The white-collar jobs wipeout shows no sign of slowing
Beneath headline employment growth, a new ADP jobs report shows major contraction in the white-collar labor market, especially in tech and consulting
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Private employers added 41,000 jobs in December, according to ADP’s latest data release on Wednesday, a modest rebound from November’s losses. But beneath the headline growth, the composition of hiring portrayed a far more fragile — and even frightening — picture of the underlying economy.
Here's what to know.
An ugly white-collar job contraction
Job losses were heavily concentrated in sectors most closely tied to business confidence and corporate investment. Professional and business services lost 29,000 jobs, while information services lost 12,000, wiping out the entire net gain on their own. Manufacturing employment also fell.
These declines were offset by gains in education and health services, leisure, and hospitality — sectors that are, generally speaking, much more insulated from economic cycles because demand remains relatively steady regardless of growth conditions.
In other words, hiring didn’t disappear. But it only looked strong in areas driven by necessity and inelastic demand, rather than true economic expansion.
The geographic breakdown reinforces the message
Employment on the West Coast fell noticeably, particularly in the Pacific region — think California, Oregon, and Washington state, with their tech-heavy cities. That’s another powerful signal of a continuing pullback in tech-, consulting- and media-heavy job markets.
Employer behavior offered another clue, too. Large companies added only 2,000 jobs in December, while small and mid-sized businesses accounted for essentially all the net growth, suggesting that corporate America is acting cautiously no matter how stable headline conditions may appear. That’s not good news for white-collar job seekers or for current employees, either.
“Small establishments recovered from November job losses with positive end-of-year hiring, even as large employers pulled back,” said Nela Richardson, ADP's chief economist.
An echo of Jerome Powell’s warning?
The sharp divergence in the ADP data echoes Federal Reserve Chair Jerome Powell’s warning last month that official hiring data may be overstating job creation altogether — raising the possibility that what appears to be modest growth is, in reality, something more of a quiet contraction.
For investors, the report likely strengthens the case that the job market is behaving in a way that could lead to future Fed interest rate cuts. In fact, as of Wednesday morning, it would appear to add to mounting evidence that official data is catching up to a serious sectoral slowdown — one that many workers, especially those in "knowledge economy" professions, have already been living through for some time now.