A friend is dropping out of IT to pursue welding - but knows the money just isn’t there. She’s starting a 5:30am 10 hour shift at a manufacturer to be able to move onto welding and CNC. She’s autistic so can struggle sometimes but is also one of the smartest people I know and does physics puzzles for fun and builds shit all the time.
Skilled trade jobs value paying your dues. Its more about that than aptitude it seems to me.
Sorry high schoolers, $70k a year is not happening - this kid is privileged as fuck.
"Sorry high schoolers, $70k a year is not happening - this kid is privileged as fuck."
My oldest son is 17 years old and graduated one semester early from high school.
He now works full-time as a welder and heavy equipment mechanic with a base rate of $25/hour and will get many, many hours of overtime this summer.
He will easily gross > 70k this year.
Granted, this is in the Bay Area (so add some inflation there) and he has certain physical and interpersonal attributes[1] that make him special ... but this is, indeed, happening and my impression is that it would be repeatable for others like him.
FWIW, he's very proud of himself and we're very proud of him but ... we're also trying to impress upon him that wages - however high - are not a path to wealth and security. Owning things is[2].
[1] He's a big strong guy, projects as aged 20+ and is very outgoing and charismatic.
At least in the trades the overtime is a well-understood part of the bargain. Plenty of white-collar employees work 60+ hour weeks with no additional compensation except the possibility of a larger-than-average bonus.
Yes, continue and elaborate? Mental (white collar) work has more of that feeling of dread I think. Maybe physical “overtime” has a physical limit, not sure how often you push yourself into burnout in those fields? Curious and asking here, don’t read in too much here.
You can google "retirement age plumbers" and see stories of people's bodies giving out at age 50. There are some things you can do to mitigate that risk, but physical labor jobs frequently land you into unplanned early retirement, with the rest of your life in pain.
I agree with that, the physical labor has been studied and experienced for quite some time now. But we need to look forward and see if there might be changes we cannot comprehend yet.
For example, we cannot yet google the software eng retirement age or the like. Assuming we started in 2005, average dude 25years old then hasn't retired yet and we don't know either where he/she's gone in 2035/45.
Software engineering as a popular career track goes back to the early 80s if I'm being extremely conservative.
There are plenty of retired software engineers that I know. Most of them retired because they wanted to do something different, and they had the money to do it. I don't know of any that have retired as a direct result of the physical effects on their body.
Yeah I’m not talking about Kernighan & Ritchie et al. More like the big boom, zero interest rate and the huge demand of SWE that occurred 2010 onwards.
I’m sure the biggest early retirement factor is weight. Most guys in the trades were 50-150lbs overweight. That’s more ruinous to your back and body than anything you are likely to do at work. We had old guys working and one thing basically all of them had in common was being thin.
>The WEL for Manganese (since 2018) in the UK for those small particles that reach the deep lung (known as respirable particles) is 0.05mg/m3 (8hr TWA), a tenth of the previous WEL.
This change is significant as much of the manganese in the fume will be respirable. It is likely that the respirable limit will be exceeded during many welding activities unless effective controls are introduced and used properly.
I think if you really want to make a proper living from the trades, you need to at some stage plan to move "off the tools" and into starting your own welding/plumbing/whatever business.
If you can do that successfully, you can get FAANG money.
Well there are around 130K plumbing businesses in the USA and around 400K plumbers, so I think that plan leaves around 270K plumbers snaking drains until they die.
Yes, but I don’t see why that means overtime is compensated in one but not the other. If anything blue collar workers are more upfront about their time being valuable, while in white collar work there’s an unwritten expectation that you’ll suck it up and get the job done. Talking about money is taboo, but who does that benefit?
If you talk to someone in the trades yes, it's understood that overtime is required to make good money. When you see people promoting the trades to highschoolers though, they are not talking about that fact.
Yes, white collar jobs can require overtime but not all and not always but that is kinda besides the point. Why are we promoting work that requires 50-60+ hours a week to get by?
Yet I see tradesmen who have started their own contacting businesses and poorly paid software engineers who somehow just make Wordpress themes.
At the end of the day, people need to discover themselves and find what they excel at. Who am I to tell people that they’ll enjoy my job and be as good at it as I am. No one should tell me to start a career in chemistry or playing an instrument. I’ve already tried it.
Yeah, is it really a good indicator if you need to work 20 hours overtime every week to make the median household income? That's just exploitation.
We also just know that, blue or white, there is no raise structure in society anymore. You can't just do honest work or even be loyal and expect it to pay off financially.
Median household income is household income, not personal income. Median personal income in the US for all people with an income is (as of 2022) $47,960. [1] For those in full time year-long employment, it's $60,070. And note because that is for all employed persons, that's including people with years of experience in their respective fields.
Scoffing at $75k for a kid's first job out of high school is so completely out of touch with reality.
$70k isn't a median income, it's much more than it. Which is to say it's much more than 50% of full+ time American workers, with years of experience on average, earn. And overtime is typically time and a half. So somebody earning $50k and working 60 hour weeks would be earning $87,500 which would put them in the top quarter of all earners in the US [1], straight out of high school, and with 0 debt.
You are right that doing this in the Bay Area would be unusual due to an unreasonable cost of living, but it's possible he's still living with his parents. If not, the great thing about the trade is that they're in high demand everywhere - including offshore where the pay skyrockets, especially for a welder who can get underwater work. Those gigs enable one to comfortably retire, if they want, a multi millionaire well before 40.
