Michigan: The Health-and-Education State

Posted by: Michael Mandel on March 11

One last tidbit on the topic, before I move onto something else. Take a look at this chart for the Michigan job market:

healthed3_729_image001.gif

As of January 2009, Michigan jobs in health and education accounted for 23.7% of the workforce, almost double the 12.5% share of manufacturing. Rather than Michigan:The Great Lake State, it’s now Michigan: The Health-and Education State.

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Reader Comments

CompEng

March 11, 2009 06:08 PM

Interesting. While I tentatively agree with education and health as good job creation stimulus targets, we have to admit to ourselves this must be a short-term action, and is not sustainable.
Any longer-term thoughts, or wait to see how things shake out?

empedos

March 11, 2009 07:59 PM

Mike's uncompromising perseverance that what matters now is to create jobs and all other issues are secondary, has finally put me into new thinking. After all, he has more sources of information that what we have and years of experience in the field. I think he is trying to tell us something that cannot be overtly published. It is for us to translate.

FFn

March 11, 2009 08:57 PM

Based on that trajectory, in 38 years everyone in MI will work in health care or education.

Any questions?

CompEng

March 11, 2009 11:00 PM

Empedos,

Here's what I remember Mike saying in recent posts: the economy is demand limited (paraphrase!), globalization has given us a worldwide glut of labor and a glut of manufactured goods. Growth, measured by profit, in the past 10 years has been primarily in financial companies. Innovation is required to grow the economy: we need new products and new markets. Jobs growth has primarily been in education and healthcare in the last 10 years.

What does that signify we need if you agree with the analysis? Job growth, new investment opportunities, new markets, and new spin-off technologies in non-manufacturing industries.
How do you get them?

Job growth: Industries with lots of people that are already growing can always add people fast in terms of raw numbers: health and education are standouts.

New Investment opportunities: what are people willing to pay for that they don't have? Following the money in the market today: education and healthcare.

New Markets and spin-off technologies? Basic research is required, which is mostly done by Universities. Biology and bio-tech is also a technology area that everyone knows has immense potential, but we haven't found a way to unlock. And it's adjacent to... healthcare. Cheap and clean energy is another one, which Obama has highlighted, but the *immediate* jobs opportunity is smaller (long-term is another matter).

This doesn't dig us out of the hole by itself, but it's identified as low-hanging fruit at a time when economists world-wide are grasping at straws to jump-start the economy.

See anything wrong with that train of thought?

Joe Cushing

March 12, 2009 12:54 AM

FFn, HA HA HA!!! I must be majoring in the wrong field.

Mike,

If Michigan could import students who pay full price, this would be a good thing. The reality is, we pay for some of this education through taxes on business, then export the educated to states that have lower taxes and better jobs. Education is a drain on the Michigan economy. We would be better off if we stopped subsidizing it by taxes and let business and charity do the job on a voluntary basis.

By the way, I attend a private graduate business school that I assume is not funded by taxes—at least not directly or in the same way/level. My last class is one week from today. (March 19) I may have to export my education but I'd rather stay in my low cost home--at least for a couple more years. I don't think I could sell it anyway.

Kartik

March 12, 2009 01:47 AM

I still think that none of us, including Michael, have conclusively proved that health/education job growth is not starving other sectors and preventing them from growing, rather than being a savior that has thwarted total collapse.

All we know is that all job growth in the last 10 years has been from health and education.

We do not know if this saved us, or whether it starved the innovation-driven sectors.

ZootzTootz

March 12, 2009 03:32 PM

Duh, if manufacturing jobs go down as a percent of total jobs, health care will rise as a percent of the total, all without any new health care jobs being created...you guys need to learn how to read graphs.

Lord

March 12, 2009 05:09 PM

I don't buy the starvation argument. Private and public spending on them are both growing as public and private spending on them increase. Why would they be the only industries not to be starved? Why don't they suffer crowding out? They are growing because they are in demand and productivity isn't rising as fast the demand. Other industries, even innovative growing ones, suffer from productivity growing faster than demand. People are choosing to spend more on them.

CompEng

March 12, 2009 05:43 PM

Kartik,

I don't think we'll see such proof. Of course money spent in one place is money not spent in another, so you are right in a sense.
But no matter where you put government money, it's money private market actors haven't placed. The question is do you put the money somewhere where there's proven demand and infrastructure or somewhere else? (Or nowhere at all, but I'm going to buy the Keynesian argument for now). If you're looking for short term stimulus, these sectors are a decent bet, but you have to be careful how you construct it or you won't be able to cleanly stop putting money in. If you're looking for long term innovation or other things, that's a different goal.

empedos

March 12, 2009 06:09 PM

CompEng,
nothing wrong with this train of thought but there is also an urgency here that runs against ordinary thinking. When the BW's chief economist says "We should keep pumping money into health and education to ensure that this hiring continues. ... Under the circumstances, that’s not a bad thing. It does set the stage for a mammoth fiscal crisis 5 or 10 years in the future—but for now, we need all the jobs we can get" what do you think he sees coming up if we don't stop babbling about all sorts of "financial orthodoxies" or "common sense" and do not focus urgently on the single most critical issue of this time according to him? May be I am just wild guessing, but I read people like Mike because I also try to get a feel of the prevailing sentiment amongst professionals and the reasons behind it. Responsible journalism sometimes does not allow journalists to write as freely as we do. Like I said, may be I am just wild guessing.

