'Big Short' investor Michael Burry expects pressure on white-collar wages — and points to Tesla firing office workers as evidence
- Michael Burry expects a glut of office workers to weigh on white-collar wages.
- "The Big Short" investor predicts further shortages of unskilled and semi-skilled workers.
Michael Burry expects the US labor market to be split in two, with manual and service-industry workers remaining scarce and sought-after, while a surplus of office workers weighs on white-collar wages.
"I see a bifurcated labor market developing as unskilled and semi-skilled 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 tweeted on Tuesday.
In other words, Burry expects labor shortages to linger in sectors such as manufacturing, trucking, and hospitality. In contrast, he predicts a glut of workers will limit wage growth in industries such as finance, technology, and consulting, as employers shrink their teams to remove weak links they spotted during the pandemic.
The investor of "The Big Short" fame linked his prediction to a Wall Street Journal report that Tesla is shutting one of its California offices, and laying off 200 people who worked there. Elon Musk's electric-vehicle company is cutting headcount and other overheads as it seeks to rein in rising costs, sources told the newspaper.
Burry has painted a bleak outlook for the US economy in recent weeks. He warned that American consumers are burning through their savings, putting less money away, and racking up credit-card debt, paving the way for a consumer recession and pressure on corporate earnings this holiday season.
The Scion Asset Management boss also underscored the huge amount of direct and indirect support that households received during the pandemic, including stimulus checks, forgivable loans, cash-out refinancing offers, and the Federal Reserve spending trillions of dollars on bonds. He emphasized that if all of that wealth evaporates due to inflation and declines in house prices, stocks, and other assets, then wage increases wouldn't be enough to compensate.
Burry has taken several shots at Tesla over the past two years. He called its stock price "ridiculous" and wagered it would fall, described the hype around the company as "remarkably similar" to the dot-com and housing bubbles, and suggested its shares could plummet in value by 90%.
The investor also questioned Musk's stock sales last year, prompting the Tesla CEO to call him a "broken clock."
