“White Collar Recession” 2023 – Why The Highest Earners May Fall Fastest

Key Takeaways

• White-collar workers might face more job uncertainty in the coming months.
• Tech layoffs may have signaled the start of challenging times for white-collar workers.
• Increased automation and overhiring in the previous year could push white-collar workers to fall fastest.

Recession fears have been swirling for months. With inflation sky-high, consumers across the country are feeling a pinch in their budgets. Living paycheck-to-paycheck is increasingly common, prompting many households to cut back on their spending.

As this pullback on spending starts to seep into the economy at large, some companies are making big changes to their workforce. Specifically, white-collar jobs are at an increased risk of being cut.

Recession fears

The start of these tumultuous economic times is often attributed to the havoc unleashed by the global pandemic.

Many analysts are predicting a potential recession in 2023. Although there are different reasons for this, many investors and companies are taking a bearish approach in these uncertain times. A few of the top concerns include high inflation, rising interest rates, and geopolitical instability.

While white-collar workers seemed to fare better economically than blue-collar workers during the pandemic downturn, many economists are expecting the tables to turn if there is a recession next year.

Potential impacts on white-collar workers

Even though many economic indicators are pointing toward a recession, it’s impossible to predict when or if it will happen.

If a recession is looming, white-collar jobs seem most at risk for cuts during an upcoming recession. After the pandemic, the rush to hire white-collar workers may have caused many companies to overhire.

While the demand for blue-collar workers is still relatively high, the demand for white-collar workers seems to be dropping off.

Where We Are Already Seeing This Impact

White-collar workers in the tech industry are already seeing an uptick in layoffs. In fact, thousands of white-collar tech workers have already lost their jobs in 2022.

Here’s a look at a few of the companies instituting layoffs on a large scale:

• Twitter: After the Elon Musk takeover, 50% of the workforce was laid off. With that, around 3,700 employees lost their jobs.
• Lyft: Lyft recently laid off around 13% of its workforce, which amounts to 700 employees.
• Stripe: Stripe laid off 14% of its workforce, which means over 1,000 people lost their jobs.
• Meta: The parent company of Facebook made one of the biggest workforce changes. It laid off over 11,000 employees.

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The waves of tech layoffs are pushing thousands of white-collar workers out of a job. The reasons behind this uptick in layoffs vary.

While many people are pointing at uncertain economic times, others are laying blame on increased automation and overly optimistic hiring in the post-pandemic economic recovery.

However, the tech industry isn’t the only place where white-collar jobs are at risk. As companies across the economy look to restructure their workforces, white-collar workers seem more at risk of layoffs.

How white-collar workers can prepare

On an individual level, there is nothing any of us can do to steady the economy. After all, these macroeconomic factors pushing us closer to a recession are well beyond the control of any household budget.

Nevertheless, it’s possible to take some action to protect yourself from a layoff.

Boost your emergency fund

In any economic condition, an emergency fund is a stabilizing feature in household finances. It’s an especially useful tool during bumpy economic times.

Since we are living through highly uncertain times, beefing up your emergency fund is one way to prepare for a potential layoff.

The size of your emergency fund will vary based on your needs. Many experts recommend saving three to six months’ worth of expenses in your emergency fund. If saving up that kind of cash seems impossible, start smaller. Even tucking away a few hundred dollars can help.

In the best-case scenario, you’ll never have to touch your funds. But in the worst-case scenario, you’ll have this money to fall back on after a layoff.

Cut costs

When preparing for a recession and potential job loss, it’s imperative to cut costs wherever possible. You can start reducing costs by delaying a major purchase, bargain hunting, or clipping coupons.

In addition, you may want to think about eliminating one fixed cost from your budget. This could include a streaming service, gym membership, or a subscription that you don’t use.

Prepare to hunt

If you are concerned your job is on the line, it’s smart to be prepared to start looking for a new job. Some steps you can take to get ready for a job hunt include:

• Updating your resume
• Learning a new skill
• Reaching out to your network

By completing these steps in advance, you’ll be ready to hit the ground running if your position is eliminated in a recession.

Will this impact your investment portfolio?

Whether or not you are a white-collar worker feeling uncertain about your job security, you will see the impact of a recession on your portfolio, as all investors will. As companies feel the pinch of greater economic issues, they will be forced to adapt to the changing times.

The steps taken to adapt will inevitably impact the company’s stock.

For investors in a turbulent market, it’s wise to monitor changes closely. Sadly, the reality is that most investors don’t have the time or inclination to keep up with every market change.

Luckily, you can harness the power of artificial intelligence to track the changing marketplace for you. Q.ai offers investment kits that update weekly based on your goals and market conditions. As an investor, this can simplify your decision making process, while ensuring that your portfolio is up to date.

For example, adding the Inflation Kit to your portfolio can help you keep ahead of the impacts of inflation.

Bottom Line

White-collar workers could be in for a rough ride in 2023. If a recession comes to pass, these workers will likely face more job uncertainty.

As a white-collar worker, you can prepare for uncertainty ahead by beefing up your emergency fund, cutting costs, and being ready to look for a new job. As an investor, you can take advantage of artificial intelligence to keep your portfolio up to date in a turbulent, ever changing market.

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