Michael Burry said on Tuesday that the U.S. labor market is about to be sliced in half, with blue-collar workers remaining a sought-after commodity, while white-collar workers see job losses and falling wages. In other words, the good times are ending for office workers.
“I see a bifurcated labor market developing as unskilled and semiskilled remain in short supply, but white-collar workers, having proven their redundancy during COVID, will find gross excess in the labor market, pressuring wages at the end,” he wrote in a Tuesday tweet.
Burry rose to fame after he predicted and profited from the housing market collapse of 2008, as depicted in the 2015 film The Big Short.
He currently runs the hedge fund Scion Asset Management, and in recent weeks used Twitter to warn of an impending recession. Now he’s arguing there’s a significant surplus of white-collar workers in America, and he pointing to a smoking gun as evidence: a recent Wall Street Journal article that detailed layoffs at Tesla as evidence.
Tesla layoffs as the canary in the coal mine
Tesla CEO Elon Musk said earlier this month that he plans to lay off 10% of his salaried, white-collar staff, while increasing hourly jobs for blue-collar workers. Musk has been cutting costs at Tesla after admitting the EV giant’s new factories have been “money furnaces” amid ongoing supply chain issues.
Musk also said he believes the U.S. economy is already in a recession that will last up to 18 months. And on Wednesday, Tesla laid off another 200 workers on its autopilot team and closed a factory in California.
Burry has long been a critic of Tesla and has sparred online with Elon Musk. He called Tesla’s stock price “ridiculous” in 2021, and bet against the company’s stock using an options strategy. But Burry’s current theory about the labor market is backed up by more than just Tesla’s recent layoffs.
A number of firms, particularly in the tech space, have been instituting layoffs as economic growth begins to cool and inflation rages on. Crypto firms like Coinbase and Crypto.com have let go 1,100 and 260 people, respectively; and Netflix let go over 700 people in two separate rounds of layoffs so far this year.
The layoffs are evidence of the glut of white-collar workers in sectors like technology, finance, and consulting, according to Burry. Blue-collar workers, on the other hand, will remain in demand, resulting in a two-tiered labor market moving forward.
Since the remote-work era began over two years ago, business leaders and economists have suggested that it may backfire by creating a more difficult environment for white-collar workers as companies begin to consider offshoring jobs to reduce costs. If more jobs can truly be done anywhere, there’s no need for them to be expensive American white-collar workers.
A 2021 Fortune-Adobe survey of chief information officers found that some 64% of CIOs believe their organization will consider applicants from anywhere in the world after the remote work boom, Fortune‘s Lance Lambert reported in April 2021. That means more competition for office workers around the nation at a time when a record 38% of the population has a college degree and is competing for those hard-to-find white-collar jobs, which may just become harder to find.
Source: Fortune
