The Return of the Healthcare Economy

You're taking a very weird tack with all this.

*** Basically, the non-health job market is in free-fall. ***

Your pink line shows even now, non-health jobs are growing at 1.0%. That's a "free fall"? What is the country's population growth rate? Did you think of that comparison? Because the population growth rate is about 0.9%, I believe. Non-health care private jobs are still growing FASTER than the population. Is that a free fall?

Isn't it sensible that in comparison with recent years, as a recession became a famously "jobless" recovery and then a non-newsworthy job-creating recovery, and as the unemployment rate fell from kind-of-but-not-really high to unsustainably low (4.5%), the rate of job growth would NECESSARILY slow?

Would you like to graph out job-creation of 2.5% versus population growth of 0.9% out a few decades, even as Baby Boomers drop out of the labor force? Would that lead to absurd projections? What do you expect?

This is all leaving aside the obvious fact that health care jobs are in fact part of the economy, so this whole exercise is pretty dubious. Yes a dynamic economy changes and the job mix changes. We need fewer automotive assembly line workers and more doctors and nurses to meet true consumer demand. What is wrong with the economy adjusting for that? Would you prefer that sick people not receive care?

The true concern here is that job growth of 3.0% in health care is certainly unsustainable. At this rate we'll run out of homo sapiens to do those jobs sooner or later. What will happen then? Can health care become more productive? Will demand be met or not? But the problem of too much demand for labor and not enough workers is not as sexy as a job-market free fall, I guess.

Do I even acknowledge your comment about Chinese lending? Did you really write that or did some intern? So the exact funds the Chinese put up in buying a fraction of the US treasuries that are auctioned away, are channeled strictly to Medicare and state Medicaid programs? Works like that, does it? Well if I can play that allocation game too, then I say that the Chinese funds are actually used to buy all those bridges to nowhere in Alaska.

Come on readers, what do YOU think think the Chinese funds are used to buy?

I agree with Kevin. 1% growth in the non-healthcare market is not a 'free-fall'. The labor force only grows at 1% a year as it is.

Didn't this same blog state that the unemployment rate for those with a Bachelor's degree or higher was just 2%? That includes ALL fields (including computer science, engineering, etc.) not just healthcare.

Let me also add that could it not also be true that : PRODUCTIVITY growth in Healthcare is slower than in the other sectors of the economy? That looks like just as likely of a conclusion from the data.

A point in favor of your argument--the growth rate (annualized) of the civilian labor force over the past six months is 0.4%.

Okay, I take back the term "free fall."

I do stick with the rest of the post. The health care system is a critical channel through which overseas money flows into the U.S. (through purchases of government securities) The other channel was housing, through purchases of mortgage backed securities, but that is probably coming to an end.

As a nation's wealth rises, so does its demand for healthcare (and other luxury goods). Our aging population also increases demand for healthcare. I believe the strong growth in healthcare employment reflects these demand factors, and it is not mitigated by productivity gains.

The rest of the economy is doing fine.

Mike...I'm guessing that "health care" as defined in the chart does *not* include industries that sell to healthcare--medical devices, MRI & CAT scanners, pharmaceuticals, etc. Is this right?

Those turn out to add very few new jobs. Between May 2006 and May 2007, for example, makers of irradiation equipment, pharmaceuticals and medical equipment added only 10,000 jobs. By comparison, health care services added 204,000 jobs.

In fact, these industries are being increasing offshored.

I'm confused by an earlier post by Kartik with regard to productivity growth. Am I to understand that evidence exists suggesting that we have had improvements in healthcare productivity?

I would be VERY interested to see that data. Please, do tell.

Just browsing the internet, your blog is very, very interesting.