In the last year, the narrative around the job market has been relentlessly negative, with countless professionals lamenting the difficulty in finding suitable positions. Despite their efforts—some applying to hundreds of opportunities—they encounter scarce callbacks, painting a picture of a severely constrained hiring landscape.
This stands in stark contrast to the broader economic indicators: unemployment is historically low, the economy consistently adds a significant number of jobs each month, and wage growth outpaces inflation. This paradox between perceived and actual job market health becomes clearer when considering recent insights from Vanguard’s employment report.
Vanguard, a leading investment-management firm, leverages its extensive 401(k) plan data to assess national hiring rates segmented by income. Their findings depict a divided job market: robust hiring among blue-collar roles and a significant slowdown in white-collar sectors. Specifically, those earning under $55,000 annually are experiencing hiring rates above pre-pandemic levels at 1.5%. Conversely, for individuals with salaries exceeding $96,000, the hiring rate has plummeted to a mere 0.5%, a significant drop from its mid-2022 peak and the lowest since 2014. This downturn is particularly pronounced among sectors like technology and finance, which typically employ higher-earning professionals.
Several factors could be influencing this trend. There may be fewer vacancies as fewer employees in corporate positions are leaving their jobs, leading to reduced hiring needs. Additionally, with rising concerns about economic stability, companies are likely tightening budgets, prioritizing cost reduction which often results in decreased hiring of higher-wage, white-collar professionals. Fiona Greig, Vanguard’s global head of investor research and policy, suggests that in tight budget scenarios, companies find greater cost savings by reducing positions at higher salary levels.
Despite these challenges, the impact on white-collar workers in the current economic environment might seem minimal. With a low unemployment rate among college-educated individuals and a below-average layoff rate, the majority of white-collar professionals remain employed. However, this doesn’t account for those who are dissatisfied with their current roles but feel compelled to stay due to the limited job openings, leading to what has been termed the "Big Stay" or a "trapped in place" economy. This situation erodes the autonomy professionals once enjoyed during the Great Resignation, where the abundant job opportunities offered them leverage against unfavorable working conditions.
This ongoing shift has sparked what some refer to as a "vibecession," a term describing the sensation of a recession based solely on the mood and sentiment of the workforce, despite positive economic indicators. This sentiment is especially prevalent among the higher echelons of the job market—those with advanced degrees and substantial professional experience—who are now seeing a tightening in opportunities. As advancements in artificial intelligence begin to automate more complex tasks traditionally handled by highly skilled workers, this trend may continue, exacerbating the disparity in job security and satisfaction between higher and lower income brackets.
This reversal of fortunes, where high earners are facing more significant employment challenges while lower-income workers see stability or growth, is a deviation from the norm that has characterized the past few decades. This has led to a collective difficulty in reconciling the current state of the job market with historical trends, as noted by Guy Berger, director of economic research at the Burning Glass Institute. Without a resolution, this disconnect is likely to foster increasing dissatisfaction and declining morale among America’s white-collar professionals, potentially leading to broader economic and social implications if it persists.