But the interesting thing about trades is that people end up enjoying them. A friend works the rigs and makes a stupid amount of $$$ thanks to doing 2 on 2 off and spending his offtime in places like Thailand. So he's taking home a healthy 6 figures, gets 50% of the year off, and is having a total cost of living in the low thousands per year. He still has no intention of retiring though, even though he could live off simple interest alone at this point. It ends up being a lifestyle and not just a job.
>Median weekly earnings of full-time workers were $1,194 in the first quarter of 2025.
Extrapolates to 62k/year. I don't know what else to say here.
>. So somebody earning $50k and working 60 hour weeks would be earning $87,500 which would put them in the top quarter of all earners in the US
Yes, work 50% more than the median and you hit the 75% mark (above 50% of the top half). The math seems to math out. But thought we wanted to not worm ourselves to death these days?
>straight out of high school, and with 0 debt.
Well, no. Not straight out of high school. You need to compete for a role among unions (which seems to be a hurdle the poster above passed, or is confident of passing), then complete an apprenticeship for a few years that may either be unpaid or pay significantly less. Then after that you become a journeyman and start to get that pay.
There's still a near college level of training where you need resources to survive that your apprenticeship isn't covering. Resources that may or may not include parents covering room and board (and in that case, sure. You can survive on anything That pays anything if the biggest expense is paid for). That's sadly a growing luxury in modern society, though.
>But the interesting thing about trades is that people end up enjoying them.
I work in games, so yea. I get it. You sacrifice comfort and maybe even health for furfillment. But I can still recognize in my industry when that passion and engagement is being exploited while still choosing to participate it.
Well, eventually I recognized it. Gaining 60 pounds and having an emergency room visit finally knocked some sense into me.
Most people don't work 52 weeks a year so yearly earnings are different than weekly earnings times 52. Beyond that it's important to consider what you're comparing here. You're looking at the wages of (and only of) all full time+ workers in America - meaning you're comparing the earnings of somebody fresh out of high school to somebody who's been working for years on average. And of course plenty of those people are also working overtime. In spite of all of this, the high school kid is still earning 20% more! And the OP that started this thread conversation made it clear his kid has already received this offer, so yes it's literally straight out of high school. His earnings in a few years will be even higher.
Games and trades are complete opposites. If you still think you enjoy game development (and aren't independent), then it's almost certain that you haven't been in the industry long. With games, you start with a passion and the games industry will just completely beat it out of you. The games industry will make you hate game development and even games. The trades are different in that somehow that passion is enabled to be born for those that didn't already have it, and fostered and grown in those that did. In software you end up in a scenario (I'm speaking outside of games here - where you don't even get good pay) where people mostly hate their job, but love the pay. And in welding you end up in one where people mostly love their job.
>Scoffing at $75k for a kid's first job out of high school is so completely out of touch with reality.
I'm scoffing at a kid needing to work 60 hours a week in order to earn an income barely above the median. I'm scoffing at the idea that people think 70k is liveable in high COL areas without sharing multiple roommates.These aren't things we should normalize.
If you really think this isn't bad, you're the ones out of touch with how expensive it is to survive these days.
Not everything that is hard or unpleasant is exploitation. 50% of jobs will pay below the median income. That's what median means. The existence of jobs paying below the median income is a mathematical certainty, not exploitation.
"Good" is always going to be relative. Is it good if your other option is to be a programmer? Probably not. Is it good if your other option is working retail for minimum wage? Yeah, then it's probably pretty good.
So it's a below median income job (as 50% of all jobs necessarily are) with the option to increase your income by working more. Still not exploitation.
There are salaried employees making less who also work 60 hours a week and don't even get overtime (granted, their jobs are likely less physically demanding).
I don't think you're understanding the long term implications of this, nor how expensive it is these days to simply live. People don't understand that soke areas can barely live on median income to begin with and that these aren't just "nice to have" hours, but needed to survive. I will call that exploitation.
>There are salaried employees making less who also work 60 hours a week and don't even get overtime
Those are called exempt jobs and they tend to start at 80k for that to qualify. I still don't like it but baby steps.
If you're non-exempt and have unpaid overtime... How is that not exploitation?
Exempt jobs in no way shape or form start at $80k. You can be making $35k and be exempt. It has to do with the nature of the work, not a salary.
You can't be non-exempt and have unpaid overtime. Non-exempt means you are required to be paid overtime for working over 40 hours per week. That's the entire point of the exempt / non-exempt designation. If you're non-exempt and not getting paid overtime, you need to report your employer to the DoL.
Yes, some areas are expensive, those areas also have higher wages. The median wage in that area will be higher than the overall median for the whole country. If you can't afford to live there...live somewhere else. That isn't complicated.
>Exempt employees in California generally must earn a minimum monthly salary of no less than two times the state minimum wage for full time employment.
So as of now that floor would be $34/hr to even be considered.
>Yes, some areas are expensive, those areas also have higher wages
Given federal minimum wage, it's likely to be the other way around. $25/hr in CA may go down to $11 in a low COL. You can see some abysmally low compensations flr jobs that "require" advanced degrees.
>If you can't afford to live there...live somewhere else. That isn't complicated.
Spoken like someone who's never tried to get housing out of state without a job offer. Let alone moving long distance.
I'm not sure what you want. It's not like $68k is poverty wages. If they don't do the overtime, maybe they only make $50k, which is still above the median personal income ($68k is household income, meaning that is usually with more than one person working). Yeah, you can't live in downtown Manhattan or San Francisco on that, but there's lots of other places you can live just fine, and many many people who live on less. Welding is in demand in lots of places, especially lower cost of living places. It can't be that hard to move. Human beings migrated across Siberia wearing animal skins, surely one can figure out how to apply for a job online and rent a U-Haul.
