The Economic Warning Sign Hiding Behind White-Collar Layoffs

White-collar layoffs at firms like McKinsey and Amazon grab headlines for their implications about artificial intelligence and tariff pressures replacing plum jobs. But there’s another canary in the economic coal mine. What PYMNTS Intelligence calls the Labor Economy® — the roughly 60 million warehouse packers, delivery drivers, home health aides, construction workers, groundskeepers, janitors, retail associates and other blue-collar workers who keep America running — is also sending up warning signals.

With the holiday shopping season in full swing, nearly half of United States Labor Economy workers say they have little to no confidence they can afford to buy presents without going into debt until next summer. Only 1 in 3 who hadn’t started shopping by Dec. 10 said they planned to buy anything at all, compared to 46% of other consumers. Those data points, a supplement to PYMNTS’ latest installment of the Wage to Wallet® Index, suggest pocketbook tightening across a broad swath of America that may indicate deeper trouble ahead.

PYMNTS defines Labor Economy workers as people earning under $25 an hour, or less than $50,000 per year. Comprising about one-third the total U.S. workforce, they drive 15% of consumer spending, making them a significant economic bloc. When they dial back their spending, the broader economy takes a hit, creating ripple effects at the businesses their spending supports. Even small interruptions — think missed work shifts, reduced hours or a late direct deposit — can instantly stymie these workers’ ability to pay rent, buy groceries, make debt payments and pay for childcare. PYMNTS estimates that a 0.13% increase in wages for this group in November translated into roughly $2.2 billion in additional annualized spending capacity. This scant increase hardly offsets the 0.8% loss in wages in October, equivalent to an annualized $14 billion hit to GDP.

Labor Economy Math

That’s what makes PYMNTS’s fresh data about their holiday spending telling. The financial strain of Labor Economy workers is an early warning signs about pressures on broader economic health that may not show up in traditional metrics for months.

Nearly 6 in 10 of Labor Economy workers are relying on cash or debit cards for their holiday purchases—meaning for them that if the money’s not in the account, nothing’s getting bought. Only 15% are using credit cards with the intention to pay in full at the end of the monthly billing cycle, compared to 31% of everyone else. And 4 in 10 plan to spend less this holiday season. Just 19% expect to spend more.

And for many of those who do plan to shop, the financial pain won’t end come New Year’s day.

Of these consumers, 1 in 5 expect their holiday debt to take more than six months to repay, a financial ball and chain they will drag into summer 2025. The percentage is one-third higher than for non-labor economy workers, who predominantly have steadier paychecks and better access to low-interest credit. The irony is stark: The very workers powering everyone else’s year-end shopping — packing boxes, driving delivery trucks, restocking shelves, caring for families — are the ones most likely to skip it entirely or pay for it well into next year.

It all reflects what PYMNTS calls a mirror economy. Somewhat but not entirely like the K-shaped economy of high earners doing well financially and middle-income and low-income ones struggling, the mirror economy reflects a “split” reality, in which economic sentiment “mirrors” the specific structural constraints a particular group operating in. Non-Labor optimism reflects an economy defined by expanding options and credit leverage , while Labor Economy pessimism mirrors a parallel reality defined by tightening constraints and personal liquidity pressure. In other words, different groups experience different economies, not one single economy in different ways.

As such, the Labor Economy sentiment index reflects an economy that is no longer moving in a single direction but instead splitting along a fault line shaped by access to credit, timing of receipt and perceived opportunity. This suggests optimism in today’s economy is shaped less by overall employment levels and more by the mechanics of monthly and sometimes daily  cash flow.