AI's Impact on White-Collar Jobs: A 29-Month Decline in Payrolls

A.I. AI is already hollowing out the white-collar economy Economists, researchers, and workers are increasingly asking what happens to an economy built around a premium on human intelligence when that premium vanishes By Catherine Baab Share to X Share to Facebook Share to Reddit Share to Email Share to Link Add Quartz on Google Share to X Share to Facebook Share to Reddit Share to Email Share to Link Getty Images On a Saturday in February, one of Substack’s most widely read financial newsletters published a thought experiment: What if the AI boom, which has already minted extraordinary wealth and spurred corporate capital expenditure to historic highs, actually turns out to be a bearish signal instead of a bullish bubble waiting to burst? What if the same technology making white-collar workers more productive will soon destroy the larger white-collar economy? The widely read Substack post by Citrini Research began with a hypothetical future memo dated June 30, 2028: “The unemployment rate printed 10.2% this morning, a 0.3% upside surprise. The market sold off 2% on the number, bringing the cumulative drawdown in the S&P to 38% from its October 2026 highs.” In the real world present, Citrini’s thought experiment rocked the market. The Dow fell 1.7% that Monday. Individual stocks mentioned in the post — Monday.com, DoorDash — fell about 7% each. IBM fell almost 13%. In other words, a Substack post laying out a theoretical scenario caused a real-world multibillion-dollar wipeout . And that may be an even more revealing read on the economy than the Citrini Research post that kicked it off. Would an implausible or far-fetched scenario have created that kind of reaction? Or did the post touch on very real, widespread, yet quiet fears — and lay bare how little choice any of us may have about the AI future? The white-collar contraction is already happening In fact, the question Citrini posed — what happens to an economy built around the premium put on human intelligence when that premium disappears — is one that economists, labor market researchers, and workers themselves are increasingly asking. And while the data hasn’t fully come in yet, the early signals are striking. White-collar payrolls have now contracted for 29 consecutive months. According to Aaron Terrazas, a former chief economist at Glassdoor, that’s without precedent . “It's clear that white-collar hiring has slowed and white-collar payrolls have contracted. This is incredibly unusual, going back 70, 80 years,” Terrazas said in an interview. “The fact is, we have not seen this long of a contraction in white-collar jobs outside of a recession ever before. That has to be kind of ringing some alarm bells.” But the headline unemployment rate — still hovering around 4.3% — obscures this narrower white-collar issue. Terrazas argued that the number has become a less reliable signal than it once was, as labor market slack increasingly appears as underemployment and workforce exits rather than formal unemployment. The more telling indicators, he said, are job postings and hiring rates, both of which have been depressed for some time. “We're kind of getting smoke signals in all of these different corners of the economy right now,” he said. Daniel Keum, a professor at Columbia Business School who studies AI in the workplace, is less circumspect. He said that AI is causing demand for white-collar workers to fall — no bones about it. He described the current moment as a “technological shock” with two distinct parts. The first is already here: AI is replacing white-collar labor , not augmenting it, at least in the U.S. “U.S. labor costs are very expensive,” Keum said in an interview. “So AI is targeted squarely at replacing people and reducing headcounts. That pays off handsomely.” The second part is AI creating a positive shock on the revenue side as it helps companies generate new products, services, and therefore new jobs. That dynamic is coming, Keum said,, but it could still be years away. Right now, we’re absorbing the negative cost shock without yet seeing the positive revenue shock. Not all the displacement looks like a human being swapped out for an AI agent, Keum said. Some workers are losing jobs not because their specific roles have been automated, but because companies are reallocating resources toward AI and away from everything else. Meanwhile, those eye-popping corporate capital expenditure numbers — the hundreds of billions Amazon $AMZN , Microsoft $MSFT , Google $GOOGL , and Meta $META are pouring into AI infrastructure — are not translating into hiring, because they're going into data centers, not people. Essentially, dramatic rises in business spending don’t equal demand for more workers with degrees, Keum argued. In fact, it may indicate the opposite. As an indicator of demand for white-collar labor, Keum suggested looking to new MBA graduates. As arguably the most credentialed, most in-demand workers in the knowledge econom