The Financial Times reported this weekend that a “white-collar recession” is emerging in the United States, suggesting that a decisive shift in the structure of the US economy is now being seen.
For decades, economic insecurity was concentrated among blue-collar workers in manufacturing, logistics, and the retail sector. These were the people displaced first by offshoring, then by automation, and more recently by the gig economy and so-called platform economics.
The professional and managerial classes, by contrast, were told they were the winners of the system. They were sold the promise that digital skills, higher education, and corporate employment would insulate them from the volatility of the market. The myth was that the middle classes were immune to the challenges posed by the modern economy. That story is now unravelling.
First, the numbers tell their own story. In just the past week, Amazon, Paramount, UPS and Target have announced a combined 31,800 white-collar job cuts. Amazon alone is removing 14,000 roles, explicitly saying it must become “leaner” to capitalise on artificial intelligence. Across 2025, US companies have announced almost one million redundancies, the highest total since the pandemic, while hiring plans are at their lowest since 2009.
At the same time, GDP growth has swung wildly, from contraction in the first quarter to 3.8 per cent annualised growth in the second. Poor data and wild responses to Trump's oscillating tariff policy might have contributed to that swing, but the suggestion is also being made that the volatility reflects what many economists refuse to admit, which is that the system is not stabilising and is instead oscillating between short-term stimulus and chronic weakness.
Second, this is not a temporary correction. It is structural. AI is now being used to justify the redundancy of knowledge workers in exactly the way globalisation was once used to justify the redundancy of factory workers. Shopify's CEO has, for example, told staff they must prove why AI cannot do their work before requesting new resources. This is not innovation for the public good. It is cost-cutting dressed up as progress. When Microsoft, Intel, and BT are sacking staff while their profits rise, the logic is not technological advancement but shareholder extraction.
Third, government policy is amplifying the pain. President Trump's tariff regime and his immigration clampdown are raising costs and tightening labour supply in contradictory ways. Companies are responding by cutting white-collar staff wherever they can to offset tariff impacts. In contrast, while blue-collar recruitment in construction and manufacturing is apparently rising because low-wage migrant labour is no longer available. The result is a labour market that is neither balanced nor resilient, and one in which inflationary pressure comes not from wage demands but from supply constraints created by bad and unpredictable policy.
Fourth, the Federal Reserve's response remains entirely reactive. Jay Powell has said the Fed is watching these layoffs closely, as if they were an external event rather than the consequence of both the monetary policy it has pursued and the fiscal policy Trump is pursuing. By keeping interest rates high to suppress wage growth, as still seems to be Fed policy, it has encouraged companies to find supposed efficiencies in sacking people and automating roles. The data show the cost in terms of weakening recruitment, ever-more precarious employment, and a narrowing base of consumer demand, which only increases the economic instability in the USA.
So what does this tell us? Very obviously, the implication is that the neoliberal model of growth through corporate concentration, financial engineering, and technological displacement has reached its limits. AI is not creating new markets or opportunities for human development. It is, instead, being deployed as a weapon of labour suppression. The supposed white-collar elite is discovering what blue-collar workers learned long ago, which is that under this form of capitalism, everyone is expendable.
The apparent onset of this whole-collar recession does, however, mark something deeper than a new round of redundancies. It is also signalling the breakdown of the old social contract between business, labour and the state. The promise that education and effort would guarantee stability is collapsing, and the state, trapped as it is in its own austerity dogmas and determined decline, is not stepping in to rebuild security.
What should be done? There are a number of possibilities:
- First, the state's responsibility for delivering fuel employment should be reasserted. Governments that issue their own currencies can and should act as employers of last resort. Full employment should again be a central policy goal.
- Second, we need to redefine productivity. Investment in AI should be directed towards reducing ecological impact and improving public service delivery, rather than creating short-term corporate profit.
- Third, countries such as the USA should be taxing extraction and not work. Income and gains from wealth derived from exploitation are lowly taxed, whilst employee vulnerability is being increased, along with income precarity.
- Fourth, we need a politics of care. People must come before algorithms. The purpose of an economy is to let everyone live, work and care within the limits of the real world and not to serve the quarterly expectations of shareholders.
If even the white-collar workforce is now “holding its breath and trying not to pass out,” as one economist told the FT, then the crisis of neoliberalism is complete. What comes next must be a politics that recognises that work is not a cost to be cut, but a relationship to be sustained, and that care, not capital, is the foundation of any functioning economy.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
Although I find AI useful as a software developer I do feel it is being somewhat oversold. Of course as usual workers pay the price.
https://www.theregister.com/2025/10/29/forrester_ai_rehiring/
I think this pattern will repeat in the Uk, if it hasnt already.
Panaroma has a potentially interesting episode on tomorrow that may have a slight link to this piece. We shall see.
Thank you, Edward.
It has started here.
