A White-Collar Recession

Not so long ago, it was common for white-collar workers to spend their entire career with one company, typically celebrating their 35th anniversary with a gold retirement watch. That arrangement provided stability for the employee and for the economy, thanks to consumption by highly paid individuals.

Corporate downsizing has been prevalent for some decades now, but never more so than during the current recession. And just as the once-stable ranks of white-color and professional workers benefited from the economy, their wobbly foundation now works against it, according to one employment expert. An analysis of Bureau of Labor Statistics data released today by outplacement firm Challenger Gray & Christmas found that 46 percent of the 5.5 million Americans who had been out of work 27 weeks or more in September had previously held positions in management, professional and related occupations, or sales and office occupations. Those 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 firm. "Prolonged joblessness among these workers will be a definite drag on the economy," says John A. Challenger, CEO of the firm.

Nearly 6 million private-sector jobs have been cut since June 2008, and the national unemployment rate has hit 9.8 percent. (To see how the top 100 U.S. metro areas have been hit by private-sector job losses, click here.) Since the onset of the recession, the ranks of unemployed white-collar workers has tripled to 3.49 million, or nearly 60 percent of the total, according to Challenger. Their personal misfortune is bound to ripple through the economy, because they account for about 75 percent of total expenditures by all wage and salary workers, or $3.2 trillion out of $4.3 trillion in 2007.

"No matter how much you earned in your previous position or how much money you saved, when you are jobless going on 27 weeks, it is necessary to drastically reduce spending. Even those with jobs are cutting back expenses," Challenger says.