What's loyalty got to do with this? I'm not "loyal" to my employer and I don't know anyone who is. If I find a job that pays better, and offers better conditions, I'll take it. Why would anyone do anything else, and why would anyone put any value on that?
I actually don't believe it.
Most people work not only for the pay check but also for some concrete project they want to see completed (or a customer problem they want to see fixed, etc). Omo economicus is a very simplified theoretical model of only one aspect of work.
There are options other than "loyal to the company" or "always choose option which pays most"
For example someone might like their co-workers, enjoy the projects they work on, and want to see the current product (that they have invested so many time into) succeed. But at the same time, they might not care about company itself at all. If the project got closed and co-workers left, they will move to a new company with no hesitation.
I don't believe in loyalty to an employer but I've had and seen numerous employers who said they valued loyalty. Those employers didn't pay for that loyalty and didn't deserve, yes.
But that is the point of the GP. Ostensibly, employers once paid for loyalty by offering consistent raises. That is done now.
Thanks for agreeing with me. Older generations have a notion of "be loyal and reliable and you'll move up". The last few decades broke such a social contract.
It probably deserved to be broken but the point overall is thst job progression isn't just a given built into most structures anymore. You gotta fight or bounce around and keep proving your worth.
Tribal knowledge and company familiarity should justify the employer in offering raises to keep the employee around. Hiring someone new almost assuredly costs more in both the front-end and the back-end.
Yes, loyalty is a two way street. If they aren't loyal to you, you're not getting any payoff by being loyal to them. Times have changed (IMO for the worse).
By comparison I was making $75k in the Bay Area as an entry level software engineer with no overtime and only because I was afraid of negotiating higher (I think 85-90 was on the table).
This isn’t to take anything away from your son’s achievements and congrats to him and you all should of course be proud of his accomplishments. I think though it’s useful to compare and contrast blue collar and white collar wages in terms of effort per dollar earned as well when discussing options to kids. There’s nothing wrong with working harder for that amount, especially when you love the work because then you get even more pride out of it, but some kids may want to work harder in the “short” term via a professional education for the long term easier path or have better job stability even in the face of physical ailments.
At a prior gig we stepped up a machine shop and ended up hiring a stinky kid who I thought was someone's homeless brother. Extremely talented, after our program wound down he started his own machine shop and now does multiple millions of dollars of revenue yearly, has staff etc, in his mid 20s now.
He's a special case sure, but if you have business sense you don't have to top out at the high end of the hourly scale.
And Vitalik Buterin was a billionaire before the age of 30 with a CS degree as was Bill Gates and Lebron James was set by the time he was 18. What's the point of talking about outliers?
It feels dubious to appeal to job stability with software in modern times. Companies in the past were hiring and building out during unprecedently great times, and there's no reason to think those times will return. And on the issue of physical ailments - the one ailment we all hope to suffer is growing "old."
In software there's widespread "age discrimination". Mostly it's companies not really valuing experience in software much, so they'd rather hire a younger guy for much less. But the outcome is the same - software is a relatively shortlived occupation for most people, and that's after spending another 4+ years in university, then spending however much time paying off your debts, and then finally seeing your full salary.
By contrast working in the trades until retirement is entirely possible. And it's undoubtedly better for your body as well. Our bodies are meant for doing things - not idle sitting and staring at screens. I did software and CS, but will not be recommending it to my children. At this point I think the best future proofing is some sort of field where computer science is applied, rather than the occupation itself, like electrical engineering.
>At this point I think the best future proofing is some sort of field where computer science is applied, rather than the occupation itself, like electrical engineering.
I think a lot of people actually like physical work and the day passes faster when you aren’t sitting at a desk. But you can’t make the big bucks there unless you are some sort of high end craftsman, and your service life is limited to how long your body stays together.
> wages - however high - are not a path to wealth and security.
High wages provide the discretionary income required to invest though. So I'd say, they're not the goal, but if the word path is to be used, I'd say they are part of the path. As far as owning things...investments specifically (not two motorcycles and a hummer), the usual advice is a well balanced portfolio. Could be equities, maybe some real estate, maybe even some crypto, all at different ratios depending on your risk profile.
My concern is that we are in a unique time period where all of that is coming to an end and there will be no wealth appreciation even for disciplined investors.
> My concern is that we are in a unique time period where all of that is coming to an end and there will be no wealth appreciation even for disciplined investors.
Everyone always fears the future when their portfolio is down.
The best hedge is to also "invest" in something that has value to you. Like bricks / house.
I'm not the person you're replying to. But actually I've been getting quite concerned about this for some time. Mostly due to the shrinking world demographics on the horizon. Overall growth is slowing and in most developed economies it will be shrinking. Also, increasing wealth inequality tends to lead to lower overall GDP so if that trend continues I expect lower aggregate growth as well.
I think there is indeed a strong possibility that we may see very poor inflation-adjusted growth from an otherwise reasonable and diverse investment portfolio.
Ultimately, the recipe for growth will just not be so simple in a world economy with a dwindling population. Thats a VERY unique situation so a lot of historical wisdom regarding investments I think may not bear fruit like it did in the past.
My approach to mitigate this is two-fold, first I'm trying to be even MORE diversified. I have investments spread out over domestic and international ETF's, real estate, and I work a public sector job with a public pension. In addition, while aggregate growth may become lackluster, certain industries will still do well. Ive run businesses before and I'm looking to start another business in a very well-targeted industry to add an additional potential revenue stream well into the future. And the second prong of my approach is to increase my savings rate much higher than historically safe targets.
I think there is good reason to be concerned about this and it has very little to do with the current market turmoil. (Although there are some indicators of trouble in that too)
One of the things I'm very happy to have is a pension from a very long-ago job that I doubt I gave more than a couple passing thoughts to at the time (as well as another less-insulated annuity that is nonetheless in a very well-funded/managed institution.) In any case, being very cautious about anything near or even mid-term.