Richard. It has come to be that the first thing I do in the morning is to look at your blog to see what you have to say. I have read this and your piece on the coming financial crash this morning, both of which are outstanding for their clarity in conveying understanding of the crisis we are in. I think many people here are beginning to fear a wave of white collar unemployment caused by the introduction of AI. I hope that when the crises do hit, as seems inevitable, that we do actually grasp the opportunity offered to build a better economy and society on the back of them, as we should have done in 2008. Instead vast sums of money have been spent trying to cling to an old system which no longer functions. It seems to me that ,AI not withstanding, there will be no actual shortage of work that needs doing. Workers in the care sector, such as old age care, hospitals, schools are underpaid and overburdened, because what they do is not sufficiently valued. There is no shortage of work, just a shortage of funding for that work. Somehow the profits from the “productivity gains” caused by AI have to be captured and channelled into work which really can be called productive- caring for other people. They can’t be allowed to just fund bigger and better mansions and yachts for CEOs. A shorter working week would also leave people freer to do more of their own caring and a shift to taxing wealth more than income has to be on the cards, if only because the more people lose their jobs the fewer people there will be earning enough to pay income tax. So you are bang on the money with your “politics of care” idea as a solution to the crisis. Hats off to you.
Thanks
Noted
What Sheila said.
Thank you
Gosh, I too am like Shelia – I wake up and first thing I do is read the bloke.
Anyway, superb post, totally accurate of what is happening.
My very big concern – with thr tech overlords share in their spoils???
I honestly believed – foolishly? That we are worked for the greater good, as a civilisation, a species to progess ourselves in health and wealth – we are part of the same thing, no?
What we have, and it must be the worst element of the human ego, is greed, pulling the ladder up – on everyone.
I dont get it. We need to be allocentric, not egocentric.
We will not survive if we do not collaborative and co-operate together.
I wake up early (5.45 today) and write the blog.
An uncomfortable reality in my view is that many white collar jobs are already what David Graeber described as “BS jobs”. Jobs that don’t make much difference if they were done or not. I’m unsure what the real impact of AI automating these jobs will be.
Last week – dinner with two very bright people in their early 30s/40s. Engineers/scientists. Their view: A.I. will destroy loads of jobs, get a craft skill (plumber/electrician/etc). Looking after people (which if you do it properly will require some level of medical skill) – ditto. The sort of investment the gov could/should make would deliver more skilled/craft jobs.
On a related note: this afternoon, I will continue work making an oak/ash/cedar chest of drawers for bed linen. I have that skill because I learnt it over 5 years @ school up to the age of 16. I’m not bragging but making an observation: education needs to cover both the development of minds (how to think) and hands (how to make). The state has an important role to play in this area – not helped by the privatisation (academies WTF?) .
I still have a coffee table I made at 14.
I worked on a model loco for several hours yesterday. Very relaxing.
There are many white-collar roles that I think we should lose involved in Private Equity, Financial Engineering, etc. These roles and the executives running these businesses (and most other commercial organisations) are simply focused on wealth extraction to benefit shareholders and themselves. They – despite all sorts of Mission, Vision and Value statements – have little or no interest in their employees. The simple approach is to add ‘sizzle to the steak’ or, more plainly, sell that somehow they have added value by cobbling together a couple of acquisitions, gained efficiencies, have created ‘quality earnings’, etc. The narratives are taken from the neoliberal playbook. The consequences are the same….greater and greater wealth extraction in the interests of the already wealthy.
My concern regarding AI is not predominantly about the white-collar job losses but rather the environmental consequences and, ultimately, social consequences. The amount of electricity required is horrendous. Couple this with the vast demand on water usage (for cooling) and we have an environmental disaster in the making. And, the industry itself doesn’t need many people so it’s not as if we are creating that many jobs…quite the opposite.
I do agree that it is time for the government to begin to realise and put workable plans in place for 100% (or close to) employment. Nonetheless, I agree with Mike Parr’s premise about learning a ‘trade’. Switzerland, Germany, etc., recognise the value of this and begin to ‘stream’ children at school towards valuable, worthwhile occupations that are not necessarily academic.
I too did woodwork, metalwork and techie-drawing in my first years at secondary. They have always proved invaluable (particularly as a uni-educated engineer). I am away to select wood / fallen trees for kuksa and spoon carving, making a natural bee-hive for next spring and to build a new table for use outdoors. We need both trades and white-collar workers. Fundamentally, we need an economic and environmental approach that values both and, more importantly, values social benefits, care, humanity, communities, wellbeing, health, education and training for all….not the few.
Much to agree with
I don’t doubt that the US economy is in peril… or that white collar jobs are in danger. However, given all the investment in AI by Amazon (and others) are they just “talking their book” when they announce these job cuts? 14,000 out of 350,000 is not huge and could be covered by natural churn.
Both Bismarck & Stolypin saw the political value of a growing ‘middle class’ and I will use it in its US meaning ie economically secure as a bulwark against revolution.
Stolypin wasnt supported however and ended up being assassinated by those who saw the risks to them in his policies – ie the revolutionaries and it didnt end well in Russia.
What I might wonder will be the political impact of adding a disaffected middle class to a disaffected working class with a political system that rules out change?
