The Future is Blue Collar
Last night, fintech company Block (XYZ) announced layoffs affecting 40% of its workforce, citing advancements in AI as the reason.
Their stock surged 23% during after-hours trading.
The market’s reaction sent a shiver down my spine.
Right now, CEOs nationwide are pondering comparable decisions. They are exploring AI agent technologies and salivating at the prospect of boosting profits.
This could mark the beginning of a widespread pattern. How many organizations are thinking, “If we cut 40% of our staff and replace those roles with AI, our stock will skyrocket too”?
Compounding this, numerous companies already rely heavily on outsourcing to countries such as India, while others hire foreign workers on visas, who often accept lower wages and longer hours.
White collar America is facing a brewing upheaval.
What Changed in AI?
Since the release of ChatGPT 3.5 in late 2022, it has served as a valuable tool for programmers, helping speed up coding tasks.
However, over the past two months, AI capabilities have leapt forward. Tools like Claude Code can now process large programming assignments given in plain English and complete them.
Here’s Andrej Karpathy, Tesla’s former AI lead, commenting on this shift:
“It is hard to communicate how much programming has changed due to AI in the last 2 months: not gradually and over time in the ‘progress as usual’ way, but specifically this last December.
There are a number of asterisks but imo coding agents basically didn’t work before December and basically work since – the models have significantly higher quality, long-term coherence and tenacity and they can power through large and long tasks, well past enough that it is extremely disruptive to the default programming workflow.”
Andrej describes an intricate task he assigned to an AI agent, which the system completed independently:
“The agent went off for ~30 minutes, ran into multiple issues, researched solutions online, resolved them one by one, wrote the code, tested it, debugged it, set up the services, and came back with the report and it was just done.”
This marks a new and unsettling milestone. Now agents can research, strategize, code, test, and debug based on a single directive.
For years, young people have been encouraged to “learn to code” to build promising careers. This advice is now uncertain.
At present, skilled programmers are still needed to ensure code security and stability.
But what about in a year? The future is uncertain.
Moreover, AI agents are improving at handling marketing, accounting, legal work, customer service, and administrative duties.
Blue Collar is a “Buy”
About a year ago, my then 15-year-old son decided against college, calling it a waste of money.
He aimed to pursue a career as an electrician. While I may have nudged him slightly, it was ultimately his own conclusion—and a wise one.
Now a year later, he’s engaged with electrical companies offering apprenticeships.
If all goes according to plan, next year—his senior year—he’ll apprentice as an electrician, attend community college classes, and graduate alongside his peers.
During the day, he’ll be acquiring a valuable skill while earning roughly $25 an hour.
Compared to attending college, incurring debts, and entering an unpredictable job market, this path is a clear winner in my view.
Certain professions still demand college, such as doctors and lawyers.
But the idea of spending $50,000 annually to have my child “indoctrinated by Marxists” is deeply unappealing. Even worse is the prospect of racking up $200,000 in student loans for the same experience.
For many young people today, trades offer the most practical and secure career option—what we recently described as the HALO trade.
Blue Collar Stocks
I’ve recently been reflecting on investment opportunities within skilled trades and spoke with our colleague Dan Amoss.
It turns out Dan and Jim Rickards anticipated this trend well ahead of the curve.
In May 2024, they recommended Lincoln Educational Services (LINC) to members of the Paradigm Mastermind Group (PMG).
Better known as Lincoln Tech, this company operates trade schools nationwide.
The investment rationale was compelling. They highlighted the shortage of skilled workers and predicted long-term growth.
“You’ve probably felt the impacts of this labor squeeze in your daily life. Shortages of mechanics, welders, electricians, and carpenters have made it difficult to get things fixed or built in a timely manner.
Lincoln Educational Services Corp. (LINC) is a for-profit education company that trains the next generation of skilled laborers.
Let me provide a few reasons why LINC stock has performed well. It could keep beating the broad market for years.”
He further outlined the bullish case:
“…the U.S. faces a severe skills gap. It’s the gap between the skills required to perform the jobs being created, and the skill set of the available labor pool. This issue has existed for years and is likely to continue well into the future.
To attract more workers, wages in the skilled trades must keep rising.
Higher pay will incentivize workers to invest in the tuition to get valuable training.
Roughly 90% of Lincoln graduates land jobs in essential critical infrastructure roles per the U.S. government’s definition. With a nationwide shortage, they’ll have no trouble placing students.
Lincoln is still tiny with only 21 campuses and 13,270 students. It can reinvest the earnings from existing campuses into building or acquiring new campuses.”
At the time of the recommendation, LINC traded near $11. Since then, the stock has performed strongly and currently sits at $34.95.
It remains part of the PMG portfolio today.
While it might seem late to buy LINC now, Dan and Jim still hold their shares, suggesting there is more growth potential.
The skilled trades’ momentum won’t fade anytime soon, and it will be many years before robotics poses a real threat to these roles.
I’m exploring additional investment ideas aligned with this trend and will share updates if anything promising emerges.
Meanwhile, encouraging young people you know to pursue trade careers might be the smartest move.
Have a nice weekend everyone.
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