CompEng

March 12, 2009 08:18 PM

Empedos,
I've written what I think the downsides are from the US perspective of not rebuilding jobs (a loss of confidence in the current order and a quick, severe dollar plunge). Read around and you'll see most of the world still expects the US to probably recover from the recession first and go back to being the world's consumption engine. To some extent, that's just wishful thinking, but the global economy is organized around that assumption. The American middle class drives that engine and the wealth of the middle class is broken up mainly into wages, 401Ks, and real estate. The latter two are currently depressed and won't rise again until consumption picks up. Americans certainly won't spend like they recently did unless they have have confidence in their income and the direction of the economy. So there story really is all about 2 things: confidence and jobs in America. A good chunk of the world economy depends on it: it's shouldn't, but it does.

Matthew

March 12, 2009 10:00 PM

Mike-

Really, I can't wait until we attain the social utopia that is Michigan. That is a great template to follow. Witness the magic of big labor and subsidization of low-productivity industries!

Hasn't Michigan been losing population? Health care and education are not the answer, they are what is left over when the vultures are done with you.

Mike Mandel

March 12, 2009 10:13 PM

Sorry, folks, something is wrong with the comments. Some of them are coming through double, and others are not going through. I'm going to keep an eye on it.

Mike Mandel

March 12, 2009 10:41 PM

Comments are going through, even though they don't seem to be. No need to put your comments through a second time.

Mike Mandel

March 12, 2009 11:24 PM

Going to summarize my response to a lot of the comments:

--Over the last ten years, we put too much money into housing, and maybe autos (more into imported autos than domestic)

--We put an awful lot of money into healthcare research, which has not yet paid off in any significant way in rising lifespans. Part of the reason why we spend so much is because our healthcare system has fallen short on innovation.

--in theory spending on education is an investment, which pays off as well or better as an investment in physical capital. However, in practice, it's a lot like advertising..we know half the money is wasted, we just don't know which half.

empedos

March 13, 2009 01:15 PM

CompEng,
I have also writing a lot about restoring America's Private Consumption and its significance toward global recovery (mainstream thinking). But there is more at stake today for the US itself. The word "confidence" that you used is only part of what the real danger is. I would add the words "wrecked self-confidence","lost faith", "lost skills", "increasing dependency on social benefits","increased alcoholism and drug abuse" (just to mention a few). Sounds far fetched? Try to imagine yourself after many years of joblessness despite your efforts. Is it worth the risk of causing such an irreversible damage to America if Mike's last sentence is true? What matters most now? How urgent do you think it is to pump money into health and education to create jobs as fast as we can and discuss all other issues (efficiency, ROI,...) after the storm has gone by?

CompEng

March 13, 2009 04:55 PM

Empedos,
I think it's important, but there's a lot of risks if we *do* put the money in too. Increased entitlement attitudes might mean the government might be blamed more severely for failing to solve every problem just because they stepped up to the plate. We might warp the US and world into an even worse investment pattern than we're currently in, with a worse dependency, and even less ability to handle ourselves when the debts are called due. It's a high-stakes issue, with potential problems on both sides.

empedos

March 13, 2009 08:40 PM

CompEng
Layoffs do not wait for us to conclude our contemplation on all possible (or impossible) consequences of pumping money into health and education without any second thoughts for the first period. There are systemic and unavoidable delays like retraining, building or refurbishing related infrastructure, approving plans, etc. A deeply indebted person that has lost his job cannot wait for too long before he looses everything. And having lost everything may be a blow from which most people over 40 never recover, entire families may be destroyed. Remember : we still don't know what's going on with credit cards. Therefore, there is a high risk on delaying action in order to meticulously think over the risks of our action : by the time we are done, either the problem has worsened or the person and his family have been destroyed, or both.

CompEng

March 13, 2009 11:04 PM

Empedos,
There have been months for smart people with lots of experience in the field to make those calls. Unemployment benefits and similar programs give us those months. I am not an economist: I only know enough to be dangerous :) As a spectator and US citizen, I feel we should plan, and as soon as we have some level of certainty about a positive outcome for everyone, act. I don't know if that point has been reached or not. As in medicine, the first rule should be to do no harm. But it seems the folks calling the shots agree with you. :)

empedos

March 14, 2009 07:09 AM

Comp Eng,
My horror scenarios was an effort to explain the smell of urgency and anguish emanating from some incomprehensible (to me) statements found in Mike's articles.
The fact that people calling the shots have the same sense of urgency is a confirmation of Mike's feelings. I tend to believe that they are right now that I have found an explanation which makes sense (to me) and which cannot be presented overtly to the general public (will induce more fear, may be panic). Like I said, may be I am just too lousy in reading behind the lines.

CompEng

March 14, 2009 08:11 PM

Empedos,
or maybe the folks in Washington are subject to immense political pressure right now, and are acting on that urgency. Reading between the lines is always tough because you have to have enough in common with the writer to understand their knowledge and concerns.

empedos

March 15, 2009 01:25 PM

CompEng,
"Political pressure" is not an abstraction, it bears a real content, especially when it comes directly from millions of indebted citizens who have lost their jobs or are afraid that they may soon loose their jobs. In case the prospect of an annihilated working/middle class within the next year bears some serious possibilities of happening, then political pressure to act as fast as possible is the right compass for people in Washington. And if health and education are the areas that can create the most jobs asap (our host has proven it with data, I have no doubts), then this is the way to go. The commonness between our host's positions and concerns (not under political pressure) and those of folks in Washington (under political pressure, no doubt) is noticeable. But without a plausible assumption on what led them to this very similar conclusion, one should not take it seriously. My assumption is that they are concerned that delaying action in order to make "proper decisions" and not giving unconditionally top priority to job-creation (through health and education as proven), may harm the US irreversibly. I' ll be testing my assumption daily by more reading, thanks for putting it under your scrutiny, it helps. Having things in common with people that I read in order to draw my tentative conclusions, is too theoretical for me (thanks for the advice, but I need to move faster in comprehending what is happening or will happen).

Thank you for your interest. This blog is no longer active.

 

About

Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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