At Quartz, Catherine Baab reports that the “white-collar contraction” is continuing. Job losses are concentrated in sectors most closely tied to business confidence and corporate investment: professional and business services shed 29,000 jobs, information services lost 12,000, and manufacturing employment also declined. These losses were offset by gains in education, healthcare, leisure, and hospitality—sectors that are largely insulated from economic cycles because demand remains relatively steady regardless of growth conditions. Employment also fell noticeably on the West Coast, particularly in California, Oregon, and Washington, a further signal of retrenchment in tech-, consulting-, and media-heavy job markets.
Healthcare alone accounts for nearly two-thirds of the offset. That is not a market-driven expansion but one sustained by subsidies, third-party payment systems, and licensing regimes. In other words, the growth is occurring in protected, regulated human-services sectors while contraction is concentrated in the very white-collar, credentialed, “knowledge” fields that were supposed to define the modern economy.
This is not just a cyclical adjustment. It is beginning to look like a structural shift. The tech–consulting–media complex that underwrote the last quarter-century of professional-class expansion was built on assumptions of perpetual growth, cheap capital, and human cognitive scarcity. All three are now being challenged. The so-called “knowledge economy” is showing signs of having been a historical interlude rather than a permanent settlement.
Talking with daughter who is out of work (programmer) the sense of those in her position is that companies are not hiring or are letting people go in anticipation of AI. There is also a sense that companies overtired a bit when labor market was tight during covid. The way I would interpret this is that the knowledge sector is going to persist and maybe even grow but it’s going to do it with fewer people.
On health care it’s mostly the demographics. More old people and those old people are getting older.
Steve
From where I sit, I believe the lackluster market for software engineers is more due to offshoring then AI. Far more positions were transferred overseas then actual replacement by “AI”.
An anecdotal observation is I think this wave of offshoring is nearing an end; and companies will need to increase investment (include investment in human capital) to shield against disruption from newcomers via AI — the risk which will become very obvious as 2026 progresses. My company (which I think is pretty forward thinking) moderated near term expectations so they can increase investment. I don’t think my company will be the last.
The statistics don’t actually support that. For example, Tata Consultancy Services is trimming employees, too.
Engineers either work in manufacturing or infrastructure. So, engineering work goes wherever the factories and cities are. Right now, that work is in China, in particular, or the Global South, in general, which latter is financed by China. American engineers can expect further job losses and stagnant incomes.
Here we are in the run-up to a major international war, and the MIC is refusing to invest in military manufacturing capacity. Sec. Hegseth has just condemned Raytheon for their refusal to increase missile production. (Our war stocks are seriously depleted.) They are spending their profits on stock buy-backs rather than expanding their production capacity.
China’s great advantage in the global competition for dominance is the Communist Party of China, which by policy hangs people like those who run Raytheon. Our Ruling Class continues its policy of bleeding America of its wealth and its capacity to create wealth. They have committed us to a future of decay and stagnation.
which was to be expected with our furnishing missiles for Ukraine.