Slow and steady wins the race. It’s a trope we’ve all heard, but apparently the white-collar workers of the tech sector have ignored this lesson.
The tech sector saw unprecedented growth during the pandemic. And they’ll soon be paying for it, according to Bloomberg.
Economists now fear companies in the tech and financial sector will be some of the hardest hit during a much-anticipated potential recession slated to hit this year. Those employees working from home, those of the “laptop class,” which saw fast growth during the pandemic, should now be worried about layoffs over the course of 2023.
Or maybe even sooner. Which means the “laptop class” might want to start preparing now.
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Future uncertainty for laptop class
While 2022 came in with a bang for many tech companies, it also went out with a whimper. After strong growth through the pandemic, the last quarter of the year was one of declining sales and massive layoffs. In September alone, Netflix had 480 layoffs, Patreon parted with 17% of its workforce and Twilio saw 800 layoffs.
As fall progressed, Twitter, Amazon, Meta (formerly Facebook), Salesforce, Cisco and HP all announced cuts too.
All of these companies fall into the tech sector, an industry that boomed during the pandemic with the work-from-home white-collar workforce becoming the “laptop class.” It’s now become more clear that this once-strong sector is due for a major correction during a highly anticipated recession.
It won’t just be companies that fall into this specific sector, but white-collar professionals who mainly work from home too. While the need to be able to work online increased during the pandemic, now that restrictions have loosened up, that need has lessened.
Or at least, it’s not as necessary. There’s been an uptick in 30- to 90-day work contracts for these professional positions. All while employers are starting to lay off workers that came on during the pandemic and aren’t a day-to-day necessity any more.
Other types of jobs seeing big gains
What’s interesting is that this does seem to be the start of a “white-collar recession,” something Americans haven’t experienced since the early 1990s, according to economists.
In fact, the reverse proves true for those in the blue-collar sector. While there were notable job gains in leisure and hospitality, health care and government work in November, professional and business services accounted for just 6,000 of the 263,000 nonfarm jobs added that month.
Meanwhile, monthly growth in that sector averaged 58,000 from January to November 2022 — down from 94,000 a month in 2021.
The pandemic led to millions in layoffs for those in traditionally blue-collar sectors, like mining, hospitality, manufacturing and transportation. Stay-at-home orders meant many were furloughed or laid off with no work for the foreseeable future.
Today is a different story, with companies not just able to return to normal, but needing to pick up the slack from the last few years of little to no work. This occurs in every part of traditionally blue-collar industries, from mining to restaurants.
A rocky year ahead for some
As for what comes next, there are worries a recession could lead to a decrease in spending — something that has previously impacted restaurants and other service industries. But economists believe Americans are sitting on enough savings that restaurants will remain part of the budget, especially as they save money by staying away from high-interest loans and mortgages.
Those in the food service industry in particular still have more growing to do. In fact, employment in the leisure and hospitality industry is still 980,000 jobs lower than pre-pandemic levels, suggesting even more growth to come, according to the Bureau of Labor Statistics.
There’s a similar case for those in the airline industry, as well as other areas of the market that went down during the pandemic and are starting to recover.
Unfortunately, the “laptop class” isn’t one of them. So if you’re part of this sector, brought on during the pandemic hiring frenzy, it might be time to brush up on your resumé.
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