongoing recession in the economy, with white-collar jobs in general not shrinking, but very weak, so things [aren’t] growing as well,” Pollak said. “There’s a white-collar stagnation.”

Attendees at a career fair at a community college in Bolivia, NC, April 20, 2023. (Allison Joyce/Bloomberg via Getty Images/Getty Images)

High interest rates are also forcing some companies to put riskier investments on hold. Employment is unlikely to pick up again until the Federal Reserve cuts rates from their current 23-year high, she said. Central bank officials have indicated that rate cuts will begin later this year, but warned that they need to see more evidence that inflation is returning to their 2% target.

Another reason for the hiring pullback is that many Americans in high-paying jobs are choosing to stay put.

“Part of this is for good reasons: the rise of flexible and remote work. When individual companies shift workplaces from being in the office to being remote, attrition often drops by 30% or more. So we’re seeing companies sort of reap the benefits of keeping work more flexible,” Pollak said.

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The labor market has remained historically tight over the past year, defying economists’ expectations for a slowdown. Economists predict that the labor market will continue to cool in the coming months as higher interest rates work their way through the economy.

The Federal Reserve raised interest rates 11 times starting in March 2022 in an effort to curb inflation and cool the labor market. Policymakers have suggested that rapid wage growth, the product of a strong labor market, was a contributing factor to the inflationary crisis that has ripped through the pockets of millions of Americans in recent years.