Has the Decline of Knowledge Work Begun?

The unemployment rate for college graduates has risen faster than for other workers over the past few years. How worried should they be?

When Starbucks announced last month that it was laying off more than 1,000 corporate employees, it highlighted a disturbing trend for white-collar workers: Over the past few years, they have seen a steeper rise in unemployment than other groups, and slower wage growth.

It also added fuel to a debate that has preoccupied economists for much of that time: Are the recent job losses merely a temporary development? Or do they signal something more ominous and irreversible?

After sitting below 4 percent for more than two years, the overall unemployment rate has topped that threshold since May.

Economists say that the job market remains strong by historical standards and that much of the recent weakening appears connected to the economic impact of the pandemic. Companies hired aggressively amid surging demand, then shifted to layoffs once the Federal Reserve began raising interest rates. Many of these companies have sought to make their operations leaner under pressure from investors.

But amid rapid advances in artificial intelligence and President Trump’s targeting of federal agencies, which disproportionately support white-collar jobs, some wonder if a permanent decline for knowledge work has begun.

“We’re seeing a meaningful transition in the way work is done in the white-collar world,” said Carl Tannenbaum, the chief economist of Northern Trust. “I tell people a wave is coming.”