Job compression in sectors ranging from corporate to transportation resulting in fewer homeowners moving up to bigger and better jobs, combined with a reluctance to take on higher-rate mortgages, has put the nation in a white-collar, middle-class, middle-management “recession,” according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
Dhawan said the thinning of middle-management ranks began during Covid lockdowns. “Businesses realized technology made it possible to run operations remotely without a large number of supervisors and reduced their ranks. Those jobs are not coming back.”
Frontline employees are a different matter. “Whether a corporation or a restaurant, no business will let go of their frontline employees. Businesses learned their lesson after cutting frontline employees during Covid when they found out how hard it was to recall employees when consumer demand returned,” the forecaster said. “This difficulty filling frontline positions had never been the case during prior recessions, which has now created a situation of ‘labor holding,’” Dhawan said.
“This isn’t a recession in the traditional definition because job creation is continuing in the healthcare, hospitality and construction sectors,” Dhawan said. “But that’s not balanced growth. During the so-called ‘Goldilocks economy’ of the late 1990s, two high-paying jobs were created for every one low-paying job. That is not the case now. High-paying job growth is completely stalled. The question is whether or not Federal Reserve rate cuts can spark a reversal.”
Not so easily, according to the forecaster.
“Gross domestic product (GDP) growth in the last quarter may look good on paper, but parsing the investment spending numbers tell a different story,” Dhawan said. “Investment growth during the second quarter came from specialized areas with one-time effects that were accounting…
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