Who's Really Taking The Brunt Of The Recession?Aaron Bernstein
For most of the past 50 years, Americans have seen a white-collar job as a buffer against the vicissitudes of the labor market. Factory workers might get laid off every time orders slumped, but managers and professionals knew that their skills were too valuable for such treatment. This belief has been badly shaken by the current recession, which most observers have perceived as having a distinctly white-collar cast.
The irony, however, is that although office employees continue to be nervous about layoffs, there is scant hard evidence that the conventional wisdom is true. "There were lots of well-publicized cuts of middle managers," says Tom Nardone, an economist at the Bureau of Labor Statistics (BLS). "But when you look at the figures, this recession hasn't hit white-collar workers harder than blue-collar ones." What's more, surveys by compensation consultants show that the hiring outlook for office workers during the next couple of months is better than it is for factory workers.
In fact, it seems clear that, as usual, blue-collar workers have borne the brunt of the downturn. Take employment. There are 1.2 million fewer blue-collar jobs today than there were when the recession started in July, 1990--a 3.8% decline. The number of desk jobs has fallen by 600,000 in the same period--a mere 0.8%. Narrow the focus to managers and professionals--excluding the technical and sales people whom the BLS lumps into its white-collar category--and you actually find 400,000 more such jobs today (chart).
A similar trend holds true for unemployment. The jobless rate for production workers hit 9% in September, up from 7.1% at the start of the downturn. White-collar unemployment, which historically tends to be lower, started at 3.2% and reached 4% last month. "White-collar unemployment never went over 4.2% during the recession, while the blue-collar rate never went below 7%," says Erica L. Groshen, an economist at the Federal Reserve Bank of Cleveland. She recently co-authored an article entitled "Is This Really a `White-Collar Recession'? " which concluded that it isn't.
So why does nearly everyone still think that it is? Groshen points out that the downturn began in the Northeast and hit hard in financial services. That left a strong early impression. In addition, while layoffs are front-page news, hiring usually isn't. But many employers hired more college grads this year than in 1989, according to Hanigan Consulting Group, a New York-based college-recruiting firm. Some examples: Schlumberger, Bechtel, Intel, and Dow Chemical.
Sometimes, the hirers are the same companies making headlines with layoffs. Take American Telephone & Telegraph Co. It has been closing plants and laying off workers for years. But so far in 1991, AT&T has hired 2,000 white-collar workers and laid off 817, including some who took early retirement. It has hired 6,000 nonmanagers but laid off or retired 6,000, too.
It isn't even clear that this slump has hurt more office workers than the last one did, in 1981-82. True, more office jobs were created then. White-collar employment grew by 739,000 jobs, or 1.4%, in the 13 months following the start of the last recession in July, 1981. But the white-collar jobless rate hit a higher peak then, 5.6%, vs. this downturn's 4.2%. The main difference: Blue-collar unemployment didn't go nearly as high this time around.
JOBS APLENTY. Now, hiring prospects are turning up for office workers. Some 19% of large companies plan to increase their white-collar ranks by the end of 1991, while 8% plan to reduce them, according to a survey by the Bureau of National Affairs (BNA), a private company based in Washington, D. C. By contrast, only 13% intend to expand their production and service staffs, and 14% say they will cut them. "The employment situation has always been better for white-collar employees, and it still is," says Mike Reidy, BNA's director of surveys.
The story is similar when it comes to pay. White-collar wage hikes have averaged more than 4% a year since 1988, according to the BLS. Blue-collar wages have never made it to that level. Next year, desk-sitters at large companies, which tend to pay better than average, are likely to get raises of 5.1%, according to a Hewitt Associates survey of 1,700 large employers. These companies plan to give hourly workers 4.7% raises. That's a typical differential between the two groups.
It's still possible that the white-collar crowd will fare worse than factory workers. Service companies such as banks and insurers continue to lay off workers. But until such cuts exceed hirings elsewhere, it will be difficult to argue that this downturn's color has been lighter than usual.
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