For decades, the American Dream was tied to a university education, with society pushing young people toward degrees that promised stability, prestige, and a path to the middle class, or beyond. Yet, as millions of students poured into universities, burdened with mounting debt, another quiet revolution was taking place in the trades. Now, we are seeing a profound shift, and it is not in academia’s favor. Plumbers, HVAC technicians, and other skilled tradespeople are emerging as America’s new millionaire class, bolstered by private equity investments and booming demand for services that keep the country’s infrastructure running smoothly.
How did we arrive at this juncture where, in a time of rising inequality and economic uncertainty, the blue-collar trades are not only providing good, stable jobs but, in some cases, making millionaires? The story is one of labor shortages, private equity enthusiasm, and the increasing recognition that these industries are essential to the fabric of the economy. In this analysis, we will explore how the trades have re-emerged as a powerful engine of wealth creation, and why this trend speaks to broader structural changes in the U.S. economy.
The Decline of Trade Work and the Rise of College Degrees
The pivot away from skilled trades can be traced back to the latter half of the 20th century, when a cultural shift, fueled by government policy, corporate demand, and societal expectations, pushed the majority of young Americans toward college degrees. Vocational training, once a common path for many high school graduates, was increasingly viewed as a fallback option for those who couldn’t make it in “white-collar” professions. This cultural push created a mismatch in the labor market, with universities churning out graduates—many with degrees in fields that were neither in demand nor particularly lucrative—while fewer people entered the skilled trades.
At the same time, many skilled trades were inextricably linked to the economy’s physical infrastructure. Plumbers, HVAC specialists, electricians, and other trade workers maintained the essential systems that kept businesses and households running smoothly. These jobs were never “glamorous,” but they provided stable, reliable income. Yet, as the pool of skilled tradespeople shrank, an increasing number of businesses struggled to meet the growing demand for services.
This created a curious paradox: while many college graduates were entering a workforce oversaturated with degree-holders and burdened with student debt, trade workers were becoming an increasingly scarce—and therefore valuable—commodity. Fast forward to today, and the trades are hot once again, but with one crucial difference: private equity, which is notoriously adept at identifying untapped markets, has entered the scene.
Private Equity’s Entry Into the Skilled Trades
Private equity’s growing interest in skilled-trade small businesses marks a seismic shift in the industry’s economic landscape. Traditionally, plumbing, HVAC, and electrical companies were family-owned, passed down through generations, or sold quietly within their communities. But in the past decade, private equity firms have begun snapping up these businesses, recognizing their potential for consolidation and scale.
Private equity’s playbook in the trades is simple but effective: consolidate smaller, independently-run businesses into larger, more profitable operations that benefit from economies of scale. With this strategy, investors pool resources, centralize administrative functions, and focus on growth. From a small family-run HVAC operation in Tucson, Arizona, to an electrical business in upstate New York, firms are being purchased for seven- and eight-figure sums.
In many ways, this is the next phase of what we’ve seen in other fragmented industries, such as nursing homes, dental practices, and car washes. By buying up smaller players, adding managerial expertise, and beefing up marketing and recruiting, private equity can take relatively small companies and turn them into regional or even national giants. For the small-business owners who are selling, these deals can be life-changing, turning years of hard work into multimillion-dollar paydays.
For instance, Aaron Rice, a plumbing business owner in Tucson, was initially skeptical of private equity’s interest in his business. But when a local HVAC company, backed by private equity, approached him, he recognized the opportunity. Selling his company not only provided financial security for his family but also allowed him to retire early, while continuing to work as a department manager. Rice is part of a growing class of skilled trades entrepreneurs who, through private equity acquisitions, are achieving the kind of financial success once reserved for tech moguls and hedge fund managers.
The American Dream in a Toolbox
The transformation of trades into a pathway for wealth is as much a story of economics as it is one of social mobility. For decades, the American Dream has been tied to white-collar professions. The narrative was simple: go to college, get a degree, and you’ll be on the road to prosperity. But that story has become more complicated.
