‘White collar’ jobs are down — but don’t blame AI yet, economists say

White-collar job growth in professional and business services has declined, with May seeing a -0.4% decrease, but economists attribute this to structural economic issues rather than AI disruption, as the technology is still in early stages and unable to fully replace human skills; an Indeed report found that most work skills are unlikely to be replaced by generative AI. While AI's current impact is limited, experts anticipate job transformation and the emergence of new roles related to AI implementation, though potential displacement of existing jobs remains a concern.

Analysis

The professional and business services sector, representative of white-collar employment, has experienced a contraction in job growth, declining by -0.4% in May following a -0.2% decrease in April, according to the Bureau of Labor Statistics. This trend contrasts with job creation in sectors such as healthcare, which added 62,000 jobs in May and accounted for nearly half of the overall job growth, alongside construction and manufacturing. Economists, including Alí Bustamante from the Roosevelt Institute and Cory Stahle from Indeed, attribute the decline in white-collar job openings primarily to prevailing structural economic issues rather than displacement by artificial intelligence. They argue that AI technology is still in its nascent stages, incapable of executing key skills without human intervention, a view supported by a 2024 Indeed report which found that approximately 68.7% of over 2,800 identified work skills are either 'very unlikely' or 'unlikely' to be replaced by generative AI. While immediate AI impact on job numbers is considered minimal, the technology is anticipated to transform the labor force significantly in the future. Indeed's February report noted a rise in consulting roles focused on implementing generative AI, with management consulting positions mentioning AI accounting for 12.4% of GenAI postings over the past year. Furthermore, a World Economic Forum report from January forecasts AI could create 170 million new jobs by 2030 (14% of current total employment) but also potentially displace 92 million existing roles (8% of current total employment), underscoring the transformative, albeit not immediate, nature of AI on the labor market.

Key Decisions for Investors

• Investors should recognize that the current softness in white-collar hiring is primarily linked to broader economic conditions rather than immediate AI-driven job displacement, necessitating a focus on macroeconomic indicators for sector-specific recovery.
• Consider long-term strategic allocations towards companies developing or effectively integrating AI, as the technology is poised for significant future labor market transformation, creating new roles and efficiencies, while remaining cognizant of sectors susceptible to eventual AI-related disruption.
• Monitor labor market data for shifts in sectoral strength, noting the current resilience and job growth in healthcare, construction, and manufacturing as potential areas of near-term investment focus or as indicators of differing economic cycle sensitivities compared to professional services.