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The Engine of US Jobs
eberta writes, "BusinessWeek has an interesting take on the US job situation, What's Really Propping Up The Economy. I think many of us have felt the US tech job market was stagnant and this article has insights into why this economy is so hot, yet not from our perspective. The spoiler is the business of health care — which will come as no surprise to anybody who has looked through the help wanted section lately. BusinessWeek has some opinions on how IT should play a bigger role in the health care industry."
Quit your griping about smoking, lack of exercise and junk food! It's us wheezing lard butts that are keeping America working.
Public subsidies through the Pentagon system.
It's been pointed out before that while wages may be stagnant in many industries, invisible benefits such as health care (from employer insurance) have been increasing in value. This boom in health care employment is the visible part of that economic fact.
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As they touch on in the article, as more and more money is spent in the healthcare sector, the cost of insurance will continue to rise, and thus put even greater stress on what little social healthcare provision there is. As the people working in healthcare rises, the salary bill rises, and somebody has to pay it; and it'll either be government funding (research funding etc) and higher charges for the users.
Speaking as a non-american, it's already one of the great ironies of the 'great american economy' - increasing numbers of people will end up working in the healthcare industry, but won't be able to afford to use it for themselves or their families. Yet giving everyone affordable access to healthcare, increasing productivity, is decried as socialist, while letting people be crippled by the financial burden of a major illness is true-blue American. Lovely.
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From the start I'm inclined to believe the article is flawed from a statistical perspecitve. Where they quote the relevant unemployment rates of Germany and France in comparison to the US they do so without mention that the European countries use a measure which would see the US figure at over 12% (They count the underemployed as unemployed, so if you're a coder working a few hours flipping burgers you show up as unemployed).
That said with an aging population health care will continue to be a growing employer at all levels.
Quidquid latine dictum sit, altum viditur
The economy may be "hot" with jobs, the problem is that it's not hot with *well paying jobs*. Between the IT bubble bursting, offshoring, the decline of unions, and stagnant minimum wage, it's not exactly the garden of opportunity in the U.S. And before I get some elitist comment like "there are good jobs out there, you just have to get off your lazy butt and look", yes I know there are good jobs, there just aren't many to go around, no matter how good a worker you are.
It's another case of the broken window economic fallacy. If more people receiving health care is what's helping keep the economy afloat, that's not a good thing. The money wasted on $100 boxes of Kleenex and $2000 short ambulance rides (don't laugh, it's the truth!) is money that couldn't have been spent elsewhere on better things.
Further:
Despite the splashy success of companies such as Google (GOOG ) and Yahoo! (YHOO ), businesses at the core of the information economy -- software, semiconductors, telecom, and the whole gamut of Web companies -- have lost more than 1.1 million jobs in the past five years.
Isn't this a good thing generally? These people are being displaced to do other, more important work. Information technology should, in general, not be a boom industry anymore. The tools are becoming good enough to displace human labor. Let more software and computers do work that people in IT used to do, and let them go work in the health care industry where mechanization has less benefit or opportunity.
... we reach a point where the health care services the population reasonably wants exceed the ability of the population as a whole to pay? What if this is happening now? The article hints at this--it is pointed out that the US trade deficit might be viewed as us borrowing foreign money to fund our collective health care. Perhaps some of this spending is currently just due to low efficiency of the health care system, but it's quite possible we could fix that, and, in 10 years, increases in costs would put us back where we are now.
Factors contributing to rising demand for health care:
1) Aging population. Even in the US, which has one of the highest birth rates of any western country, the population as a whole is getting older. With the baby boomers about to retire, this is going to hit us hard and fast.
2) Obesity and other dietary/behavioral risk factors. There's been a bit of evidence that the negative consequences of obesity were overblown, but it's still bad news.
3) The most subtle and nefarious of all: advances in medicine. There's not really any demand for drugs that haven't been discovered yet, or surgeries that can't yet be performed successfully.
This last point is the scariest of all. Suppose we developed a way to give people an extra 10 years of life, but it cost a million dollar per person. We simply couldn't afford to provide it for everyone. What do we do? The American solution is to offer the procedure to anyone who can pay for it. The Canadian way would be to have a 90-year wait list so most people died before they could get the procedure. Other countries would perhaps find other ways of rationing health care, but the point is that the inevitable consequence would be rationed health care. Maybe the market would do the rationing, maybe the government would, maybe the Grim Reaper would, but rationing there would be.
So, what do people think? Obviously, we should try to make health care more efficient, but, if it's too expensive to give everyone full access, how do we sort things out?
That all but explains what's keeping things going, with supposedly good numbers. Add the gutting of the Middle-class, the creation of an area that has become low-income, low opportunity for the majority - where populist measures(read: universally non-competitive admissions/fully paid financing to any university in exchange for globalization) may end up being quite necessary to fix a major problem. That problem being
the non-existence of the signs of a good economy - but all the signs of one being dismantled with no workable revitalization plan for the displaced.
(To preempt some people - this excludes Honda, Toyota, and the other "Foreign Manufactured, US Assembled" manufacturers if you're going to talk about them contributing anything useful)
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Healthcare does not really build value. Nothing has been made because Aunty Tilly got a $20,000 bypass instead of a $5 bottle of asprin.
In the way economists measure things, the Exxon-Valdez disaster was a huge economic success.
One thing that really drives up the GDP is esculating housing costs. When a $100k house's value increases to $300k this is seen as a $200k increase in the economy.... but this is just bullshit, no value has been created. Sure it can stimulate the economy because Aunt Tilly can now take a $20k loan against her house and get a bypass and this trickles into the economy. Or Joe Sixpack might buy a new Chevvy... However, you should really see this as what it is: hyper inflation in housing prices.
If the "value" of a loaf of bread increases from $1 to $5, then that is seen as inflation, not growth. When a house goes from $100k to $300k this should be seen as inflation too.
Engineering is the art of compromise.
http://www.ideosphere.com/fx-bin/Claim?claim=ITJOB S
The above link is a futures exchange (where you bet only your reputation) on the future of ITJOBS in the US. You can compare articles like this to the consensus in that market. The market above includes a measure of whether or not the jobs we will still have in the future are well paying jobs or not. The current market consensus opinion is pretty rosy.
From the start I'm inclined to believe the article is flawed from a statistical perspecitve.
I think it is flawed to concentrate on jobs in the first place. By far the more meaningful data to compare countries by is standard of living. After all, everyone had a job in the stone age!
Of course standard of living is a subjective thing, practically only measurable through composition of a set of factors including such things as working hours per week, life expectancy, crime rate and even family size. Naturally, the weighing of factors would bias results in favor of one country or the other. Still it would perhaps give less absurd results than these statistics: I mean they make the US, where a single mom of average education is practically forced to take two jobs, look better than Germany, where some unemployed people still go on holiday twice a year!
blow your mind already
>The spoiler is the business of health care --
Anyone interested in this point should read "The end of Medicine", reviewed on Slashdot recently.
I found it a sad read. In between the author explaining why he is a realli smart, cool guy, he takes you on a tour of the tech companies working in the US health care area. There is *big* money in detecting and dealing with the symptoms of bad life style. And a lot of the money is going on tech.
(The sad bit is how little is going on prevention - life style changes, proper food, exercise. Ah well)
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Easy. Why do you think the US is one of the proponents of IP and copyright? Because that's all that's left in its industry: Content.
Agriculture is heavily subsidized. As in many/almost all "western" countries. In other words, a lossy business for the state. It's kept running to remain at least in a moderate way able to sustain itself, just in case the world starts treating them like, say, Cuba and shuts down international trade (or in case some country/ies decide it's fun to sink ships going for US harbors). It's a war insurance, if you want. And many other countries do exactly the same.
Productive industry is pretty much in the same boat. From cars to consumer products, everything is manufactured abroad. The only hardware still going strong is military hardware, and there the government is even the main (and often only) customer, not something where they would EARN money. They're spending.
So what remains as the generator of tax is service and content. Now, service is pretty hard to export. You can only export it by getting people from abroad to your country. While it is a generator of tax, it largely only creates domestic tax. Tourists from outside the US become fewer and fewer (and, honestly, I can't blame anyone who doesn't want to dare going to the US).
So what remains as the bringer of foreign money (besides the biggest bringer, the ability to "tax" internationally by having the foreign trade currency at your pressing fingertips, the USD) and balances the foreign trade at least to some degree is content, patents and copyright.
Health care is certainly a big tax bringer of the future, but this most certainly only creates domestic tax and does not generate a single cent of foreign money pouring into the country.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
There is really no mystery here. More old people means larger government spending on health care. More spending means more jobs in the health care industry.
There are 2 other factors that have increased health-care spending. First is the millions of illegal aliens who have no insurance. They usually go straight to the emergency room, where physicians do not refuse service (even to people without insurance). The services are not paid by the illegal aliens but are paid by the government.
Illegal aliens do become sick. They often work at grueling, backbreaking work. There is no incentive for American businesses (that employ illegal labor) to improve the working conditions because they can always find another desperate laborer if the current laborer becomes too sick to work. After all, the USA has an open-border policy with Mexico and the rest of South/Central America.
The other factor that has increased health-care spending is the excessive hours which Americans are forced to work. "60 Minutes", the renowned CBS program, recentedly reported that the average American now works more hours than even the average Japanese. These additional hours of work take a severe toll on workers' health. For example, 60+ hours of computer work per week leads to cardiovascular problems due to lack of exercise. The excessive hours also strain family relations, leading to the need for counseling or psychotherapy. In Silion Valley, the divorce rate is about 30% higher than the national rate.
It seems that the economic engine that is the health care industry is already having its fuel siphoned to India. Employers are enrolling their staff in healthcare plans that will send patients overseas for medical procedures that can be scheduled in advance.
The appeal is obvious: Heart surgeries and hip replacements in such countries as India, Thailand and Mexico can be had for less than one-third the cost in the USA.
At the same time, medical costs in the USA are rising rapidly, with no end in sight.
Seth
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What if you're in a country that has mandatory health care, unemployment insurance, retirement insurance and so on? Where is my increasing value! (*cry, rant*)
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
You can get a kidney there for a price you can afford. Or you can't get any over here. You can maybe die from AIDS over there, or you can die for sure here.
Pick your prefered cause of death.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
The U.S. economy probably is less healthy than it appears to be on the surface. We have a huge federal budget deficit as well as a huge trade deficit. A large percentage of our tax dollars goes towards paying the interest on what we have already borrowed. The majority of the federal budget deficit is being financed by money borrowed from Asian companies such as China. My knowledge about economics is somewhat limited, but my non-expert understanding is that in a strange sort of way the federal budget deficit helps make the trade deficit possible. Money needs to circulate between the two counties for trade to occur so China needs to send the dollars they they accumlate back here, somehow, to keep the price of the dollar from totally collapsing. So they buy T-bills from the U.S. Treasury to help us finance our deficit and the war in Iraq. That keeps the value of the dollar high enough for us to be able to buy goods from China at Wallmart and elsewhere. Correct me if my understanding of the economics is wrong, but doesn't the huge federal budget deficit help to make the huge trade deficit and loss of American jobs possible.
There are other problems as well such as a possible housing bubble in which many people have purchased homes with zero-interest loans or no down payments. If there is a bubble and it collapses then many of them could be in serious trouble. There is also high consumer debt levels and GM and Ford also seem to be in trouble.
So apparently, the overpriced health care that most of us can barely afford is now one of the main engines of the U.S. economy. There is that and housing (at least for the moment). The U.S. still dominates in making music and movies which Hollywood has been trying to protect with all the DRM and RIAA stuff they have been trying to push on all of us and the rest of the world. So the $500 per month that I pay for medical insurance is apparently going to support one of the few growing industries that the U.S. has heft.
Oh and lets not forget that all the baby boomers will soon be retiring and demanding Social Security and Medicare payments. Baby boomers have had smaller families which means that each retired baby boomer will eventually be supported by only two tax-payers. Younger people can plan on doing that while paying off the federal deficit at the same time while working in a job market in which in which many of the best jobs have gone overseas. Am I wrong in thinking that all this is not a sustainable plan for a long term healthy economy? Would someone please explain to me why politicians, the press and voters have not been more concerned about decades of large scale deficit spending. The combination of the war in Iraq and the tax cuts have made the deficit spending worse than ever. It is almost like we are trying to burn ourselves out econonomically. Would someone who has more knowledge about macro-economics please explain why I should not be worried about any of this! It everything really OK?
I run a small IT consulting business (it's just me) and two of my clients are in health care. Business is good, and these clients are growing like gangbusters.
Long term I worry though, as healthcare isn't fundamentally 'productive' in any sense. It's not making anything new, it's just chewing up a larger and larger percentage of our paychecks in the form of social security, medicare and insurance payments.
Nothing has been made because Aunty Tilly got a $20,000 bypass instead of a $5 bottle of asprin.
If a bottle of asprin results in her passing away but the bypass gives her 20 years more life, then (adjusting for inflation, etc) she merely has to generate $1,000 more wealth each year than she consumes for the operation to be "worth it". And, consider this: she has some dollar value of training and experience, valuable both during her hours working and her other hours contributing to the community. It could be that buying her a bypass would be like fixing the alternator in your car; sure it doesn't result in anything "new" but it is a small repair on a valuable item. You wouldn't throw away your car with a bad alternator; don't throw away (valuable) Aunty Tilly because she's got a bad valve.
Obviously, at some point people get old enough that society will never regain its financial investment in that elderly person (or lifetime-disabled person). S'OK. We're human beings; we take care of each other because we sympathize and empathize. It's part of the human condition, and it's a good thing.
Support a few technologists in Washington.
...someone who lost a manufacturing job with good benefits and wage in exchange for a service job with no benefits at half the previous wage as employed. Someone who has a part time job is employed, even if it is just a few hours a week. Making burgers is now a manufacturing job.
It's nuts really, word rearrangement and spin to make things look better than what they are. As soon as the fed reserve note loses international lustre (and it is sliding that way now) the party is over. The globalists have had three decades now to prove their point that their magic theories work, and we have record deficits, record lack of savings, record budget shortfalls, pensions dropping all over, etc as the result. They can rearrange it all they want, it is still a failure unless you are in the tippy top income brackets. They tout real estate there, but what is it really? A mass of people who own *debt*, but not very much true home ownership, they own inflated mortgages, now at 30 years, or even worse, the "interest only" type mortgages, people who only own the hope that sometime some sucker will buy their property or way more than what it is really worth so they can pay off that huge mortgage and maybe show some true equity. Nuts.
Government "borrows" money, which creates dollars to be paid to government contractors who pay their suppliers, shareholders and employees.
The reason US inflation hasn't skyrocketed in the past in response is oil. The producers are paid in US dollars which means the rest of the world has to buy these new dollars to pay for their oil, essentially what's happening is that inflation is being exported from the US to the rest of the oil consuming world, or rather, the US economy is heavily subsidised by the oil consuming world. With the falling dollar though and corresponding reduction in the value of their dollar holdings, some are switching those dollar holdings to alternative currencies so less of that inflation is being exported and the falling dollar accelerates. Prices appear to increase correspondingly.
You will have noticed inflation and interest rates increasing.
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My first reaction when I hear about an industry hiring so many people, is "how can I get those people fired so that the industry's product won't be so expensive?"
I don't think I've ever heard of anyone comparison shopping for healthcare here in USA. And now that I think of it, I don't know how I would. It's not like prices are published somewhere, or that I can go get a copy of Consumer Reports that shows who gives the most value.
Insurance is the reason. A lot of people think of insurance as healthcare, rather than "catastophic oops" hedging. If, when you consider going to a clinic or hospital, you're not thinking, "oh shit, how much will this cost?" then you're not going to exert a market force.
If the patient doesn't exert a market force, then the provider will not be subject to market forces.
And every once in a while, some politician runs on a platform of further removing market forces, to make healthcare even more expensive. At least insurance users have a little say over costs, by shopping around for insurance plans (though it's horribly indirect). Politicians get the bright idea of having involuntary taxes pay for healthcare, so that nobody will have any incentive at all to reduce cost. It's not like someone will say, "Well, I don't want to spend as much on healthcare, so I've decided to pay less, and the only way to do that is to pay less income tax, and the way to do that is to have less income. Therefore, I'm leaving IBM to accept McDonald's offer." ;-)
I think if we can remove the indirections and somehow increase the information flow, we could get people to start thinking about cost/value, and create incentive for advancing the tech. I won't be happy until all the doctors and their support staff are unemployed, because we all have medi-droids taking care of us. You don't want a medi-droid? Ok, fine, hire expensive humans. But I sure want one. And if I can't have a robot, then let me hire someone who makes $10k/year, tele-operates from New Delhi, and prescribes 20-year-old no-longer-patented drugs. I might not live as long as you, but while I'm alive, I'll have a lot more beer money. :-)
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I think you got your numbers messed up..
The aritcle said 1.7 million new HEALTHCARE jobs..
Are you trying to say Healthare should should be creating jobs to meet all US population growth???
Healthcare alone added jobs to meet 12% of the population growth. Thats is quite a bit for a single sector of the job market.
Now a usefull stastic would be how much did Healthcare grow vs US Population..
Now according to U.S. Bureau of Labor Statistics there were 6,388,000 US Healthcare Jobs in 2002.
By adding 1.7 million jobs the sector grew by 26%
In the same timeframe the population grew by 5% so healthcare is growing 5x faster the the population.
I couldn't find numbers for total US job growth from 2001 to today.
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See Shadow Statistics for more on how the government cooks the economic reports.
US Trade Deficit: When the Sausage comes home to Roost has some good discussion on the coming consequences of the trade deficit, and how we got here. Particularly pertinent is the section at the end about the 1987 book The Rise and Fall of the Great Powers, and how the U.S. has definitively entered the "fall" stage of the power cycle.
But as you seem to indicate, few people seem to know that the federal reserve system is at the root of our poor nation's economic struggle. See the 1983 book The Misdirection Conspiracy: Or Who Really Killed the American Dream for a good history behind how the banking class (not your friendly neighborhood banker, but the Rockerfellers/Morgans/other globalist shysters) are sucking the lifeblood from the working class.
Also worth mentioning that Michael Mandeville, author of The Coming Economic Collapse Of 2006 (2003) says that the predicted collapse is well underway. The current trouble at Ford and General Motors marks an acceleration of the decline.
The present economic calamity was, of course, set in stone as soon as Nixon closed the gold window back in 1971, removing all incumbrances to out-of-control monetary growth (monetary inflation), or perhaps even as early as the establishment of the Federal Reserve system in 1913... See 1970's, redux for more on how globalization & the federal reserve bleeds america dry.
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