U.S. white-collar sectors sustain output growth as hiring stalls

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U.S. white-collar output growth

Highlights

Employment across finance, insurance, information, and professional and business services is down about 2% since end-2022, while real output in those sectors has risen 16%.
Companies increasingly replace consultants, call centers, and back-office teams with software and IT firms, boosting output per worker and limiting new hires, partly via artificial intelligence.
Despite higher labor productivity, Bureau of Labor Statistics and McKinsey note gains are not unusually rapid and mainly affect individuals rather than overall institutional performance.

Productivity gains outpace hiring in key sectors

As reported by Business Insider, Burning Glass Institute chief economist Gad Levanon says employment across finance, insurance, information, and professional and business services is collectively down about 2% since the end of 2022, while real output in those sectors has risen 16%. He says the pattern breaks with historical norms and reflects a low-hire, low-fire labor market in which companies continue to meet demand with fewer workers.

Levanon says work once handled by consultants, contractors, call centers, and internal back-office teams is increasingly being delivered by software, cloud, and IT firms that generate more output per worker without adding much staff. He also says demand in white-collar fields still exists, but employers are able to satisfy it with leaner workforces.

Part of that shift may be linked to artificial intelligence, particularly in back-office and junior-level tasks where adoption is easier. Moody's Analytics senior director Dante DeAntonio says firms are pushing aggressively to find efficiency gains from AI, with younger workers and new graduates likely to face the earliest hiring pullbacks where employers see potential replacement value from automation.

Job market strain and limits of the AI explanation

Indeed Hiring Lab economist Cory Stahle says the divergence risks weakening the traditional connection between GDP growth and improving living standards for workers. He says strong economic expansion may no longer reliably translate into more jobs or a better quality of life, especially for people trying to enter or advance in white-collar careers.

Stahle also says job seekers should avoid overreacting to a difficult short-term cycle, arguing that careers are built over decades rather than a few years. At the same time, he says AI is only part of the explanation, noting that output per worker and productivity were already rising before tools such as ChatGPT came onto the scene.

That view is echoed by broader productivity data. Bureau of Labor Statistics figures show labor productivity is increasing, but not at an unusually rapid pace, while McKinsey North America chair Eric Kutcher says recent gains appear more visible at the individual level than across entire institutions.

Our earlier article on Meta’s AI monetization drive covered how the company is scaling up its Muse assistant and enterprise offerings to create new revenue streams beyond advertising. We also outlined Meta’s rising AI capital expenditures and why investors are watching whether those investments translate into durable cash flows—an important backdrop as AI adoption increasingly shows up in productivity gains across the economy.

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