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

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........

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