Or AI takes off so that labor becomes worthless and owning things is all that matters and labor gets gaslight that it's a them problem until capital has built a big enough army of murderbots to put down anyone who says the emperor has no clothes.
I'm hoping for something inbetween the apocalyptic possibilities.
someone needs to weld those murderbots, or pick up the little piece of scrap keeping the welding bot from making more murderbots, or to take over welding when the murderbots all stop working and start watching Sanctuary Moon 24/7
>The best hedge is to also "invest" in something that has value to you. Like bricks / house.
That makes intuitive sense, but quickly falls apart when you do any rigorous analysis. Buying a house might cover your shelter needs, but you still need to eat, and you can't eat bricks. Moreover if the fear is your portfolio losing value, buying a house doesn't really mitigate that. Sure, you might still have a house at the end of the day, but that's cold comfort if you paid $2M for a bay area house that subsequently saw its value tank (eg. something like Detroit). Even in some sort of apocalypse scenario a house isn't obviously better than stocks, because the whole concept of owning a house relies on some sort of functioning legal system.
On the other hand there are very real problems with investing in "bricks / house". It has historical under-performed stocks. Moreover a single house provides poor diversification compared to a basket of stocks and its performance is tied to the economic health of your local area. If you lose your job, there's a good chance that your house won't fetch a high price. All of this makes for a poor risk adjusted return, and it's unclear how "has value to you" counters this.
I can live in Albera. My commute to my job in British Columbia would be hell though.
Owning a home too far from amenities isn't worth much. Same with living too far from where the weather is hospitable, food is available, or the people with skills I need have settled.
Owning a home isn't much of an investment if the jobs, people, or weather shift out from under you. You're then stuck selling your investment, likely at a loss, while also moving to where you can make a living
Yeah, that's the chance you take buying real estate. Try not to be bad at it?
I don't know what to tell you, I bought in a city where I've lived for 25 years and in the neighborhood for a bit over a decade, even that not for the first time. I'm not going to say it doesn't take luck and work.
> Sure, you might still have a house at the end of the day, but that's cold comfort if you paid $2M for a bay area house that subsequently saw its value tank
>That makes intuitive sense, but quickly falls apart when you do any rigorous analysis. Buying a house might cover your shelter needs, but you still need to eat, and you can't eat bricks.
This analysis relies on someone to have a mortgage that takes 100% of their salary every month. The general rule was don't buy a house over 3x your annual pre-tax salary. I think it's moved up past that in most places though. Either way, don't buy so much house you can't afford food. I would think that goes without saying.
>Moreover if the fear is your portfolio losing value, buying a house doesn't really mitigate that. Sure, you might still have a house at the end of the day, but that's cold comfort if you paid $2M for a bay area house that subsequently saw its value tank (eg. something like Detroit).
This analysis is an edge case and in no way represents the norm. I'm not sure of any area that has gone from Bay Area prices to Detroit prices in a single lifetime.
>Even in some sort of apocalypse scenario a house isn't obviously better than stocks, because the whole concept of owning a house relies on some sort of functioning legal system.
Another crazy edge case. It's saying don't buy a house because an asteroid might hit. I'm pretty sure that newly non-functioning legal system wouldn't protect your stock portfolio either. If it comes to that, best to invest in bullets and whiskey.
>On the other hand there are very real problems with investing in "bricks / house". It has historical under-performed stocks.
Include paying rent in your analysis comparing it with stocks, particularly after you pay it off. You're sinking $X into a rental property with zero return and zero equity gained. I don't have to pay $2000 to the mortgage ever again and I have an asset that has more than doubled in 20 years, and a place to live that is essentially rent/mortgage free for life. That's a lot of dividends comparatively. Also, rents go up, mortgage payments typically don't, so factor inflation in your rent analysis.
>Moreover a single house provides poor diversification compared to a basket of stocks and its performance is tied to the economic health of your local area.
You shouldn't ever put all your money in stocks. Putting money in real estate, bonds, CDs, cash, etc. is the definition of diversification.
>If you lose your job, there's a good chance that your house won't fetch a high price.
Housing prices are unrelated to an individual losing their job. If you lose your job and haven't saved up enough runway, you could default on your mortgage. You could also not pay your rent. You get kicked out either way, but the bank should cut you a check for the equity you have remaining, minus whatever fees they conjure up.
>All of this makes for a poor risk adjusted return, and it's unclear how "has value to you" counters this.
All of your points were based on invalid assumptions, edge cases, or are irrelevant when compared to paying rent. Buying a house is a long game.
>This analysis relies on someone to have a mortgage that takes 100% of their salary every month. The general rule was don't buy a house over 3x your annual pre-tax salary. I think it's moved up past that in most places though. Either way, don't buy so much house you can't afford food. I would think that goes without saying.
The problem is that in much of the anglosphere, housing is so scarce that you have to ignore such rules of thumb, or live in the middle of nowhere.
>This analysis is an edge case
>Another crazy edge case
If you ignore edge cases, then you're left with just the median case, and that says that at current price levels, houses aren't worth investing in because they have historically worse returns than stocks, and provide poor diversification.
>Include paying rent in your analysis comparing it with stocks, particularly after you pay it off. You're sinking $X into a rental property with zero return and zero equity gained. I don't have to pay $2000 to the mortgage ever again and I have an asset that has more than doubled in 20 years, and a place to live that is essentially rent/mortgage free for life. That's a lot of dividends comparatively. Also, rents go up, mortgage payments typically don't, so factor inflation in your rent analysis.
This calculator[1] factors everything you listed, and the math doesn't work out for the hottest housing markets. It might work out for Miami or Huston, but not San Francisco or even Albuquerque. Using default assumptions implies a break-even price-to-rent ratio of 14, but most US metros are far above that[2].
The nice thing about the calculator is that if you don't agree with the assumptions, you can plug in your own numbers. I'd like to see what numbers you come up with to make to make the math work out in favor of buying in the top US cities.
>Housing prices are unrelated to an individual losing their job.
The point isn't that a Bay Area housing market will crash because Google Employee #68908 lost his job, it's that if there was an AI winter/tech crash, that will result in Bay Area housing prices dropping, along with layoffs.
> The problem is that in much of the anglosphere, housing is so scarce that you have to ignore such rules of thumb, or live in the middle of nowhere.
This is a bit circular, supply-and-demand-wise. Especially in the US - why is demand in some areas so high that people will bid houses in San Jose up to 2M+? Why aren't they buying the same thing for 450k in Dallas?
Why aren't the companies based in those crazy expensive areas and paying million-plus total comp to large sections of their workforce being eaten alive by ones with lower labor costs in other regions?
Housing is scarce in the areas that are already the most densely populated, which itself is a bit of yogi-berra moment.
Too much discussion about housing in the US focuses only on the supply side and ignores the geographic concentration of demand that has happened over the last few decades. Is that centralization good for the country in the long-run regardless? Obviously that centralization goes back way longer in many European countries, so was the distribution and the number of growing populaces in cheap, not-yet-established areas part of the secret sauce for the 20th century US? Could you start the companies that made the Bay Area what it is today in today's Bay Area? Could you even start them in somewhere cheaper today, or would you not be able to get the talent to join you there? We're five years into remote work being way more common than it ever was before, and it hasn't broken that stranglehold of concentration yet.
>We're five years into remote work being way more common than it ever was before, and it hasn't broken that stranglehold of concentration yet.
That's partially because big companies decided WFH was now verboten. Part of it was because execs in that area didn't want their personal property values to go down, I suspect. I'm sure there was also governmental pressure as well to protect the auxiliary businesses like local restaurants, protect tax revenue like property tax state income tax, etc.
> This calculator[1] factors everything you listed, and the math doesn't work out for the hottest housing markets
That's a great calculator; I remember using it like a decade ago. And while it includes all factors they listed there are a few it doesn't:
1. If interest rates go down, you can refinance, but if they go up, the inflation and appreciation values likely will as well, but your rate is fixed, for (up to) 30 yrs (!!)
2. It's relatively easy to make improvements while you live there (and capture increased value when you leave)
3. The calculator assumes that the down payment and cost difference vs renting would be invested, which is fine but ignores psychological realities that prevent this more often than not
Also:
> The best hedge is to also "invest" in something that has value to you. Like bricks / house.
The suggestion was mentioned as a 'hedge'. The point being: you don't know what the values entered into the calculator will really end up being. Having some costs locked in can help with concerns around cash flow (and shelter costs are usually a significant percentage of costs overall). It's an "also 'invest'" strategy, so there's a whole lot not included in the calculator here as well
I will agree that this could play a massive factor, but it's a massive "if" you're banking on. There's no guarantee that interest rates will dip, and the longer it doesn't dip the worse the math works out for you. Sure, tons of homeowners refinanced during the pandemic, but that was a once in a lifetime opportunity. Moreover stocks also rallied in the same period, which raised the opportunity cost of the equity you have locked inside your home.
> but if they go up, the inflation and appreciation values likely will as well, but your rate is fixed, for (up to) 30 yrs (!!)
No, higher interest rates makes house prices dip, or at least suppresses growth, not the other way around. All things being equal, higher interest rates means higher monthly payments, which means buyers have less buying power in absolute terms. We see this reflected in housing prices after the fed hiked interest rates.
>2. It's relatively easy to make improvements while you live there (and capture increased value when you leave)
I reject the premise that making improvements is some sort of positive value activity. If you're staying for a long time, then that 10-year old kitchen remodel isn't going to boost prices much by the time you sell. If you're selling in the near future, then you run into the problem of realtor fees eating into any profits, because moving frequently means such fees can't be amortized over longer periods. In either case there's risk associated with renos. They can be botched or go over budget, and all things being equal as a buyer I'd rather buy a non-renovated house for $x, than pay $x + $50k for a house that the previous owner spent $50k renovating. By all means, do that kitchen reno to make your home a nicer place to live, but don't think it's something that pays for itself.
>3. The calculator assumes that the down payment and cost difference vs renting would be invested, which is fine but ignores psychological realities that prevent this more often than not
Fair point, although I seriously doubt people who do rigorous buy vs rent analysis are the type of people who can only be cajoled to save through a house/mortgage
>The suggestion was mentioned as a 'hedge'. The point being: you don't know what the values entered into the calculator will really end up being. Having some costs locked in can help with concerns around cash flow (and shelter costs are usually a significant percentage of costs overall). It's an "also 'invest'" strategy, so there's a whole lot not included in the calculator here as well
The values could easily work against you as well. For instance if housing costs rise slower than expected. This is a real possibility with the rise of YIMBY in politics and boomers selling up as they retire. Moreover how is parking most/all of your savings in a single asset (ie. your house) considered a "hedge"? Maybe it can be construed as a hedge if your portfolio was all MAANA stocks, but I'm not sure how anyone would think shifting from a globally diversified stock/bond portfolio (ie. a bet on the global economy) to a single house in the US is a "hedge".
No, of course not but I think you should respond by increasing your savings rate beyond historically safe targets and diversifying even more aggressively.
100% agree. Part of it is age, and part of it is current situation and needs, but I've definitely dialed back on aggressive investments into safe harbors.
I'm not sure what the rest of the US market is like, but the Bay Area has a huge shortage of tradespeople because of the 2008 housing crash and very high cost of living pricing folks out. I knew of this but became much more acutely aware when I started doing transit advocacy. Getting folks to build/maintain HVAC systems, weld, drive buses, etc is getting increasingly difficult.
If your son can avoid having to buy into the Bay Area housing market (by living on property you own/pay for), he can make good money and probably will have little trouble finding work for years to come.
FYI for those not from the bay area: California mandates that chain restaurants pay at least $20/hour. So $25/hour isn't that much more than entry-level at McDonald's.
But McDonalds doesn’t really offer OT, which is a huge draw. Many fast food workers work multiple jobs because they need the hours for money, and none of their employers give OT regularly.
Working 40 hours at $20/hr = 800/week.
Work 40 hours at $25 and 20 at $37.5 = $1750 which is enough to live in the Bay Area.
I'm pretty sure OP wasn't talking about the Bay Area which isn't a sane place economically speaking where 70K isn't all that great of a salary, especially with a ton of overtime.
Yeah, ignoring the OT, 70k in the Bay Area is ~40k in Omaha, Ann Arbor, Orlando, etc [1]. Without the OT it's more like 30k. And if your brain, like mine, hasn't adjusted to inflation yet, that's ~23k in 2019 dollars [2].
Sure, Omaha doesn’t have surfing or mountains, but camping, hiking and other outdoor activities are cheaper, less crowded, and way more accessible. You’re not fighting for a campsite or dropping $50 just to sleep outside, and most hiking is free or near-free. No $25 parking fees or permit lotteries just to walk a trail. And saying $70k goes far in the Bay Area if you don’t pay rent is kind of ridiculous. Almost no one lives rent-free. Every well-paid software engineer I know out there is trying to get out. They’re all burned out by housing costs, crowds, and the grind. Amenities don’t mean much if you can’t afford to enjoy them.
Dispersed camping in National Forests is typically free. Likewise BLM land. There is a lot of both in California. And because public land is your land, permission is usually not required.
Is the Bay area perfect? For me, no. I don’t live there. I live somewhere better that’s within driving day trip distance. But if I was young, it would be a different story.
I mean, even an hour west of Boston, there's a ton of hiking/canoeing/etc. mostly with free or cheap parking (have a free parking pass for state stuff). Mostly just do day-trips so not sure what camping spots run. But there's a ton of cheap/free stuff. No, it's not Yosemite though have a pass for national parks as well but plenty of nice stuff.
You are exactly right. This is how I have calculated it since I took MicroEconomics as a Freshman.
P.S. Union Journeyman Welder, Bay Area median salary is $26 ~ $36.82 =
$52,000 to $72,400.
"The median household income in the Bay Area was $128,151 in 2022, according to the U.S. Census Bureau. This represents a slight decrease from $132,586 in 2019. "
So.. 56% of median household income? If him, and his gf worked, then they would collectively make 112% of median household income.
> we're also trying to impress upon him that wages - however high - are not a path to wealth and security. Owning things is
I'm not a parent, so I'm a little hesitant to disagree, but this seems like the dumbest thing I've heard in my life.
Wages are exactly the path to wealth and security -- the matter is what you do with those wages. You can't own things without receiving wages unless you inherit your wealth.
If what you were trying to say is that the best path to being wealthy is to already be wealthy, then I definitely agree, but for those born missing their silver spoon wages are the only way.
Your kid had his silver spoon (no offense intended here), and it seems like he's going to be a balanced person because he'll probably be able to see and appreciate different worlds, so congrats on that. I find it hard to believe someone can go into a field like welding (knowing tech exists, and having the aptitude).
I am curious to hear though -- what is your plan? In my own pre-parent mind it seems like this is a chance to teach him about as much of the world and the people around him/society above and below him as you can before settles into his life (clearly there's a ton of time left to change, etc). The struggles of the average blue collar worker are very different from that of the white collar worker -- but the right advice about the various big things in life I'd imagine would make a world of difference.
With regard to owning things, knowing things like "banks giving out mortgages are playing a trust game -- and they trust you a lot more if you have 50 working years left". It's possible of course to get a bad mortgage, but the first rung of the ladder is more about projections more than anything for young people. In the Bay Area I'm sure that... isn't reasonable advice though since your housing market is absolutely insane.
Also, is he going into welding with some sort add-on skills? Like welding with a little bit of CS/robotics? Welding with a passion for cooking? etc. The (currently) secondary skill tree can completely change careers.
Banks do not engage in age discrimination in giving mortgages. You can get one at age 20 or age 60, all else being equal.
It’s a secured asset, so if you turn 65 and need to go into a nursing home for some , or die, they’re confident they can recoup the balance of the loan from the house when it is auctioned off or sold to another family member.
> It’s a secured asset, so if you turn 65 and need to go into a nursing home for some , or die, they’re confident they can recoup the balance of the loan from the house when it is auctioned off or sold to another family member.
Thanks for noting this, this was definitely a possibility I hadn't weighed enough, though I'm not sure it's always another family member (I assume you meant another family member or any random bidder)
> Banks do not engage in age discrimination in giving mortgages. You can get one at age 20 or age 60, all else being equal.
I find it hard to believe the suggestion here that as far as 30y loan repayment goes, all else equal, a 60 year old earning 70k a year is similarly risky to a 20 year old earning the same rate? From first principles, this clearly doesn't hold.
Now, I assume you were referring to the illegality of considering age in loans -- it is illegal to consider age, but in this case the "age discrimination" is baked in -- because it's built into credit scores[0][1]. The common sense take prevails here, I think.
Actual results on the ground often differ from what is and isn't legal/right, as anyone who is in an underrepresented class will attest to (I do not mean this in the preachy liberal sense, it's just the best way I can find to say it), I think this might be one of those cases (guess I'll find out when I'm 60?).
The aarp link seems to basically say that a lot of seniors are having loans rejected because of low reported income, so be sure to report retirement income.
The philadelphia fed link notes that older people who apply for loans are being denied more often, but there's lots of potential reasons for that. Aggregate economic stats, other than credit score, in the table at the end look worse to my eye near the top age brackets (but maybe not at the same levels that rejection started climbing).
It's not clear to me when it says age discrimination is prohibited, but mortality expectations are allowed. Seems like the same thing to me.
The paper suggests there may be an element of selection, which resonates with me. Looking at my parents and their siblings, most all of them would have had a mortgage 30 years ago and likely be in these statistics; now, those with higher retirment incomes also seem to be the ones that paid off their mortgages and aren't interested in a new one.
I think all he's saying to the kid is to avoid the wage slage mindset of always being a worker, renter, and consumer. You don't have to be born wealthy to understand that or to work your way out of it. Wages are important but they're a mean not an end.
> Wages are exactly the path to wealth and security -- the matter is what you do with those wages. You can't own things without receiving wages unless you inherit your wealth.
No, you can also build things to achieve wealth – for example, you can build a company and achieve wealth this way. This doesn't necessarily have to be a pump&dump startup, lots of entrepreneurs became wealthy by founding a sustainable business.
True, but let's consider the next age group up from 17, ... graduate students earn less than that, don't get paid overtime, and will have to search for a new job in a few years.
That may be true but we're talking about an anecdote. The U.S. Bureau of Labor Statistics tracks that people with a high school education, on average, earn about half of what people with masters degrees earn [0]. It's easy to lose the big picture when focusing on an outlier.
In the chart linked by mmcwilliams, an undergraduate degree in engineering would normally be a "Bachelor's Degree" - assuming the certificate awarded at the end says "bachelor of science" or something similar.
Some engineering programs make sure students are learning specialized practical skills, others make sure they get a solid grounding in basics so they have an easier time in picking whatever engineering discipline strikes their fancy.
The differentiation here is usually that a professional degree follows a bachelors or undergrad degree. Law school and medical school are categorized differently than masters degree programs. In US colleges an engineering degree would typically be an MA and in some fields the MA is not a terminal degree.
Kids (kid being someone from 16 to 30 without children of their own, ideally also without substance abuse problem and a home they can sleep in without fear of being assaulted) have nearly infinite energy, capacity to absorb (physical) abuse, and often the focus to learn esoteric subjects, if they're interested in the subject.
So I would fully expect a large fraction of bored kids to potentially become expert car mechanics, or tree pruners, algebraic geometers, hadoop experts, air conditioning duct builders, etc, if given access, mentorship, opportunity, recognition, and compensation.
I don’t disagree. After all, that’s exactly how I became an expert in whatever I do right now.
You seem to have missed my point though, it was about switching tracks to become an expert in a new thing. A random physics PhD grad might not have a burning passion for fintech, for example but still becomes an expert after three months in the job because of the sheer amount of rigorous training.
I think that the ability to learn adjacent skills (and I'd call fintech and physics PhD adjacent) is a function of domain expertise. For instance, if I were running an automotive body shop I'd put the expert hvac technician slightly ahead of the quant in the "how quickly they'll pick it up" and I'd put either ahead of the person who's never run down to the end of the "obsessive about a subject" maze. For lots and lots of kids, that "obsessive about a subject" focus comes naturally and often is beaten out of them by "please go back to your data entry task; we're not paying you to find weird buffer overruns while speed-running mario brothers 720"
And let’s consider the next age group up from that with some graduate students easily clearing 150-200k in total comp. Short term pain for long term prosperity - studies related to me was that on average university graduates end up making $1M more than non graduates in lifetime earnings (of course misleading data since university admission is already selecting for something that correlates with ambition AND the professional world tended to prefer university students with opportunities)
Of course people pursuing higher education are often doing it for personal growth reasons as well.
Haha, can't actually tell if this is satire. If it is, then bravo, sir! If it's not, then it's sad this poor father doesn't know his son has dropped out of high school to become welder who needs a ton of OT to scrape by in the Bay Area.
Welder employment market is very boom bust (people crowd it when work is well paid because welders are rare, and they leave it when work is not well paid because welders are plentiful), it could go either way in 5 years (programming is the same, but we haven’t had a bust since 2008, and then there was the 80s which was brutal for SWEs).
> paying your dues. Its more about that than aptitude it seems to me.
Yes, paying dues, both in the sense of putting in the time to learn the trade well, and very likely for a good paying career in the trade, paying union dues.
People have been doing this since the rise of professional guilds in the middle ages.
Today's kids can show aptitude, capability, and interest by doing well in shop class. An employer can take that interested teen or tween on at an entry level, add to their skill level, and make a profit on their labor. The worker can protect their labor value through a union, and probably should if only for the side benefits apart from negotiating contract labor rates.
Should they just go to college instead? Sure, if they have that interest,
and can get out without a student loan debt bigger than some mortgages.
Unions are not magic. I have a friend who did belong to the local sheetmetal workers union and she was... not positive. Moved into a non-union shop and was a lot happier.
Similar experience here. Family member went into a union job and discovered that it was great for the old guys at the top who had been there for 3 decades, but it was rather repressive for the new people starting at the bottom. Much easier to pivot into a different job where union seniority wasn’t the defining factor of your entire career.