You can see the political impact already with a shift away from the mainstream parties to the Greens and Reform.
Why oh why does the western media, business elites harp on and on about how AI ( or any other innovative technology) is going to make the rich few even richer leaving the majority of western populations jobless and very much poorer.
Why is the narrative not, how do we use this technology to actually enhance and improve the lives of the majority?
MIT’s recent report on how US businesses are using AI shows very little success in implementation.
Why the sackings by the big tech companies? Purely to prop up, push up the share prices. Thereby increasing wealth or rather the illusion of wealth by using share prices as the criteria.
Expect re-hirings at much lower salaries as contractors.
What I find astonishing is the vacuity of thinking about people.
This omission is the biggest clue as to who is driving AI and always has been. It’s simple. You cut, get rid of wages, pensions, other benefits and your profits will hit nirvana levels – it will all accrue to you because algorithms and robots don’t need pensions or healthcare. Capital, corporations love this.
That is it for silicon valley. What happens to the human beings is not their concern. That’s a ‘political issue’. ‘Nothing to do with me guys! Even though I’ve been lobbying you and give you political contributions and getting you to turn a blind eye to spying on my customers’.
And what have the politicians been doing exactly? Well, they’ve not been telling us not to have kids? Too honest for them. Or not to bother spending on expensive further education for our kids. Because the jobs ain’t there.
No They have left us to market forces instead of thinking about the future. And have only ‘hinted’ that they don’t want us to produce more people by ‘nudging us’ instead using the most cruel ways possible to change our reproductive behaviour – induced poverty – the child cap on benefits, the bedroom tax, austerity, inflation – My God – even dangerously under funding maternity wards in our hospitals (the lowest of the low in my opinion).
Any sort of caring job is under-valued and taken for granted – women will know a lot about that. So I’m all for a society based on care.
David Graeber in ‘Bullshit Jobs’ detected a lot of jealousy and resentment towards jobs that were seen socially useful – I too think that that is why there is a war on caring, ‘woke’ etc., but for different reasons.
Because caring also does not work when you are trying to change society with such underhand methods as austerity/induced poverty. Better to have people at each other’s throats than caring about each other, fighting each other for less and less.
But this tactic is very dangerous. This is why fascism is growing as anger grows. The rich have seen this and is why some of them actively participate in promoting fascism. Many capricious politicians too. We are at a crucial fork in the road.
Thank you, Richard.
It’s the same in the City, Whitehall and local government.
The decimation that began mining and manufacturing in the 1980s has moved up the chain.
Might this be yet another example of the currently fashionable and powerful brand of economics, which is fundamentally parasitical?
It feeds off its host society, without concern for the sustainable welfare of that which facilitates the incomes, power and status of the promoters of yesterday’s and today’s economics/grabonomics.
Tomorrow?
I found your parasite metaphor thought provoking. I poked and prodded ChatGPT to expand it to:
In this metaphor, society and the planet together form the host — the living system that provides the resources, labour, and stability on which any economy depends. A healthy host enables steady, long-term prosperity, just as a robust organism sustains its internal ecosystem. Capitalism, however, particularly in its neoliberal form, can behave like a parasite when profit extraction outpaces renewal. When markets prioritise short-term gains over social welfare or environmental sustainability, they consume the host’s vital reserves — natural capital, social trust, and public well-being — faster than they can be replenished. Earlier forms of capitalism, though often harsh, tended to reinvest in local communities and infrastructure, keeping the host alive. But deregulated, globalised capitalism has evolved toward greater “virulence”: exploiting labour, eroding social safety nets, and degrading ecosystems, much as a pathogen overwhelms its host’s defences.
As in biology, the long-term outcome depends on adaptation. An unsustainably virulent system risks destroying the very foundations it relies upon, leading to ecological collapse or social breakdown — the death of the host. Alternatively, capitalism could mutate into a new form, or co-evolve into a more symbiotic relationship, aligning profit with planetary and social well-being. This would mean prioritising regeneration over extraction, fairness over concentration, and resilience over speed — a shift from parasitism to mutualism. Evolutionary success, in both biology and economics, ultimately depends not on consuming the host but on helping it thrive.
My Question: Can we adapt … or are we destined to kill our host?
If you involved any sort of voluntary organisation you will know how hard it is to find people with the time to support what you are doing.
Way back when computers and word processors started to appear in the workplace, I was hoping that the undoubted time that would be saved would be given back to the workers previously doing that work manually.
In shorthand, the 40 hour working week would do down to maybe 30 hours. Same pay for same work done.
I had a vision of many more hours of “leisure” for everyone, allowing, among other things, more voluntary work .
In practice, employers took that time and either reduced the number of people doing the jobs, or, in many cases, piling that work onto someone else.
How many “executives” now have much “clerical” work piled on to them? I see people struggling to get this sort of work done on top of what used to be their only job.
It will be the same with AI I suspect.
We could choose to move to many more people working 25-30 hours a week, rather than fewer doing 40-60 hours a week.
But I doubt we will.
That is how they extract ever more value from us.