Are White-Collar Jobs Disappearing? Not Really

​Recent reporting has pushed the idea that we are experiencing the extinction of some white-collar jobs due to a conflation of economic factors and the emergence of powerful automation and AI. Are we?

First, there were months of layoff announcements from technology firms and sectors impacted by higher interest rates. Then, generative AI like ChatGPT showed that artificial intelligence has the power to edge some knowledge workers out of some of their tasks and potentially modify existing professional roles. Changes are happening. But is a permanent shift in labor demand resulting in a sizable loss of white-collar roles really taking place? The data—and experts—point to no.

Preston Mui, senior economist at Employ America, a labor market and economic policy think tank in Washington, D.C., crunched the latest employment numbers from the Department of Labor and confirmed that there has been a significant uptick in white-collar layoffs over the last six months. But employment among many white-collar industries, including professional and business services, also has grown since before the pandemic.  

"Among occupational sectors, employment in professional and business services is the highest relative to before the pandemic," he said. "There has been an increase in white-collar jobs since the pandemic. On the other hand, for example, there are fewer leisure and hospitality jobs than before the pandemic."

Jay Denton, chief analytics officer at LaborIQ, a compensation and labor market analytics software company based in Dallas, pointed out that the average unemployment rate for white-collar jobs overall is 1.7 percent, an almost negligible number. "White-collar jobs have some of the lowest unemployment on record, which is the same as what it was a year ago, before the recent layoffs," he said.

"The recent layoffs in the press represent a very small number of jobs relative to overall employment," said Juan Pablo Gonzalez, senior client partner and sector leader for professional services at Korn Ferry. "Unemployment is still near historic lows, suggesting that there are more jobs than there are job seekers. You do see some displacement from large employers, but those folks are finding jobs, including joining startups and smaller businesses. The bottom line is that the labor market for white-collar jobs is incredibly dynamic."  

Denton said that a breakdown of white-collar industries does reveal that certain areas—such as technology, finance and real estate—are challenged right now, and finding a job in those sectors has temporarily gotten harder.  

"The difficulty has been that some of these layoffs have been so concentrated in a certain industry that when you go to get another job, there are fewer openings and increased competition from so many people just like you who are looking for that same type of job," he said.

But that's to be expected as one of the hottest job markets on record cools down.

"Things are coming back into balance," Denton said. "The job market will feel different than it did the last few years, because employers were starved for candidates then. Having a lobby full of people interviewing for the same job was not the case a couple of years ago. The candidate pipeline was dry, and everyone was a passive candidate. There are now more active job seekers, especially in certain industries."       

Mui agreed that what employers are seeing is "more likely related to normalization after the pandemic and a slowdown in growth expectations. I don't see this as related to long-term structural changes to the labor market."

White-collar roles are growing, but there is some trepidation for certain job seekers, Gonzalez said. "Consulting and accounting firms are continuing to hire, for example, but when the economy slows, one of the first places to cut back on is consulting spend," he said. "So, in some cases, among early-career hires, offers have been made but start dates may be delayed due to uncertainty."

The contraction in hiring is the result of a cyclical slowdown in demand, he said. "For example, if the professional firm is servicing technology companies, they are likely experiencing a slowdown. But other sectors, like health care, are growing rapidly, so resources are shifted."

Experts also disputed that any current job displacement is due to improved automation or AI.

"There is no evidence that any job losses are coming from new AI like ChatGPT," Denton said. "We all use technology that eliminated jobs in the past, but here we sit with one of the lowest unemployment rates on record. Typically, innovations make things easier and create another set of jobs. We are seeing changes because of technology, but what's happening is not matching up with the headlines I'm seeing out there."

Gonzalez said that strictly defined functions may become obsolete as AI becomes more present at work, but overall, jobs will leverage technology and change, not go away.

"Work is being reimagined, not eliminated," he said. "It's not that the jobs are going away. The jobs are changing."