White collar stagnation (revisited)

Bonus season is back, it's just not evenly distributed

• the upwardly mobile would love to catch a break

• a higher unemployed share (that’s still quite low)

• bonus season is back, but it’s not evenly distributed

• the ongoing ‘back to normal’ paradox of two simultaneous expansions

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White collar stagnation (revisited)

Random Walk’s theory of White Collar Stagnation is pretty straightforward.

When the steady stream of cheap capital ended, the people who orchestrate the flow of capital would feel the impact to their compensation, more so than others.

• That includes ‘Finance Bros,’ yes, but also

• their service providers (e.g. lawyers, consultants),

• management for the companies who spend all the capital, and

• some of the more expensive talent (e.g. software engineers).¹

Those are generally considered white collar sorts of people, and now that their cheap capital tailwind ended, white collars have “stagnated.”²

That stands in contrast with the acceleration of a blue collar tailwind: national aging and the “labor shortage.”

• With more people consuming healthcare (paid for by Uncle Sam), demand for a shrinking pool of lower-end service workers increases.

• Plus, subsidies for manufacturing (and real industrial tailwinds) likewise create a premium for $ervices & Trade$.

Now, because you can’t have your wages and eat them too, inflation has caught up to blue collar wage gains (for the most part), but the point stands that lower-income workers have been the relative winners of the post-pandemic world.³

A higher share of unemployed

Again, nothing catastrophic—far from it—but still a meaningful reshuffling of the hierarchy.

Here’s another nifty little chart to illustrate the point: