Now, please welcome BlackRock's global head of corporate affairs, John Kelly.
Okay, welcome back folks. Please take a seat. We're about to start our panel with Larry Fink and Mike Rowe. But before we do, as you get settled, I just want to tell you how proud I am of the initiative that we launched today, our Future Builders initiative. And much like everything else we do at BlackRock, we really rely on the expertise of our clients and others and partnerships with government at all levels. And this initiative is really exceptional, and that, you know, we're experts at a lot of things, but we really rely on you all to tell us how we do this big initiative. And so this is the beginning of our journey. It's about the American worker and how to close the skilled trade gap. And this video here will explain a little bit more in detail, but we want to thank you. We're at the beginning of this journey. We're grateful for the partnership and we're on our way. So, roll the video. Thank you.
For nearly 40 years, BlackRock has helped Americans save and prepare for their future. As we enter a new era of infrastructure development, there is a powerful opportunity to translate this investment into lasting economic opportunity for people and communities across the country.
Becoming a master plumber opened so many doors. It was the best decision I ever made.
According to the Bureau of Labor Statistics, hundreds of thousands of net new skilled trade jobs will be needed in the coming years to meet demand. That's why the BlackRock Foundation is launching a national $100 million philanthropic initiative to help close the skilled labor gap, connecting people to skilled trades training and putting them on the path to become future builders.
With commitments like this, we have the opportunity to train young people faster so that we get them on the job site and help them start their career down a good path of success for them and their families. This generation of workers has an opportunity that none of us ever had prior to this moment in history.
By investing in training and access today, we're helping ensure more people can participate in and benefit from the infrastructure transformation underway across the country.
Now, please welcome the founder of the Mike Rowe Works Foundation, Mike Rowe, and chairman and CEO of BlackRock, Larry Fink, moderated by Semaphore's business and finance editor, Liz Hoffman.
Hi everyone. Larry, Mike, thanks for coming. Larry, you underwrite risk for a living. Is a four-year college degree the most expensive bad investment in America right now?
No, because for me, I had no idea what I wanted to do. I mean, for me, it took me more than four years to decide what I wanted to do. So I was able, you know, I think college is a great moment for socialization, of equalization, of maturity. So much about life is about the human connectivity, and so I do believe there's a great value beyond the education. And as I said, I still believed I was quite immature after my four-year degree, so I was able to talk myself into staying on for two more years and getting my MBA without ever working. And by that time, I think I was a little more mature to go do it. But let's be clear, for many people, there are other paths to build a wonderful life and a wonderful career. And the key is, you know, you have to look at the essence of each and every person. And the key for life for everyone is to find their purpose. And for some people, their purpose will remain to get a four-year or advanced degree, and they could take that forward. But that's not going to be the pathway for everybody. And I think in the United States, and this is going to be one of the critical issues we have, I think the speed of which AI is changing, we're not adapting our society fast enough. You know, really post-World War II, the pathway to a white-collar job was a university education, a college education. And AI is going to disrupt many of those type of jobs. At the same time, AI is going to create a lot of skilled jobs needs. And I don't, the biggest issue confronting our country today and other countries is the speed of which this change is occurring. Is society moderating that fast enough? I've had many conversations with university leaders and what are they going to do about it? Because there's no question in my mind the demand for four-year degrees is probably going to be going down. And how are we going to be, and you know, if you look at the growth rate of tuition in our university system, I think it's now for 30 years in a row growing faster than inflation, which obviously asks the question, is that a good value proposition 30 years later? I mean, I went to school. Well, I was a product of California where going to a university system was $600 a year, $200 a quarter. You went to three of them. So, I mean, I was able to have a great value for that education, and that's $600 a year. That's not the equation today. We're talking hundreds of thousands of dollars for a four-year education in some cases. So we need to be recalibrating how we are, how are we designing our society and getting our society prepared. And this is one of the foundational reasons why we thought about providing this philanthropic gift to start Future Builders, because we need to highlight there's other pathways for dignity and purpose. And with the rise of AI and how AI is going to reshape us, it's going to create many jobs and we're not prepared as a society to fulfill those jobs. And to me, this is a crisis.
Mike, part of this is cultural that we've seen of kids towards, Larry says, college degrees, four-year degrees, six-year degrees. And that's going to be slow to change, but as you sort of look out, like what is the cultural piece of this? We were talking backstage a little bit that like young people seem not to be okay and a lot of that is real uncertainty, growing uncertainty about where they're going to get wages and then where they're going to get kind of a sense of purpose.
Yeah, the kids are not all right, you know. Not to put too fine a point on it, but nothing in the history of Western civilization has gotten more expensive more quickly than a four-year degree. It's not to say it's not valuable, but I mean nothing. Not real estate, not healthcare, not energy, nothing. So, that kind of happened. And like a frog in the boiling water, I think a lot of parents watched it happen. And today people still ask me how did it get so expensive so fast? And the honest answer is a 300-page book I can't get around to finishing. But I thought and think that it started with the very deliberate decision to chop class out of high school back in the early '70s. In fact, I would say that in the long history of education, you'd be hard-pressed to find a more boneheaded decision that led to more unintended consequences. We removed from our high schools, not just metal shop and wood shop and all those other things. We removed the vocations that actually looked like work. So, a kid who maybe wasn't even interested, didn't have the chance on his way from math class to English class to poke his head in to see what was being built, what was being fabricated, what miracle was unfolding in that shop. That was just gone. And at the same time, we really put our thumb on the scale. I think we wanted to encourage more kids to get a higher education, whatever that means. And so, as with most PR, we went too far. We weren't satisfied with making a persuasive case for a four-year degree or beyond. We had to say if you don't take that path, you're screwed. You're going to wind up turning a wrench. You're going to wind up with some, you know, vocational consolation prize, right? That message landed and it scared parents to death and it gave kids a clear example of what an aspirational career looked like, and it didn't look like work. So, you take that over 35 years or so, drip, drip, drip, countless portrayals in modern media about the vocational consolation prize. That was Schneider on One Day at a Time. Some of you will remember, you can't find a plumber on TV that's not 350 pounds with a giant butt crack, right? All these portrayals, they're alive and well. They've been with us forever, right? That landed. That's powerful. And so we freed up a bottomless pile of money. We encouraged kids to borrow whatever it took to take that path. Their parents were scared. Their guidance counselors are getting bonused on their ability to get more kids to matriculate toward that direction than the other. You know, how did college get so expensive? How couldn't it get that expensive? That's what we did. And so today, $1.7 trillion in student loans currently on the books, most of which is not held by trade school graduates. 7.6 million open positions, many of which are in manufacturing and the trades. According to Nick Eberstadt, whose terrific book you should all read, it's called Men Without Work. We've got 6.9 million men, prime working age men, not only not working, but affirmatively not looking for work. That's never happened in this country, not in peacetime. Anyway, so all of these things have conspired to bring us to this place. And by the way, thank you for doing this. It's, I can't even tell you how gratifying it is for me to have spent the last 17 years talking about our crumbling infrastructure and trying to make a more persuasive case for the jobs that we just saw up there on the screen. If I had an alarm bell, I would ring it. Not a week goes by that I don't hear from the leader of some consequential industry who is freaking out in real time. The maritime industrial base needs 400,000 people to build our submarines, welders and electricians and CNC operators. 400,000. Where are they? They said, you know, we've looked everywhere. Do you know? And I said, yeah, man. They're in the eighth grade. That's where they are. You know, we've talked about AI. We've talked about data centers. We've talked about the incredible opportunities that have come. Dina just mentioned a program I didn't even know about in Ohio laying fiber optics that guarantees you a job. There's so many great stories to tell. This is one more in the page. Sorry for the filibuster, but when we talk about why our workforce is out of balance, I think it makes perfect sense to start with why do we paint with such a broad brush when it comes to telling kids what the best path for the most people is. That's why we're out of whack today, I believe. And as to why we're still lending money we don't have to kids who are never going to be able to pay it back to train them for a bunch of jobs that are about to become completely irrelevant. Yeah, that's beyond my pay grade.
We've been assuming that these jobs, these electricians, welders, HVAC, all that stuff is less vulnerable to AI. In part, I think because the videos we see of robots, they're always like falling down and helpless and taking an hour to unload a dishwasher. But the tech will obviously get better and there are those in Silicon Valley who have a different solution to this problem, which is like a million robots outdoing. And I don't know sort of what you maybe Larry, like what those competing visions for a long time we told kids learn to code. Turns out that was pretty short-lived advice. Like how do you future-proof this particular piece of advice that you're giving and the money you're putting behind it?
Well, there's no question. I mean, Elon Musk is now saying we're going to have more robots than humans in a number of years. But they're going to do smaller, you know, they're going to do different tasks. There's no question, as Mike was talking about, in so many industries where we are short workers, short finding the talent to take on these jobs. I don't, you know, I don't know where robotics is going to be going. I'm pretty optimistic that they're going to be improving and getting better at what they do. But that being said, I do not believe the large-scale projects that we are talking about in rebuilding America is anything, you know, short-term. It's probably much longer term where we're going to have that type of machinery in the future. But that being said, the opportunities for the next 10 plus years is going to be the rebuild of America. Let me be clear, if we don't rebuild America's infrastructure, if we do not have an America that has abundant power, that is affordable, which is the foundation for AI, we don't have that. China wins. And they're building 100 gigawatts of nuclear as we speak. They're putting solar fields that are miles in length. We need to be moving now. And as Mike talking about there, we can't afford to wait until these eighth graders matriculate. We have to start focusing on it now. We need to get the, you know, what I'm worried about, you know, is this May when our college graduates are graduating, we may see the highest unemployment rate of that group of young men and women that we've seen in years without a recession. And so we need to be talking about it. We need to be thinking about it as a society. We need to be moving forward. There's other pathways. And hopefully we're all waking up to that idea that, you know, we need to be rebuilding our power grids. We need to be producing as much, you know, power as we can with any type of, you know, molecule that you could have or any type of, you know. So I am in Washington even now I'm pushing that we need to be talking much louder about solar. I mean solar has to be a component of pragmatic energy policy. And so the combination of the strength of our economy and the geology of our country related to the hydrocarbons, that's a foundation and that's something that we have that so many other countries don't have. But if you travel around the world like many of us do in business, you're seeing the growth of solar in so many ways because every country needs to solve their power issue, whether that's in India or Africa or anything else, and they don't have the hydrocarbons like we do. And the advancements in battery storage and the advancements in solar panels is growing so rapidly that solar is going to become a very viable source. Now, what we need to get back to more jobs, we need to build those power supplies, the solar panels, the battery storage platforms here in the United States. We need to be partnering up with companies, whether they're Korean or even Chinese, have them come here, build it. We could own 51% of their businesses like what happens over in China. We could be doing this and building and creating really real jobs again. But we need to have a plan and a policy.
You're talking about potentially very high unemployment numbers while the economy is growing, continue to grow. There's I think growing concern about sort of jobless growth. And...
But Mike said it. We don't have enough skilled workers. There's so many job openings right now and we're hiring. We have a bunch of young men and women who chose the path of getting a college degree right now where that disruption is occurring very rapidly. I try to tell everybody the future is today. It's happening now.
BlackRock still hires a lot of young analysts, right? What's that look like in an AI world?
We're hiring 500 to 700 every year. We're growing, but let me be clear. The amount of revenue growth that we are seeing as a firm, and then you compare that to our headcount growth. We have great evidence that we're doing a lot more with fewer people. So, we're still growing because the firm's growing, but we're not growing headcount as fast as we're growing the enterprise. And I think that's what's going on. And this is, you know, we're just starting the age of AI. I mean, we're growing now because compute's faster. We have all these other things that are allowing us to do so much more. We have one of our strongest platforms at BlackRock is our systematic or quantitative big data analytic platform in investing. It's, you know, it's our one of our fastest growing equity pro, it is our fastest growing equity product at the firm. And we have GPUs on our platform doing all the processing and all that. Five years ago it took 12 hours to process all the data. Now it's less than, you know, it's in minutes. So the speed in which the analytics can then interpret is just a great example how technology is transforming what we're doing. And now if you intersect where AI is going to help us in terms of working with more and more of our clients and RFPs and other processes, it's just going to accelerate the speed in which we do this. And it means we'll have less humans doing all that. But because we are continuing to grow and, you know, we've grown quite considerably over the last five years, we're continually growing our headcount. Our headcount right now, it's the highest level it's ever been in the history, about 25,000 people. But our headcount's growing at a slower pace in our revenue growth.
Mike, not to make you like an avatar for blue-collar America, but I think like the messaging around this is sometimes I think internalizes you've got, you know, tech CEOs and respectfully folks on Wall Street saying, you know, you get down in the sewer and do the thing. You have spent time in the sewer doing the thing. I guess I'm just sort of curious how you think like this gets packaged. Does the government need to be doing something here? The last time there was this big, you know, job disruption and sort of the outsourcing in the '80s and '90s and there was like real reskilling and trade assistance. I haven't quite seen that yet. I, you know, trying to, we're in an election year. This is going to be a big storyline. I'm sort of curious how you think it gets internalized and...
Everybody's going to run on it. Yeah, everybody. I mean, with regard to sewers, I don't know if you were among the 60 men who joined me in the line for the men's room downstairs. Like, the metaphor is right in front of us. I mean, look around. This is a stunning venue. I can't imagine a better place to do this. But there we are. You know, five urinal and a couple stalls, just 60 guys standing there getting to know each other, waiting. You know, it's like it's out of sight and it's out of mind. And that's most of what our infrastructure is. Last night you made a comment about, you know, the bridges and the roads and sure, but there's this whole labyrinthine network that keeps us connected and that needs tending to. And the people who tend to it were the stars of a TV show I worked on a few years ago called Dirty Jobs. And elevating those people in a persuasive way is actually the answer to your question. If we're going to close the skills gap, we need to make a more persuasive case for the opportunities that currently exist. Now, how do we do that? Well, a lot of companies are tempted to do it themselves. You know, Caterpillar and Ford and Kimberly Clark and so many others I've worked with over the years, and they come at it with this idea of, okay, well, we want to move the needle. We want to make a difference. We want to tell our story. We want to make a case for our jobs. And what comes out the other end is this, right? It's the companies patting themselves on the back talking about all they can offer the world. And kids' BS meter today is highly tuned. They know when they're being marketed to. We all do, maybe more so than ever before. So the thing that's hovering over this whole conversation, in my opinion, is what is persuasive? How can we articulate a message that's going to resonate with parents and their kids and guidance counselors? Are those posters persuasive? Maybe, you know, maybe like there are a lot of ways to come at it. And I think, you know, my foundation functions mainly as a scholarship fund. We award work ethic scholarships. And if you're looking for a silver lining in all this, by the way, we've been at it 17 years. This year, we got 10 times the applicants than we did last year. Plumbers, steam fitters, pipe fitters, welders, ship builders, HVAC techs, two-year schools. That's my jam, right? This year, we're going to lean into that harder. But to your point, Liz, I also want to do a better job in tapping the country on the shoulder. Right. Hi, America. It's me again. Get a load of what BlackRock is doing. It's $100 million. This is why it matters. Guess what's going on up in Ohio? I'd ask Dina McCormack to elaborate on that because it matters. What's going on at Palantir? This is amazing. I mean, Alex Karp might look like a mad scientist, but he's doing something brilliant over there. He's taking kids straight out of high school, like 30 of them in this meritocracy program. And he's teaching them liberal arts in Palantir, like he's putting them through a Western Civ course. At the same time, he's taking them out into the field and putting them to work on these big consequential engineering projects and teaching them a skill. Two years from now, these kids are going to be making 300 grand with no debt at all working for a consequential company. So I think it's really incumbent on all of us to do a much better job in explaining the various and disparate ways that this skills gap has to close. You guys are big, but you can't do it alone. You know, you're macro. I'm micro and in between, that's not bad, but in between a lot of other companies and a lot of other foundations and a lot of other consortiums are wrestling with this same problem. And the only way we're going to solve it is if we get this rising tide. You know, I thought when I think Carol was talking earlier at UPS, they've got this, they're dealing with the same drama as FedEx, a shortage of truck drivers to elevate that trade. It's only a matter of national security. We got to do it. I reckon later this year, maybe sooner, we'll start to see competitors coming together to talk about this issue. Home Depot is doing some incredible things to reinvigorate the trade. So is Lowe's. Why be at cross purposes? All of that has to be articulated and sold to the country. And I mean sold. We're in a game of persuasion. The stigmas, stereotypes, myths, and misperceptions that have surrounded the jobs you're trying to reinvigorate are real. They've been there from the moment we took shop class out of high school. That's real. They're there. But so too are these other giant mathematical problems that you're probably better suited to talk about than me. The population is closer to a collapse than a, you guys remember the, what is it, the population bomb early, right? Wrong. The population is not shrinking. It's shrinking and the workforce is retiring especially in the skilled trades. This year for every five who leave two come in. It's been that way for over a decade. Five out, two in. Five out, two in. The arithmetic's not on our side. The perceptions are not on our side. The need is clear and present and maybe existential. And that's why it's really exciting to see the grown-ups come together and say, 'All right, it's time. This is the year we close the gap.'
Liz, can I just turn it around too in another way because this is something that we're passionate about at the firm and I talked about this a little last night. We're going to have this AI boom. It's going to be so transformational. You know, right now BlackRock manages about 30 million retirees in the United States. Their pension fund. We're the largest retirement manager in the world. About 50% of everything we do out of the 14 plus trillion is some form of retirement or retirement products like annuities and other things like that. The big issue that we see is America, which has the largest and broadest participation owning the financial markets, is about 60%. And so in other words there's 40% of America that does not have any capacity to invest. And I really do believe if you go just go back at any point in time, even go back to the 1920s, and know we need more of our population and especially even with young people starting in their job force to be growing with our country and we never talked about that. Unfortunately, the last time they talked about things like Social Security and they were thinking about restructuring it, it became because they talked about the privatization. And if we don't get more Americans investing with the growth of our country, and I am really bullish on the United States. I am more bullish on the United States than any other country. And what we've seen over the last hundred years, capital is appreciating more than salaries. And I'm not sure that's going to change. We need to narrow. And that's what we're all talking about here to try finding more and more people having great honest long-term jobs with that gives them that integrity and purpose in life that then they could raise a family. But importantly, if you look at all the statistics, the families that were able to put a little money away every month and invested in America, and I could talk about my, you know, I write about my parents because my parents, my mother was a school teacher, my father owned a shoe store, and they when they both passed, there was a big pool of money because my father always believed in the United States and always invested in the markets. But we're going to have the biggest technological boom in our lifetimes. And that means if that works out and we're the leader as a country, we're going to boom. And so we're going to need more and more Americans investing in this growth or having a piece of the American growth. And we don't talk about that enough. And if we're, you know, we're talking about the wealth gap all the time and what is the causes of it and the big cause is capital has appreciated more than wages. And I don't see that changing. And so as we think about, you know, the whole concept of jobs and reskilling and the needs we have in the future and the threats we have as an economy, we don't have these group of men and women working in this area to rebuild our infrastructure. At the same time, we need more and more America to be investing with America so they can grow alongside our economy. And we don't talk about that enough.
Well, I think I mean literally a year ago today, you and I were up here talking about exactly this and since then we've seen a fair amount of movement in Washington out of the White House to change the products that can go into retirement accounts, but also...
Well, that's, they're talking, we haven't gotten that through. No, but I think the childhood account, Trump accounts, right? Trump account. I think it's great. I, you know, and that if you think about how big our economy is, you know, that's about an $8 billion cost a year. I think with our growth of our economy we got to actually even afford more. BlackRock's matching our employees with this too. Those a little more. But this is something that in my mind if we could get all the corporations in the world doing this side by side. We're going to give all those young, those eighth graders a lot more opportunity and the young children that are being born today. If we had these accounts that were investing in, let's say, the Russell 5000 or the S&P 500, whatever account you want to grow with America, we're going to be in a far better position in 18 years.
Have you seen the Jump Start bill that's out there? Congressman called Riley Moore out of West Virginia proposed this about a month ago. It's like a 529 only it's geared toward the trades. Yeah. Now, this is a real simple policy thing that ought to be a no-brainer. To be fair, a 529 can be used for a trade school, but the Jump Start account will allow you to take pre-tax money, right? Put it in there and then buy your tools. Nobody thinks about the cost of tools for an aspiring trades person, especially one who wants to hang out his or her own shingle. It's a lot, a work truck so you can invest in the tools of your trade on your way into this world and it's especially advantageous for people with an entrepreneurial spirit and that to your point I think is what we really have to encourage because if you want a stake in the larger piece of the pie we also need to embrace some level of financial literacy which by the way is not being taught any more than metal shop is being taught. But all that stuff has to happen and there are policies and pending ideas that I think are good that don't get a lot of press and you know part of what we're trying to accomplish here I think would include identifying those things and then leaning into them hard.
I want to ground some discussion about jobs in the broader economic environment. Larry, obviously very bad jobs report last week. One obvious shock to the labor supply, particularly manual labor, is the administration's approach to immigration. There were already projected shortages and the demand, you know, boom on the data center side. It's kind of demand shock, but I don't know. Is this a self-inflicted wound to some degree?