Sure, but a union is supposed to work better, so if it isn't, by definition it's to some degree corrupted. So it's important to remember that the union itself isn't a bad thing.
A union is supposed to provide for workers in the same way that a software company makes software. If either of them don't, there's something fundamentally corrupt about each org, not with the concept.
Our high school did something I'll never forget. They offered trade based two hour "block courses" through the school district. We had Electronics and Circuit Design, IT, Auto Shop and Repair, Welding, Aerospace Engineering, and a whole bunch more that I was never interested in and so don't remember.
It was a great program. It was offered in connection with local state and community colleges. You could get credit for some of your high school work if you continued on in the field. The local employers knew about it so they would stop by often to see what students were learning and to suggest new directions for the entire class.
Never seen anything like it before or since which was the 1990s. It was a way to start paying your dues before you even left high school. You wouldn't command an awesome salary right out of school but you could easily insert yourself into the trades with almost no down time.
My high school had something similar. Also in the 90s. The trade program was eventually disbanded. And the shop classes were converted to computer labs. In a similar vein, the nursing program is still going and very popular. You graduate with a CNA, 6 months to LPN, enough credits to get an AS.N in 1 year. A lot of my friends bought their first home before 25.
“Paying dues” is a waste of everyone’s time and the productivity of the market. It means one node of the market was underutilized, purely for ego.
One thing I like about being closer to market oriented trades (or directly trading) is that your compensating is immediately based in the utility you provide. Like in financial services if you provide a service is based on the volume and your toll on that volume.
But yes if you dint have opportunities, like the knowledge, capital and flexibility to leverage it, then there’s entry level grunt work remaining.
“Paying one’s dues” has a very different connotation to me than “Learning a skill.” The former suggests a tenure-based system of seniority and pay scales, rather than a meritocratic system based on skill level and actual output.
To me it just says you'll make less for a period while learning the ropes. I suppose there are situations where you need to be spending the time to empty the trashcans but I don't take it that way.
You have to take into account, that you start to earn money from a very young age. And you don't start your career with huge student debt. Skilled workers have a huge head start and it's easy to find need jobs because of the demand. If you're smart and good at your job, you can create a decent life for yourself with skilled labor. Especially because all the smart kids seem to do the "smart" thing and go to college, leaving more demand for good laborers in the skilled labor market.
The difference between compensation in different countries is fascinating. In OZ/NZ tradespeople are the highest earners. For Australia I suspect this is explained at least partially by mining (I know people who earned $600+ per hour 10-15 years ago, and that included free flights in and out, free accommodation etc), and NZ needed to follow because of the ease of moving to Oz. Mining doesn't really explain why plumbers and carpenters earn like crazy as well though.
The quality of work though is extremely poor if I compare what one would expect in e.g. Germany. I guess that's the advantage of the German apprenticeship system where tradespeople get proper training and not take a couple month course at a tafe and then start their own business.
> (I know people who earned $600+ per hour 10-15 years ago, and that included free flights in and out, free accommodation etc)
I remember countless stories like this circulating when I was in high school. Someone who wasn’t going to college was instead going off to do some obscure thing like work on oil rigs or do welding in hazardous locations.
The hook was always that they heard a friend of a friend brag about some extreme hourly rate they made one time a few years ago and assumed that’s just what the job always paid.
Then they went out and did it, learned that the job was terrible, and discovered that the average pay was a lot less than the all-time highest number that people would quote.
> I guess that's the advantage of the German apprenticeship system where tradespeople get proper training and not take a couple month course at a tafe and then start their own business.
Plumbers and electricians in Australia both do four year apprenticeships, with some time at TAFE and the rest training on the job.
The quality problems you see are generally less about training, and more the result of financially-motivated corner cutting.
I was into machining right out of high school. After layoffs and plant closings I got into IT, now networking. I’d never make the kind of money I do now if I hadn’t of made that career change! I love my job too.
You don’t even need to be in the trades to make $70k/year. That’s just about $33/hour, you can make that in a fast food restaurant or grocery store these days on the low rung of management or even just a senior IC in services where I live.
I own Netgate (hat tip to the haters who will comment), the company that does pfsense and tsnr.
I also own Bump It Offroad in Windsor, CO. We do some CNC (plasma table) as well. I pay welders about $70k/year plus benefits, to start. They’re both college drop-outs, but smart and willing to learn.
Though I grew up in the trades, it’s not about “dues” for me, but more work ethic and willingness to learn.
Very cool. I'm down the road in FtC, and I TRIED to get my daughter to take the Front Range machining program when she was in HS, but it required going an hour away to one of the Denver campuses every day because they didn't have it here. I thought it would be good for her to have as a fallback, and I'd have gotten her a CNC router to learn on. She also really didn't express any interest, if they had a local program I probably could have convinced her to go.
It seems like around here it's definitely some interest in some of those skills. I gather the Bugatti guy has some need of them.
edit: (I've got a 100 series, so I'll keep an eye on BIO)
I have a number of concerns with CSU Ft. Collins. I know people who transferred to Billings because FtC was losing accreditation in some majors. (This was years ago.)
FRCC only offers machining in Boulder Co. Welding (only mentioned because that’s what this tread is about) is offered in Larimer though.
I know of several job opportunities today in the northern part of the Front Range that need toolpath programming.
The kid built a CNC router for his HS FRC/FTC club as an Eagle Scout project, then ended up at Mines.
Skilled trade jobs value paying your dues. Its more about that than aptitude it seems to me.
Sorry high schoolers, $70k a year is not happening - this kid is privileged as fuck.