OtherGround Forums A 'wave' of layoffs is coming: white-collar jobs

7/11/20 8:23 PM
1/13/04
Posts: 16030

https://finance.yahoo.com/news/jeffrey-gundlach-sees-unemployment-wave-hitting-white-collar-jobs-224443437.html

Gundlach: A 'wave' of layoffs is coming for $100,000/year white-collar jobs

Julia La Roche

Correspondent

Yahoo FinanceJune 9, 2020

Billionaire bond investor Jeffrey Gundlach, the CEO of $135 billion DoubleLine Capital, sees the potential for a "wave of more higher-end unemployment' hitting white-collar workers making more than $100,000 per year as employers increasingly question the value these employees bring.

In 11 weeks, more than 42 million Americans filed for unemployment insurance as the COVID-19 pandemic wrecked the economy. The bulk of these job losses hit lower-income households the hardest.

"A lot of times it's not the earthquake, it's the fire," Gundlach said on a webcast for the DoubleLine Total Return Bond Fund (DBLTX), later adding that he could "easily see layoffs in various industries" affecting higher earners.

Gundlach, who runs the Los Angeles-based bond investment firm, explained that one of the outcomes of remote work is it reveals who produces and who doesn't.

"What people may have learned for white-collar services jobs, in particular, during the work-from-home lockdown situation, at least in my perspective — I've talked to a lot of my peers on this —  I kind of learned who was really doing the work and who was not really doing as much work as it looked like on paper that they might have been doing," Gundlach said.

He's witnessed this at DoubleLine, where people running "certain groups" haven't been as responsive, while the more junior members on their team have stepped up.

"I wonder where they've gone. It seems like the people who work for them are constantly in contact with me doing all this work and some of the supervisory, middle management people I'm starting to wonder if I really need them. And this is just a one sample thing," he added.

The 60-year-old investor said he's hearing similar things from his peers.

"Everybody feels this same way. They feel like this is sort of like Warren Buffett's thing, 'When the tide goes out, you find out who is swimming naked.' I mean, when you actually have to respond quickly, and people below middle management are actually doing the responding, they start to get credit for the work.“

As Barron's Matthew Klein points out, the latest jobs report for May is showing signs of the virus' impact hitting these white-collar jobs.

Deflationary

One of the consequences of the lockdowns is that it's "short-term deflationary." He believes commercial real estate prices will go down as companies shift from an office to work-from-home permanently.

 

7/11/20 8:23 PM
1/13/04
Posts: 16031

He also makes a case that it's wage deflationary.

"If a $100,000 white-collar worker gets laid off, I think that they just stare in the mirror in the morning with just fear in their eyes looking at their own eyes because what are you going to do?” he said. “A lot of people don't have any savings, not enough savings. If a certain swath of the employment-population has a significant layoff in the echo of the pandemic, which I think is coming, then they're probably going to be looking for a job and there won't be many openings relative to the unemployment pool with that type of a skillset.”

“Obviously, I think these people will take another job with a pay cut,” he continued. “If you're making $100,000 and you're staring at the abyss of no income and you have de minimus savings, especially if you have a family to feed, I think that $75,000 similar job would look pretty attractive even as an interim step." 

What's more, the shift to permanent work-from-home is deflationary too if someone can do the same job in a lower-cost environment like Boise, Idaho compared to San Francisco.

Julia La Roche is a Correspondent at Yahoo Finance. Follow her on Twitter

7/11/20 8:29 PM
12/31/10
Posts: 11773

That is coming for a while now. As companies make less money investors/boards will demand spending reduction and that translates into firings.

 

And for lower wages well I guess the only solution is to abolish the borders. That will push the wages up riiiight

Edited: 7/11/20 8:29 PM
5/3/01
Posts: 29989

there'll be some of this to be sure. however, no ceo has ever felt like they're paying little enough for middle management. when executives at large companies have to get things done, they incentivize group leaders with bonuses and title promotions, who then use their position for protectionism.

it's interesting he brings up san fran to boise, though. i actually know a couple who operated a company based in SF who relocated themselves to boise to work remotely. the owner of the company immediately reduced their pay. of course, they thought they'd just live in boise making silicon valley money and fly back as needed with a small portion of the profits.

nope.

7/11/20 8:31 PM
3/21/12
Posts: 13946
lol @ him calling out his own managers
7/11/20 8:31 PM
1/13/04
Posts: 16032
luctaro - 

That is coming for a while now. As companies make less money investors/boards will demand spending reduction and that translates into firings.

 

And for lower wages well I guess the only solution is to abolish the borders. That will push the wages up riiiight


Do you think this is somewhat like 2008/2009 or not as bad / good?

7/11/20 8:33 PM
3/15/06
Posts: 24056

It's the perfect storm for this to happen. In addition to the points they made, the other one is that companies tend to lay off the lower payscale people first, not because it's a good old boys club looking out for their kind, but because they fear being able to quickly replacing that caliber of employee over the lower skilled ones when business bounces back. That fear starts to disappear when it looks like a bounce back isn't imminent.

7/11/20 8:36 PM
1/13/04
Posts: 16033
CuddleBug - 

It's the perfect storm for this to happen. In addition to the points they made, the other one is that companies tend to lay off the lower payscale people first, not because it's a good old boys club looking out for their kind, but because they fear being able to quickly replacing that caliber of employee over the lower skilled ones when business bounces back. That fear starts to disappear when it looks like a bounce back isn't imminent.


So you think no small to medium term bounce back and things will get worse or the opposite?

