America's richcession could hit high-earning white collar workers the hardest

Most recessions are hardest on the poor, and easiest on the rich, but the current economic slowdown in the US appears to be pointing towards the opposite trend, experts say.

Dubbed a 'richcession' by the Wall Street Journal, and a 'white collar recession' by others, the economy is flashing signs that 2023 could be a difficult year for high earners with cushy office jobs.

Wages for the lowest earners are rising faster than for their high-earning counterparts, and white collar workers have faced steep layoffs, with the tech industry alone cutting more than 150,000 workers last year. 

Companies such as Meta, Amazon, and Twitter, where the median worker made $232,626 in 2021, have all cut jobs by the thousands in recent months.

The economy is flashing signs that 2023 could be a difficult year for high earners with white-collar office jobs, dubbed a potential 'richcession' (file photo)

Companies such as Meta, Amazon, and Twitter have all cut white-collar jobs by the thousands in recent months, while demand for blue-collar workers is strong in many sectors

Meanwhile, reversing trends from the depths of the pandemic, blue collar workers are now in hot demand, and have seen their wages rise at a faster pace those of top earners.

In November, wages for the bottom quarter of earners were up 7.4 percent from a year ago, outpacing inflation, while wages for the top quarter rose just 4.8 percent.

Although top earners started off from a much higher base, the trend illustrates how the job market has shifted to favor low-income workers, who remain sought after by employers. 

In November, job openings in the US declined slightly to 10.458 million, which represented 1.74 jobs for every unemployed person in the country. 

Manufacturing job openings increased by 57,000 on the month, while retail trade vacancies rose by 37,000.

Meanwhile, job openings dropped 75,000 in finance and insurance, one of the industries hardest hit by higher borrowing costs, and declined 15,000 in real estate.

In November, wages for the bottom quarter of wage earners were up 7.4 percent from a year ago, outpacing inflation, while wages for the top quarter rose just 4.8 percent

Though most economists project a recession in the coming year, one is not assured. 

But even if the economy avoids a downturn and scrapes by with sluggish growth, current trends point to a tougher time for high earners than their blue collar counterparts.

PepsiCo, Walmart, Gap, Zillow, Ford and Stanley Black & Decker have recently cut their white collar workforce, but nowhere have the cuts been steeper than in the tech industry.

Tech-driven firms cut more than 150,000 workers last year, according to a recently released analysis from Layoffs.fyi, which tracks firings in real time through information gleaned in media and company releases.

The firm found that the technology sector is now among those with the largest numbers of job cuts, with rates increasingly rapidly over the past few months.

The worst offenders, the website said, were once-untouchable tech stalwarts Facebook parent Meta and Amazon, which both suffered heavy loses in 2022 and engaged in firings to rescue their bottom lines.

The concerning numbers were laid bare in a recently released analysis from Layoffs.fyi, which tracks the firing in real time from information gleaned in media reports and company releases

The worst offenders , the website discerned, were once-untouchable tech stalwarts Facebook parent Meta and Amazon, which both suffered heavy loses in 2022 - and subsequently laid off roughly 11,000 and 10,000 staffers, respectively

It's a stark reversal from the early days of the COVID-19 pandemic, when tech workers largely went remote and were spared the sweeping layoffs that hit the service industry. 

Now airlines, hotels, restaurants and bars are desperate for workers as the leisure and hospitality industry continues to recover from the pandemic. 

The trends are leading to fears the US is racing towards a 'white collar recession'.

In normal downturns, blue collar employees tend to lose their jobs first, but now office workers are facing mass culls.

A report by KPMG said more than half of US chief executives are considering job cuts in the next six months.

Dave Gilbertson, VP at software maker UKG, told the Financial Times: 'I wouldn't at all be surprised if white-collar workers do end up being the first to be let go in a recession scenario. 

'If you look at where the lay-offs have been already, it really hasn't driven to the blue-collar markets yet. That is because there's such a severe labor shortage in these blue-collar roles.'