Weekly Economic & Business Outlook

White-Collar Recession—Fact or Fiction?

The recent acceleration in layoffs among some of the largest U.S. companies has fostered claims of an ongoing white-collar recession, in which employers are seeking fewer workers for occupations requiring higher levels of education or experience. But a deeper dive into the data suggests that white-collar workers are, in fact, thriving relative to their blue-collar counterparts. Over the past year, a period which most experts agree saw a significant contraction in labor market activity, the number of employees in white-collar occupations grew by 1.4%, more than twice that of employees in blue-collar occupations. In this same timeframe, unemployment amongst white-collar workers rose by 5.4% while unemployment amongst blue-collar workers rose by 8.5%.

The trends are similar when comparing industries based on their share of white-collar and blue-collar workers. In industries where white-collar occupations comprised at least 50% of their total workforce, job openings accelerated by 2.3% while those comprised of mostly blue-collar occupations experienced a 12.3% decline. Furthermore, quits rose and layoffs fell in the former while quits rose and layoffs fell in the latter, suggesting greater employee leverage and labor market momentum in industries with mostly white-collar occupations.

So, what trends could be fueling these claims? For one, wage growth within blue-collar occupations is faster than that within white-collar occupations. However, a slower pace of wage growth within white-collar occupations does not necessarily indicate lower labor demand. At times of elevated labor costs and reduced corporate profits, the wages of executives and high-level personnel are more likely to be negatively affected than those of salaried employees whose compensation is not directly tied to the performance of their company or economy at-large. Second, layoffs receiving the most coverage are occurring at some of the largest US companies that are engaged in services or usually employ high-skilled workers. But while downsizing, especially among large companies, is natural during an influx of economic headwinds, the data clearly show that this has not occurred en masse to the point of threatening broader trouble in the labor market.

Hence, while easy to understand the basis for claims of a white-collar recession, the data in fact prove the opposite: Demand for white-collar workers is still thriving; it is their counterparts, blue-collar workers, who will need more assistance once the labor market recovery begins.

Internal Staffing Turnover On the Rise

The story of the labor market over the last several years has been that of a low-churn environment. This is top of mind for staffing firms, as the result of this decline in workplace mobility has been stagnation in demand for staffing services.

However, data on internal staffing employees show turnover in that segment increased from 2023 to 2024. Based on analysis of more than 5,000 internal employee survey responses collected as part of the Best of Staffing employee survey, ASA corporate partner ClearlyRated has estimated that the median staffing firm had 33.1% turnover in 2024, up from 28.6% turnover in 2023.

Employee turnover increased across all job categories but was highest among recruiters (46.3%) and account executives (44.2%). These two job categories also saw the largest percentage point increases from the prior year at 12.3 and 13.0 points, respectively. Support staff had the third highest turnover rate with 30.9%, up 7.2 percentage points from 2023. Staffing executives had the lowest turnover rate (19.6%) overall, but the figure was roughly double the 9.2% turnover observed in 2023.

In addition to differences by job role, ClearlyRated found differences by demographic variables. Turnover was 1.5 times higher among Black employees than white employees, and 1.2 times higher among LGBTQIA+ workers versus straight, cisgender workers. The study did not find a difference in turnover rate between male and female workers.

The staffing industry has faced serious headwinds since reaching a peak in 2022, and increasing turnover among internal employees is an additional challenge. With employee engagement trending downward generally in recent years, managers at staffing firms should be mindful that while the labor market overall is seeing lower churn, internal staffing employees are at a heightened risk of turnover.