7/11/20 8:36 PM
8/15/07
Posts: 19660
Based on my experience, if you actually looked at the performance of most of these people, they're not worth near what they're being paid.
7/11/20 8:41 PM
3/15/06
Posts: 24057
Graduate1 -
CuddleBug - 

It's the perfect storm for this to happen. In addition to the points they made, the other one is that companies tend to lay off the lower payscale people first, not because it's a good old boys club looking out for their kind, but because they fear being able to quickly replacing that caliber of employee over the lower skilled ones when business bounces back. That fear starts to disappear when it looks like a bounce back isn't imminent.


So you think no small to medium term bounce back and things will get worse or the opposite?

I think there will be a bounce back myself, but I know where I work we're having a great year so far and they are preparing for a contraction just in case.

7/11/20 8:46 PM
1/13/04
Posts: 16034

Side note question. How much security do full-time employee's have versus a contract employee regarding job security in 2020 during this pandemic (meaning is there a pecking order of who can be released?

7/11/20 8:50 PM
3/18/02
Posts: 94255
Graduate1 - 

Side note question. How much security do full-time employee's have versus a contract employee regarding job security in 2020 during this pandemic (meaning is there a pecking order of who can be released?


Id say it depends on the size of the company and its financial health.  In Canada, firing a career exec is expensive esp vs a contract employee which essentially costs nothing 

7/11/20 8:51 PM
3/18/02
Posts: 94256
Soul Gravy - Based on my experience, if you actually looked at the performance of most of these people, they're not worth near what they're being paid.

yep

7/11/20 8:56 PM
3/25/11
Posts: 157

I live in silicon valley, and I'm dreading what is coming. I don't work in Tech directly, but indirectly. 

I have skills that are not as easy to replace and not possible to replace remotely, but the major financial crisis coming definitely has me worried. 

Edited: 7/11/20 9:16 PM
2/14/10
Posts: 14178

Corporate waste and bloat will be given a much more critical look in the coming months. Unfortunately, the same can't be said for the public sector.

Of course, if more people get laid off, we end up with more socialists. I'm not a Chicken Little type, but everything is interconnected. Income tax, sales tax, property taxes in areas suffering an exodus. Tolls, gas tax, etc. This might be a big push of the proverbial reset button.

7/11/20 9:17 PM
8/16/12
Posts: 3646

White collar jobs is RACIST! It should be black collar jobs. Black collars matter!

 

:)

7/11/20 9:19 PM
1/1/01
Posts: 8570
This is from a month ago. This is the same guy that started shorting the S&P500 at 2960 in an attempt to fearmonger the weakhands into panic selling so he can buy in because he missed the bottom.
7/11/20 9:33 PM
11/10/18
Posts: 8506
Soul Gravy - Based on my experience, if you actually looked at the performance of most of these people, they're not worth near what they're being paid.

I agree. I’ve owned several businesses over the years and very few people earn their check. 

7/11/20 9:38 PM
5/22/05
Posts: 25842

Another promising trend for the middle c l a ss

7/11/20 9:39 PM
1/13/04
Posts: 16035
tycoon - This is from a month ago. This is the same guy that started shorting the S&P500 at 2960 in an attempt to fearmonger the weakhands into panic selling so he can buy in because he missed the bottom.

Interesting - did not know the back story regarding his bet on the market. Granted it was a month ago and just did a google search to see if anything recent was posted regarding this and couldn't find anything.

7/11/20 9:40 PM
1/13/04
Posts: 16036
banco - 

Another promising trend for the middle c l a ss


Care to elaborate?

7/11/20 9:41 PM
1/13/04
Posts: 16037
Eskimo - 
Soul Gravy - Based on my experience, if you actually looked at the performance of most of these people, they're not worth near what they're being paid.

I agree. I’ve owned several businesses over the years and very few people earn their check. 


Wages and purchasing power (leading to company revenues) go hand in hand (with the ultimate goal of higher profits to companies).

7/11/20 9:52 PM
1/1/01
Posts: 8572
Graduate1 - 
tycoon - This is from a month ago. This is the same guy that started shorting the S&P500 at 2960 in an attempt to fearmonger the weakhands into panic selling so he can buy in because he missed the bottom.

Interesting - did not know the back story regarding his bet on the market. Granted it was a month ago and just did a google search to see if anything recent was posted regarding this and couldn't find anything.


https://www.benzinga.com/trading-ideas/short-ideas/20/04/15888002/heres-where-gundlach-has-a-short-position-in-the-s-p-500

You need to improve you Google Fu my friend, he shorted at 2863 to be precise. Don't trust hedge fund managers, their job is to make money for their client at your expense.
7/11/20 10:09 PM
1/13/04
Posts: 16038
tycoon - 
Graduate1 - 
tycoon - This is from a month ago. This is the same guy that started shorting the S&P500 at 2960 in an attempt to fearmonger the weakhands into panic selling so he can buy in because he missed the bottom.

Interesting - did not know the back story regarding his bet on the market. Granted it was a month ago and just did a google search to see if anything recent was posted regarding this and couldn't find anything.


https://www.benzinga.com/trading-ideas/short-ideas/20/04/15888002/heres-where-gundlach-has-a-short-position-in-the-s-p-500

You need to improve you Google Fu my friend, he shorted at 2863 to be precise. Don't trust hedge fund managers, their job is to make money for their client at your expense.

Your better then me. So speculation and fear mongering (I hope)..

7/11/20 10:26 PM
4/20/11
Posts: 20081

In