Latest / Stagflation Conversations with Fexingo: High Inflation, Slow Growth, and 1970s Echoes / How Stagflation Is Reshaping the Job Market for Skilled Trades
Transcript
- Lucas: If you're a recent grad with a degree in marketing or communications, the job market right now is brutal — factory layoffs in June are approaching levels we haven't seen since the financial crisis and Covid. But if you're an electrician? You're probably turning down work. Luna: That gap is getting wider by the month. The unemployment rate is stuck at 4.3 percent, inflation's still sticky, and yet the trades are screaming for people. Lucas: Right. And it's not just anecdotal. The JOLTS report for April showed job openings ticked up to 7.6 million — that's about 700,000 more than the prior month. A lot of those openings are in construction, manufacturing, and repair services. Luna: So what's driving this? I mean, we've been talking about a labor shortage in the trades for years. Lucas: Two things. First, structural supply — after 2008, a whole generation of young people were told to go to college, not trade school. So the pipeline of new electricians and plumbers dried up. Now those Boomer tradespeople are retiring, and there's nobody to replace them. Luna: And the second force? Lucas: Stagflation itself. When the economy slows but prices keep rising, companies look to cut costs. They freeze hiring for white-collar roles — marketing, HR, middle management — but they can't offshore or automate a plumber fixing a pipe. So trades become almost recession-proof. Luna: Yeah, you can't Zoom a welder into a construction site. But there's a tension here — wages in the trades have been rising, but not as fast as housing costs. In places like Nevada, which is supposedly the easiest state to find a job right now, a journeyman electrician might make $35 an hour, but a one-bedroom apartment in Reno is $1,800 a month. Lucas: That's a real squeeze. But let's look at Nevada specifically — there's a headline from a few days ago: 'Struggling to find a job? Try looking in Nevada.' That state has a booming logistics and construction sector, partly because of data center buildouts and lithium mining. So the demand is concentrated in specific geographies. Luna: And in specific trades. It's not all trades equally — residential construction has slowed because of high mortgage rates, but commercial and industrial is still going. Lucas: Exactly. The data shows nonfarm payrolls still grew in May — we added about 172,000 jobs. But the composition matters. A lot of those gains were in health care, government, and construction. Meanwhile, manufacturing shed jobs. So the recovery is uneven. Luna: This is where the stagflation framing gets interesting. Normally in a recession, everything contracts. But here, inflation is giving tradespeople pricing power. They can charge more because there's no substitute. Lucas: And that's a huge shift from the 1970s, when unions had more power but the trades weren't necessarily a 'career of choice' for college-bound kids. Today, with student loan debt at $1.7 trillion and starting salaries for many degree holders barely above $40,000, a four-year degree is no longer the safest bet. Luna: I think that's the core insight for this episode: stagflation is rewiring the risk-reward calculation of education and career choice. If you're a high school senior today, the path through a trade school might actually offer more income stability than a university degree. Lucas: Let's put some numbers on that. The Bureau of Labor Statistics projects that electrician jobs will grow 7 percent over the next decade — that's faster than average. Median pay is around $60,000, but experienced journeymen in high-demand areas like Nevada or Texas can clear $100,000. And you're not paying $30,000 a year in tuition for a four-year degree. Luna: But there's a catch: apprenticeship programs take four to five years, and during that time you're earning maybe $15 to $20 an hour. That's a tough slog if you don't have family support. Lucas: It is. And that's a barrier, especially when housing costs are rising. But some states and unions are offering stipends or tuition-free pre-apprenticeship programs. It's not perfect, but it's a real alternative. Luna: So what does this mean for the broader economy? If more people go into trades, does that ease the labor shortage? Or does it just shift the bottleneck to other sectors? Lucas: I think it helps on the margin, but it's not a silver bullet. The bigger picture is that stagflation is forcing us to rethink what 'good jobs' look like. For decades, the message was: get a degree, get a desk job. Now, the desk job might not be there, and the trades are paying better than ever. Luna: And that message is starting to reach parents. I know a lot of families who are now encouraging their kids to consider HVAC or plumbing instead of a generic business degree. Lucas: Which brings us to policy. Should the government be funding more trade schools? Expanding apprenticeship tax credits? There's a bipartisan bill in Congress right now — the National Apprenticeship Act — that would invest $3.5 billion over five years. But it's been stalled. Luna: With the current political climate — the Iran deal, the tariff wars — it's hard to see that getting prioritized. But maybe it should be. Because if stagflation persists, we'll need more plumbers and electricians, not fewer. Lucas: We should also talk about the risk of automation. Some people say that trades are safe because robots can't do them. But that's not entirely true. There are already bricklaying robots and automated welding machines. So tradespeople need to adapt, learn new tech. Luna: But the human element — diagnosing a weird electrical problem in an old building, or fitting a pipe in a tight crawlspace — that's hard to automate. So I think the trades are safer than, say, data entry or customer service. Lucas: Agreed. And that's why, in this weird stagflationary moment, the skilled trades stand out as one of the few sectors where demand is rising faster than supply. It's a rare bright spot. Luna: If today's conversation helped you think differently about your own career or a young person's options, that's exactly why we do this show. We keep it ad-free, and listener support is what makes that possible — buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small way to keep the economics conversations going without interruption. And we genuinely appreciate it. Luna: So back to the data — one thing I want to highlight is the real GDP growth number. It's at 1.6 percent annualized, which is up from 0.5 percent last quarter. So the economy is still growing, but slowly. That's the 'stagnation' part. Lucas: And inflation is still above the Fed's target. Core PCE is at 2.6 percent — down from its peak, but not low enough for the Fed to cut rates. So we're stuck in this high-rate, slow-growth environment. Luna: Which actually makes the trades even more attractive. Because when borrowing costs are high, people put off big purchases like new cars or renovations, but they still need repairs. That creates steady demand for tradespeople. Lucas: Exactly. And that's the kind of concrete, ground-level insight we try to bring every episode. If you're looking for a career that's resilient to stagflation, the trades are worth a serious look. Luna: And if you're already in the trades, you might have more leverage than you think. Next time you're negotiating a raise, bring up the JOLTS data. Lucas: That's a great note to end on. Thanks for listening.