When he started coughing last week, Andrew Kerr figured it was just a reaction to his marathon training. To be safe, the paralegal told his boss at a small east Tennessee law firm. But that got him barred from the office for 14 days, without pay.
As the coronavirus pandemic overturns the U.S. economy, the shock waves are being felt in industries well beyond the hardest-hit: travel, hospitality and restaurants. White-collar workers — tech, marketing and professional employees among them — are facing layoffs, pay cuts and furloughs as their companies sharply curtail operations or suspend them altogether.
“I didn’t think it was going to happen to me just because of where I worked,” Kerr, 29, said of his first substantial job as a civilian. “We’re going to have a ton of bills, and I have no idea how they’re going to get paid.”
The coronavirus pandemic has sent the United States hurtling toward recession with startling haste, as dozens of states and cities have taken drastic measures to battle the fast-spreading disease that has claimed more than 27,000 lives worldwide. People are sequestering themselves and nonessential businesses have shuttered as communities adapt to social distancing, the best defense against infection. But as last week’s record-shattering 3.3 million jobless claims indicate, the near-shutdown is taking a toll in almost every corner of the U.S. economy.
White-collar workers, who make up a greater share of the economy than ever before, are increasingly getting caught in the fallout.
“When I was talking to my parents at first, my dad said, ‘This is going to be a really big impact for service industry workers,” said Erica Newell, who was laid off this week from her job in client success at a Salt Lake City start-up. “But I’m seeing people that are not in the service industry, like people in tech and whatever, and those people are being hit really, really hard. So I think it’s safe to assume it’s everybody.”
Blue-collar jobs, which generally involve trade, manufacturing and labor, had once been the backbone of the nation’s economy. But the shift toward automation and a more service-based economy in recent years has caused many of those jobs to disappear while professional, or white-collar, jobs in tech, business management and consulting have grown.
White-collar workers in sales, business management, technology, professional and administrative jobs make up about 54 percent of the U.S. economy — about 80 million positions, according to a Washington Post analysis of Census Bureau data from 2018, the most recent year available.
“White-collar jobs are at an all-time high going into this crisis,” said Daniel Zhao, a senior economist at Glassdoor. “Everybody right now is focused on layoffs from restaurants and retail stores, but there really is this underlying risk affecting workers in every industry.”
Travel management company TripActions laid off 300 employees via Zoom, Protocol reported. New York real estate start-up Compass shed 15 percent of its workforce. Storied movie studio Twentieth Century Fox laid off 120 employees in Los Angeles.
“As you are aware, we are facing unprecedented times,” Roger Raimond, a managing partner at the New York law firm Robinson Brog Leinwand Greene Genovese & Gluck, told employees in a memo last week announcing layoffs. “Although we are all saddened by the reduction of our staff, the decisions were made in an effort to maintain the firm’s long term viability.”
Megan Doherty, 36, had been director of human resources at an 80-person advertising firm in New York until she was let go Monday. The week before, her employer had gone from offering reassurances that there was nothing to fear to telling her to work from home to eliminating her job.
“I don’t have a family situation where I can call my mom and say, ‘Can I get my rent covered for a few months?’ ” she said. “I’m usually sending them money.”
Doherty worries she won’t be able to pay for her antidepressants and thyroid medicine. She had four calls with recruiters Thursday. One was a scam, and another mentioned having laid off two people that day because work was at a “standstill.”
Uncertainty about how quickly things could return to normal is pushing some companies to take a wait-and-see approach, compensation and outplacement experts say, in what had been one of the tightest labor markets in history. Before the pandemic, the U.S. unemployment rate hovered at historic lows. In February, before the full force of the disruption hit, the U.S. economy had added 273,000 jobs. A 2019 survey from the National Federation of Independent Businesses found that 26 percent of small-business owners said finding qualified workers was their greatest challenge — a 46-year high.
“These departments that had been in emergency meetings about hiring have been in whiplash,” said Andy Challenger, senior vice president of Challenger, Gray & Christmas, an outplacement firm. “There’s a hesitancy to let people go when there’s a seed of optimism about a snapback in the economy.”
Concern about leaving people without health insurance in the middle of a public health crisis has prompted some companies to look for cutbacks short of layoffs. A survey of 812 employers by the human resources consultancy Willis Towers Watson about “cost containment considerations” found that about 17 percent of employers had already reduced or delayed merit increases or planned to do so, while 11 percent were freezing salaries or planning to do so.
Morgan Stanley and Salesforce have pledged not to lay off anyone in 2020, and Citigroup confirmed that it is suspending all layoffs. Timothy Ryan, the U.S. chairman of PwC, wrote on LinkedIn that the consulting giant has “adopted the principle that we will only consider laying off employees as a last resort.” A number of chief executives have said they will forgo salaries — though that is often a symbolic move, as base pay is typically only an element of executive pay packages — while others have slashed salaries among their top management.
Delta Air Lines CEO Ed Bastian will get no salary for six months and is having all company officers take a 50 percent pay cut through June 30; other managers are seeing 25 percent cuts. Marriott CEO Arne Sorenson said he would not take a salary for the rest of 2020 and the hotel chain’s executive team would get half-pay. Dick’s Sporting Goods said that its CEO and president would receive no salary, only benefits, effective March 29; the chief financial officer’s base salary was cut in half, while the base pay of other senior managers and salaried employees would be “temporarily reduced by graduated amounts,” the company said in a filing.
A few are making across-the-board salary cuts, often with graduated percentages that take more from higher earners. An email to Occidental Petroleum employees that was posted on TheLayoff.com said certain employees at the company would see their salaries reduced by as much as 30 percent. CEO Vicki Hollub’s salary would fall 81 percent, and other top executives’ salaries would see reductions of 68 percent, on average.
Carol Sladek, who leads the work-life consulting practice at Aon, has noticed that some employers are considering less extreme cost-cutting options, from offering voluntary unpaid time off programs to suspending or reducing the 401(k) match to tabling promotions, bonuses or raises. She’s also gotten more inquiries about furloughs — in which employees must take unpaid time off but often hold on to their health insurance — at all levels, including for high-income and professional employees.
Furloughs are somewhat common among unionized workforces, Sladek said, but “employers that would not generally think of this as an approach are looking at this. They’re hoping for this to be a more temporary measure.”
Lissa Surgeoner, a lawyer who worked part time in Rochester, N.Y., learned a week ago Friday that she would be furloughed for two months from her job doing mortgage and default servicing for banks. With a moratorium on foreclosures, there’s little work, she said, “and rightfully so.”
At the time, her most pressing concern was whether she and her husband (a full-time lawyer at the same firm) would be able to continue making their student loan payments. She still has $100,000 in law school debt and was considering whether she might need to put her loans into forbearance. They also spent $30,000 in savings to conceive their children, ages 3 and 1, through in vitro fertilization and other reproductive assistance. They applied for a zero-interest credit card, to help out if things worsened.
On Friday, they did: Her husband was furloughed for two months, too.