Navigating the AI Revolution: Why Skilled Blue-Collar Jobs Are Outpacing White-Collar Careers

The Rising Tide of Blue-Collar Jobs: Skilled Trades Outpacing White-Collar Salaries

Alejandro Lovera
May 9, 2023
Investor Resources


The traditional narrative of white-collar jobs providing higher wages and better opportunities is being challenged in today's evolving labor market. Evidence now suggests that certain blue-collar jobs, particularly skilled trades such as electricians, plumbers, and welders, may offer higher wages than some white-collar professions. This shift is driven by factors such as an aging workforce, a shortage of skilled workers, the need for infrastructure development, and the increasing automation of white-collar jobs due to AI and automation.

The Growing Demand for Skilled Trades:

Recent studies have shown that the demand for skilled tradespeople is on the rise.

According to the Bureau of Labor Statistics (BLS), employment for electricians, plumbers, and welders is expected to grow by 8%, 14%, and 3%, respectively, between 2020 and 2030.

The need to maintain and upgrade existing infrastructure, including buildings, roads, bridges, and water systems, is a primary driver of this demand. As infrastructure ages and becomes outdated, there is a need for skilled tradespeople to repair, upgrade, and maintain these systems. Additionally, the construction of new infrastructure projects, such as highways, airports, and power plants, is also fueling the demand for skilled tradespeople.

The COVID-19 pandemic has also highlighted the importance of skilled tradespeople in maintaining critical infrastructure. As many people shift to remote work and online activities, the demand for reliable and efficient infrastructure has increased. This includes the need for skilled tradespeople to maintain and repair systems such as electrical grids, water treatment facilities, and telecommunications networks.

Moreover, the growing interest in sustainability and renewable energy sources is also driving demand for skilled tradespeople. For example, the installation of solar panels and wind turbines requires skilled workers to design, install, and maintain these systems.

Aging Workforce:

The aging workforce is a growing concern for many industries, particularly in the skilled trades sector. As the baby boomer generation approaches retirement, there is a need to replace skilled tradespeople with younger workers. In the construction industry, for example,

the National Association of Home Builders' 2020 report revealed that 41% of construction workers were aged 45 or older, indicating a significant portion of the workforce approaching retirement.

The generational shift is creating a vacuum in the skilled trades sector, leading to increased demand and higher wages for those who possess the necessary skills. This demand is particularly acute in industries such as construction, where skilled tradespeople such as electricians, plumbers, and carpenters are essential for building and maintaining infrastructure.

The shortage of skilled workers is not just a problem in the United States but is a global concern. In Europe, for example, a report by the European Centre for the Development of Vocational Training highlighted that many industries, particularly in the manufacturing and construction sectors, are experiencing a significant shortage of skilled workers due to an aging workforce and a lack of interest among younger generations in pursuing blue-collar jobs.

To address the shortage of skilled workers, there is a need for policymakers and industry leaders to invest in training and education programs to attract and retain younger workers. This includes developing apprenticeship programs, vocational training, and educational initiatives that promote the skilled trades as viable career paths.

Shortage of Skilled Workers:

The shortage of skilled workers is a significant challenge for many industries, including construction, manufacturing, healthcare, and technology. This shortage is a driving factor behind the increasing wages for blue-collar jobs, as there is fierce competition among employers to attract and retain qualified workers.

The current shortage of skilled workers is another driving factor behind the increasing wages for blue-collar jobs.

A 2021 survey by the Associated General Contractors of America revealed that 80% of construction firms faced difficulty filling skilled trade positions.

Why Are We Facing a Shortage of Skilled Workers?

Educational Emphasis on College Degrees: For several decades, the primary focus of the educational system has been on promoting college degrees as the primary path to success. As a result, many young adults have opted for traditional four-year college programs, often overlooking the potential of vocational training and skilled trades.

Insufficient Vocational Training Programs: With the decline in vocational education and the closure of many trade schools, there are fewer opportunities for individuals to acquire the necessary skills to enter the skilled trades workforce. This has resulted in a smaller pool of qualified candidates for employers to choose from.

Stigma Surrounding Blue-Collar Jobs: The societal perception of blue-collar jobs as less prestigious than white-collar careers has also contributed to the shortage. Many young adults are discouraged from pursuing skilled trades due to the stigma surrounding these occupations, despite the potential for higher wages and job stability.

Automation and White-Collar Jobs:

While blue-collar jobs continue to experience growing demand, many white-collar positions are being automated, reducing the number of available opportunities. A

According to a 2020 report by McKinsey & Company, up to 25% of office-based jobs could be automated by 2030.

This includes a wide range of white-collar jobs, such as administrative assistants, bookkeepers, and customer service representatives, among others. The report suggests that while some jobs will be eliminated completely, others will be transformed, with some tasks being automated while others remain in the hands of humans.

The impact of automation on white-collar jobs is likely to be felt in various ways. First, automation could lead to a reduction in the number of available jobs, as machines become more capable of performing complex tasks previously done by humans. This could result in job displacement, particularly for workers who do not have the skills or education required for new roles in the digital economy.

Second, automation could lead to a shift in the types of jobs available, as new roles emerge that require skills in areas such as data analytics, machine learning, and software development. This could result in a skills gap, as workers with traditional skills may struggle to find work in the new economy. To address this, there will be a need for upskilling and reskilling programs to help workers adapt to the changing demands of the labor market.

Third, automation could also lead to a transformation of work, as machines take over repetitive tasks, leaving humans to focus on more creative and strategic activities. This could result in a more fulfilling and satisfying work experience for many workers, but it could also require a shift in mindset and work culture to embrace this change.

Blue-Collar vs. White-Collar Salaries:

The combination of these factors has led to a closing gap between blue-collar and white-collar salaries.

According to the BLS, the median annual wage for electricians, plumbers, and welders was $56,900, $55,160, and $44,190 respectively in 2020.

In contrast, the median annual wage for office and administrative support occupations was $37,870. As the demand for skilled trades continues to rise, these salary differences are expected to widen even further.

Another significant advantage of pursuing a blue-collar career is the reduced need for a college degree. Many skilled trades require vocational training or apprenticeships, which are more affordable and time-efficient than traditional four-year college degrees. This allows individuals to enter the workforce faster, avoid student loan debt, and begin earning sooner.

The Power of Early Earnings and Compounding Interest:

By starting a career in skilled trades without the burden of student loan debt, blue-collar workers can take advantage of compounding interest by saving and investing earlier in their careers. The sooner an individual starts saving, the more time their money has to grow through the power of compounding interest. This financial advantage can significantly impact an individual's long-term wealth and retirement savings.

For example, a plumber who starts saving $5,000 annually at age 25 and invests it at a 7% annual return would have approximately $1,143,000 by age 65. In contrast, a white-collar worker who starts saving the same amount at age 29 due to student loan repayments and delayed entry into the workforce would have approximately $816,000 by age 65. This difference of over $300,000 showcases the potential financial benefits of starting a blue-collar career without the burden of student loan debt.

Alex has always sought a better way forward for the builders he worked with everyday.