Billionaire bond investor Jeffrey Gundlach, $ 135 billion CEO DoubleLine Capital, sees the potential for a “higher end unemployment wave” hitting white-collar workers making more than $ 100,000 a year as employers hand over increasingly questioning the value of these employees.
more than 42 million Americans applied for unemployment insurance as the COVID-19 pandemic destroyed the economy. Most of these job losses hit low-income households the hardest. “Data-reactid =” 13 “> In 11 weeks, more than 42 million Americans applied for unemployment insurance as the COVID-19 pandemic destroyed the economy. Most of these job losses hit low-income households the hardest.
DBLTX), adding later that he could “easily see layoffs in various industries” affecting high earners. “Data-reactid =” 14 “>” Often it’s not the earthquake, it’s the fire, “said Gundlach in a webcast for the DoubleLine Total Return Bond Fund (DBLTX), adding later that he could “easily see layoffs in various industries” affecting high earners.
Gundlach, who heads the Los Angeles-based bond investment firm, said one of the results of working at a distance is that it reveals who is producing and who is not.
“What people may have learned for white-collar jobs, in particular, during the homework lockout situation, at least from my perspective – I have talked to a lot of my peers about it – i I sort of learned who was really doing the work and who wasn’t really doing as much work as it could have done on paper, “said Gundlach.
He witnessed this at DoubleLine, where the people who lead “certain groups” were not as reactive, while the more junior members of their team intensified.
“I wonder where they went. It seems that the people who work for them are constantly in touch with me to do all of this work and some of the executives, middle managers, I’m starting to wonder if I really need them. And this is just one example, “he added.
The 60-year-old investor said he hears similar things from his peers.
“Everyone feels the same. They feel like it’s a bit like the Warren Buffett thing, “When the tide goes out, you find out who swims naked. I mean, when you have to respond quickly and the people below middle management are responding, they start getting credits for the job. “
Matthew Klein of Barron points out, the latest jobs report for May shows signs of the impact of the virus on these jobs. “Data-reactid =” 32 “> As Matthew Klein of Barron points out, the latest jobs report for May shows signs of the impact virus hitting these white-collar jobs.
One of the consequences of the closings is that it is “short-term deflationary.” He believes that commercial real estate prices will fall as businesses move from an office to homework permanently.
He also argues that this is deflationary wages.
“If a $ 100,000 white collar worker is laid off, I think he just stares in the mirror in the morning with just fear in his eyes when looking at his own eyes, because what are you going to do ? ” “Many people have no savings, not enough savings. If a certain part of the workforce has a significant layoff in the echo of the pandemic, which I think is coming, then they are probably going to be looking for a job and there will not be many openings by compared to the unemployment pool with this type of skills. ”
“Obviously, I think these people will take up another job with a drop in wages,” he said. “If you make $ 100,000 and you look at the abyss of lack of income and you have minimus savings, especially if you have a family to feed, I think a similar job of $ 75,000 would be quite attractive even in an intermediate stage. “
In addition, moving to permanent home work is also deflationary if someone can do the same job in a lower cost environment like Boise, Idaho compared to San Francisco.
Twitter. & nbsp;“Data-reactid =” 39 “>Julia La Roche is a correspondent at Yahoo Finance. Follow her on Twitter.