The slow road toward economic recovery could be made even slower by the fact that nearly half of long-term job seekers came from the ranks of the white-collar workforce. The inability of these higher-earning professionals and office workers to find jobs within 27 weeks will be an increasing drag on consumer spending and further hobble the economy, according to one employment expert.
“White-collar workers make up about 60 percent of the labor force and their higher earnings give them spending power that is invaluable to the economy’s health. Prolonged joblessness among these workers will be a definite drag on the recovery,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas Inc., a global outplacement consultancy that provides job-search counseling to individuals who have been laid off.
An analysis of Bureau of Labor Statistics (BLS) data by Challenger found that of the 5.5 million Americans out of work for 27 weeks or more in September, 46 percent previously held management, professional and related occupations or sales and office occupations. In contrast, these white-collar job categories accounted for about 30 percent of the long-term jobless at the peak of unemployment following the 2001 recession.*
According to the latest BLS data, the number of unemployed workers who previously held management, professional and related occupations has nearly tripled since the recession began in December 2007, going from 1,090,000 unemployed to 2,859,000, as of September. Meanwhile the number of unemployed workers from sales and office occupations has gone from 1,638,000 in December 2007 to 3,367,000.
Together, the ranks of white- collar job seekers have grown by a total of 3,498,000 since the onset of the recession. This figure does not include those who have stopped looking for work out of frustration (and therefore not counted among the unemployed).
The rise in white-collar joblessness can also be seen among the job seekers receiving training and counseling from Challenger. Nearly 64 percent of job seekers going through the Challenger individual outplacement program in the second quarter earned $85,000 or more in their previous position. That is up from 41 percent a year ago. It is, in fact, the highest percentage of high-income job seekers since the firm began its tracking in 2000. Between 2000 and 2008, job seekers at this pay level accounted for an average of 45 percent of those being counseled by the firm.
Prolonged joblessness among white-collar workers could have adverse effects on the economy. The latest available data on consumer expenditures, collected through a joint survey by the Bureau of Labor Statistics and United States Census Bureau, indicate that the largest portion of annual expenditures are made by these individuals. Average annual expenditures among all wage and salary workers in 2007 amounted to nearly $4.3 trillion. Of that total, spending by those categorized as managers and professionals or technical sales and clerical workers, accounted for nearly $3.2 trillion or about 75 percent.
“No matter how much you earned in your previous position or how much money you have saved, when you are jobless going on 27 weeks, it is necessary to drastically reduce spending. Even those with jobs are cutting back expenses. A recent survey by IBM found that 59 percent of respondents earning $100,000 or more have made significant spending cuts because of the economy. These cutbacks in spending by the highest earners most certainly will not hasten a recovery,” he concluded.
* While the 2001 recession officially ended in November 2001, unemployment continued to climb, finally peaking in June 2003.
