A white-collar recession

Data from past recessions shows us that blue-collar workers usually bear the brunt of the impact. This time around, the trend could flip.  

Driving the news: Within the last week, layoffs at white-collar firms have started to get scary (read: AmazonGoldman,  BlackRock), but blue-collar industries, where the amount of manual labour is typically higher and the pay lower, seem to be doing just fine. 

  • That lines up with the last year of labour data, which highlighted relatively low numbers of job vacancies in high-wage sectors compared with all-time highs in low-wage sectors.

  • The “job vacancy gap” is part of a full circle moment for low-wage workers. The hardest hit during the pandemic might now enjoy more job security in the short term.  

Why it matters: Blue-collar workers might fare better through the current downturn than they have in recent history. According to The Wall Street Journal, “Demand for goods and services, while softening, is still too high for many employers to consider layoffs.”

  • If demand does soften, industries such as leisure and hospitality might hesitate to fire the front-line workers they struggled to hire and retain after the pandemic. 

What’s next: If layoffs spread to blue-collar industries as interest rates rise (and they will rise more), you’ll know the economy is in trouble. But for now, job growth is still blowing past expectations in Canada, and a “soft landing” might still be in the cards.