When Starbucks announced last month it was firing more than 1,000 corporate employees, it highlighted a disturbing trend for white-collar workers. Slow wage growth.
It also fueled that long-standing discussion of economists. Is recent unemployment just a temporary development? Or will they inform something more ominous and irreversible?
After sitting below 4% for more than two years, the overall unemployment rate since May has surpassed that threshold.
Economists say the job market remains strong by historical standards, and much of the recent weakening appears to be linked to the economic impact of the pandemic. Companies actively hired amid a surge in demand and moved to layoffs after the Federal Reserve began to raise interest rates. Many of these companies are trying to make their businesses more lean under investor pressure.
But amid the rapid advances in artificial intelligence and President Trump’s federal targets, it disproportionately supports white-collar jobs, which some thinks it has begun a permanent decline in knowledge work.
Karltannenbaum, chief economist at Northern Trust, said: “I tell people that there are waves.”
To date, few industries have typical shifts over the last few years than creating video games. The boom began in 2020 Couch-bound Americans searched for a new form of home entertainment. The industry reversed the course and actively hired it before embarking on a period of layoffs. Thousands of video game workers lost their jobs last year and the previous year.
The scale of unemployment is Game Developers Choice AwardsThe industry’s annual awards show complained about the “record layoffs” during the 2024 opening monologue. The unionization trend that began with low-wage quality assurance testers that same year has spread to better-paid workers, such as game producers, designers, engineers, and more, of companies making hit games. fall out and World of Warcraft.
At Bethesda Game Studios, owned by Microsoft and creating fallout, workers said they had unionized some because they felt the union would leverage in the soft labor market, as they were wary of rounds of company layoffs in 2023 and 2024.
“It was the first time Bethesda had experienced a layoff in such a long time,” said Taylor Welling, a studio producer who earned a master’s degree in interactive entertainment. “It scared so many people,” Microsoft declined to comment.
unemployment Finance and related industrieswhile still low, it increased by about a quarter from 2022 to 2024. The rise in interest rates slowed demand for mortgages, and businesses were trying to lean more. In Revenue Call Last summer, Wells Fargo’s chief executive noted that the company’s “efficiency initiative” had pruned its workforce over 16 quarters, including a cut in nearly 50% of workers in the company’s home lending sector since 2023.
Last fall, Wells Fargo fired about a quarter of the approximately 45 employees of the Behavioral Management Intake Team, which confirms accusations of corporate misconduct against customers and employees. Heather Rolfs, The let go of lawyer said she believes the company is trying to save money by reducing the US workforce, and she and her colleagues believe it is an attractive target as they have recently tried to put in on the union.
“I think it’s great to get rid of two birds with one stone,” Rolfs said. Some of her former colleagues say they are worriedly waiting every Tuesday after payday. “We feel we can be fired at any time,” he said. Eden Davis, Another worker on the team.
A spokesman for Wells Fargo said in a statement that the layoffs have nothing to do with the union, saying “we will regularly review and adjust staffing levels to suit the market situation.” He said two managers on the team also lost their jobs.
Atif Rafiq, author of a book on corporate strategy in senior positions at McDonald and Amazon, said many companies are trying to emulate Amazon’s model of building teams that go beyond capabilities to reduce barriers between workers with different expertise, such as coding and marketing. In the process, they may discover redundancy and take on layoffs.
CEO Brian Nicole in a memo announcing the layoffs at Starbucks last month I quoted the goal “Delete layers and replicas and create smaller, more agile teams.” Nissan provided similar evidence for management reductions announcement this month.
Overall, the latest data from the Federal Reserve Bank of New York show Unemployment rates among university graduates have risen by 30% (2% to 2.6%) since falling from the bottom in September 2022, compared to about 18% (3.4% to 4%) for all workers. An analysis by Julia Pollack, Chief Economist at Zippleck Crutter, shows that unemployment rates are the highest among those with bachelor’s or university degrees, but do not have a degree.
Employment rates were slower for jobs that require university degrees than for other jobs. According to ADP Researchresearching the labor market.
Some economists say these trends are inherently short-term and may have little concern for themselves. Lawrence Katz, a labor economist at Harvard University, noted that the increase in unemployment rates among college-educated workers was slightly greater than the overall increase in unemployment rates, and unemployment rates for both groups remained low due to historic measures.
Professor Katz argued that slowing wage growth for middle-class workers could simply reflect the discounts that these workers effectively accepted in exchange for being able to work from home. Data from the Institute of Liberal Economic Policy Wages for workers in the 70th and 80th percentiles of income distribution have shown that since 2019 they have grown more slowly than wages in other groups.
However, there are other indications that returns on university degrees may have changed over time. Wage gap between people with university degrees and those without one It has grown steadily It started in 1980, but has been flattened over the past 15 years, but it remains high.
Flattening may partially reflect the fact that as university attendance increases, there are more college-educated workers that employers can choose. However, some economists Make a claim What it reflects Reduced Employer Needs For university graduates, for example, information technology is more sophisticated, which means fewer jobs like bookkeeping. Such jobs do not necessarily require a university degree, but they were often appealing to graduates.
Artificial intelligence can also reduce the need for it by increasing the automation of white-collar jobs. recently Academic Paper Software developers using AI coding assistants have improved their key measures of productivity by over 25%, and found that productivity gains appear to be the biggest among the most experienced developers. The results suggested that employing AI could reduce the wage premium enjoyed by more experienced coders as it erodes productivity benefits over beginners.
Mert Demirer, a MIT economist who co-authored the paper, said in an interview that the work of software developers could change over the long term, making human coders a type of project manager overseeing multiple AI assistants. In that case, wages could rise as humans become more productive. Also, if cheaper software leads to even greater demand, AI will expand employment among coders.
Still, at least in the short term, many tech executives and their investors seem to see AI as a way to trim staffing. Software engineers at large tech companies said they refused to be named for fear of harming their job prospects. His team was about half of last year, and he and his colleagues said they were expected to do roughly the same amount of work by relying on AI assistants. Overall, Unemployment rate In the technology and related industries, it jumped more than half from 2022 to 2024, from 2.9% to 4.4%.
Then there was Trump’s attempt to remake the federal government. This has so far resulted in job losses and employment freezes for federal employees and employees of universities and other nonprofits that rely on government funds. Johns Hopkins University, which relies heavily on funding for federal research, announced this month that it has abandoned 2,000 workers around the world as a result of Trump’s cuts.
Professor Katz at Harvard University noted that the majority of university-educated workers relied on the federal government over other groups, either directly or through nonprofit funding. “What appears to be a major contraction in science and research, education and government spending could potentially have a very large impact,” he said.
“The overall unemployment rate among university graduates does not seem to be particularly rising,” he added. “But that could be in the next six months.”
Source: www.nytimes.com