Today, millions of college graduates are saddled with debt and struggling to find stable, well-paying jobs in their chosen fields. By contrast, tradespeople are graduating from vocational schools with little to no debt and entering industries where demand for their skills is only growing. What’s more, the opportunity to move from employee to business owner is often easier in the trades, where the barriers to entry are lower, and a successful business can be built with sweat equity and a few thousand dollars in initial investment.
As private equity pours into these industries, the message is clear: you don’t need to live in Silicon Valley to build an empire. In fact, the empire-building potential of the trades is arguably stronger than ever. HVAC businesses, plumbing companies, and electricians are not only necessary for maintaining homes and businesses, but they are also increasingly vital to the infrastructure upgrades that will be needed as the U.S. transitions to a greener economy.
The Infrastructure Imperative
The importance of skilled trades extends far beyond individual wealth creation. These industries are critical to maintaining and upgrading the nation’s infrastructure, which has been woefully underfunded for decades. As the Biden administration rolls out its ambitious infrastructure spending plans, skilled tradespeople will be at the forefront of efforts to modernize everything from roads and bridges to energy grids and water systems.
Moreover, as the country pivots towards renewable energy and electric vehicles, the demand for electricians, HVAC specialists, and plumbers is only set to rise. Solar panels need to be installed. Electric vehicle charging stations require wiring. Energy-efficient heating and cooling systems need to be maintained. In this context, the skilled trades are not only a pathway to personal financial success, but they are also integral to the country’s broader economic future.
However, there is a catch: there simply aren’t enough skilled tradespeople to meet the growing demand. The same cultural forces that pushed young people toward college degrees have also contributed to a shortage of vocational training centers and apprenticeship programs. This has created a bottleneck in the labor supply at a time when demand is skyrocketing. Companies are desperate for workers, and the shortage of skilled tradespeople threatens to slow down infrastructure projects and drive up costs.
Addressing the Labor Shortage
The labor shortage in the trades is a complex problem, but one that can be addressed with concerted efforts by both the private and public sectors. Private equity, with its focus on growth, is already investing in apprenticeship programs and training initiatives to build the next generation of skilled workers. For example, Redwood Services, a private equity-backed company, has invested heavily in training and apprenticeship programs to ensure that their growing business has a steady pipeline of workers.
Public policy also has a role to play. Expanding vocational training programs, offering incentives for apprenticeships, and reducing the stigma around trade work are all critical steps in ensuring that the U.S. has the workforce it needs to maintain its infrastructure and support its economy. The Biden administration’s focus on infrastructure spending is an opportunity to not only rebuild the country’s physical assets but also to rebuild the workforce that supports them.
The Future of Trades: A New Era of Wealth Creation
The rise of private equity in the skilled trades is a sign that these industries are entering a new era of wealth creation. For too long, the trades were viewed as a fallback option, a path for those who couldn’t “make it” in college. But today, it’s clear that the trades offer not only stable, well-paying jobs but also the potential for serious entrepreneurial success.
As more people recognize the opportunities available in the trades, we are likely to see a shift in how these industries are perceived. The story of Aaron Rice and other skilled trades entrepreneurs highlights the transformative power of the trades—not just for individual workers, but for the economy as a whole.
In the coming years, as the U.S. grapples with labor shortages, infrastructure needs, and the transition to a green economy, the skilled trades will play an increasingly important role. For those willing to pick up a wrench or a screwdriver, the future looks bright.
The resurgence of the trades, fueled by private equity and rising demand, marks a new chapter in America’s economic story. No longer just a path for those who avoided college, the trades have become a powerful engine of wealth creation, offering opportunities for both personal and entrepreneurial success. As the country faces labor shortages and infrastructure challenges, the trades will continue to play a crucial role in shaping the future of the U.S. economy.
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