Gundlach, who runs the Los Angeles-based bond investment firm, explained that one of the outcomes of remote work is it reveals who produces and who doesn’t.
“What people may have learned for white-collar services jobs, in particular, during the work-from-home lockdown situation, at least in my perspective — I’ve talked to a lot of my peers on this — I kind of learned who was really doing the work and who was not really doing as much work as it looked like on paper that they might have been doing,” Gundlach said.
He’s witnessed this at DoubleLine, where people running “certain groups” haven’t been as responsive, while the more junior members on their team have stepped up.
“I wonder where they’ve gone. It seems like the people who work for them are constantly in contact with me doing all this work and some of the supervisory, middle management people I’m starting to wonder if I really need them. And this is just a one sample thing,” he added.
The 60-year-old investor said he’s hearing similar things from his peers.
“Everybody feels this same way. They feel like this is sort of like Warren Buffett’s thing, ‘When the tide goes out, you find out who is swimming naked.’ I mean, when you actually have to respond quickly, and people below middle management are actually doing the responding, they start to get credit for the work.“
As Barron’s Matthew Klein points out, the latest jobs report for May is showing signs of the virus’ impact hitting these white-collar jobs.
One of the consequences of the lockdowns is that it’s “short-term deflationary.” He believes commercial real estate prices will go down as companies shift from an office to work-from-home permanently.
He also makes a case that it’s wage deflationary.
“If a $100,000 white-collar worker gets laid off, I think that they just stare in the mirror in the morning with just fear in their eyes looking at their own eyes because what are you going to do?” he said. “A lot of people don’t have any savings, not enough savings. If a certain swath of the employment-population has a significant layoff in the echo of the pandemic, which I think is coming, then they’re probably going to be looking for a job and there won’t be many openings relative to the unemployment pool with that type of a skillset.”
“Obviously, I think these people will take another job with a pay cut,” he continued. “If you’re making $100,000 and you’re staring at the abyss of no income and you have de minimus savings, especially if you have a family to feed, I think that $75,000 similar job would look pretty attractive even as an interim step.”
What’s more, the shift to permanent work-from-home is deflationary too if someone can do the same job in a lower-cost environment like Boise, Idaho compared to San Francisco.