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Health Care is the #1 Source of New Jobs...

Should 'Scarcity' Be Part of the Definition of Economics? |


| The Case of the Missing Productivity

February 02, 2007

Health Care is the #1 Source of New Jobs...

Michael Mandel

...for now and, likely, for the foreseeable future.

With this morning's jobs report, the BLS also released revised employment data for 2006...and guess what? Two things turn out to be true: First, health care is the biggest source of new jobs. Second, health care's share of the labor market is rising (see table and chart below)

Both of these facts will be consistent features of the labor market from now on. This is a big change, and reflects the combination of government funding (and borrowing!) for health care and the continued slow growth of other types of jobs.

In effect, we are borrowing from abroad to create healthcare jobs.

In the past, healthcare job growth would lag the rest of the economy when times turned good. For example, in the last expansion, healthcare's share of private employment actually peaked in 1993. This will not happen again.

I will be talking at the National Economists Club next Thursday in DC on the topic: “Will Our Children All Work In Hospitals and Doctors’ Offices?” I believe that my presentation will be available on their site afterwards.

12:05 PM

Labor Market

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Well, the number of Healthcare jobs is only a tiny bit more than Hotel/food jobs, and still only 18% of the total, so I am not sure we should say "In effect, we are borrowing from abroad to create healthcare jobs."

As a share of the labor market, it seems that we have been at a relative plateau for 4 years.

The real interesting datapoint would be whether theHC percentage share of total labor market in the US matches that of Japan or Western Europe. That would be interesting to see.

I'm more worried about the 4th highest item being local government.

Posted by: Kartik at February 2, 2007 03:50 PM

The top two are likely booming because of the Baby Boomers who are 1) reaching the age of increasing health problems, and 2) traveling a lot and going to resorts. In the next 10-15 years, those jobs will likely continue to boom with the retirees. My concern is what happens to all those jobs when the Baby Boom dies off (not to be crass, but...). I have the same concerns about retirement havens like Florida and Arizona which have been growing rapidly and creating a great deal of infrastructure which may, in the course of a decade (2015-2025), leave them heavily overbuilt.

Kartik, I'm not worried about local government growth; I believe the more services provided locally the better. Note that "local" is broken out from "state", so we're talking about city governments. In the meantime, federal employment dropped. That's a good thing; the more power we can take back from Washington the better. It is very interesting that local governments greatly outpaced state governments. Might Garreau's "Nine Nations" be prophetic? Personally, I hope so - though I hope for 100 "Nations".

Posted by: Brandon W at February 2, 2007 04:15 PM

Fat chance. I'm going to have to echo Kartik about the plateauing over the last four years and add that there are going to be huge changes in the health market. Right now, there's a lot of money there and they've been adding labor as a result. However, the health market is probably the most inefficient market in the economy and that will inevitably change and soon. There are two reasons why it's so inefficient, more than 90% of payments are made by a third party and it is highly regulated. However, the twin wrecking balls of the PC and the internet will come bashing through this house of cards, just as they have or will for every information industry. No doubt you are experiencing this first hand at businessweek, Mike (though I must say businessweek has probably been the most savvy magazine about the current internet situation).

Posted by: Ajay at February 3, 2007 01:20 AM

What time is the luncheon you're speaking at?

Posted by: N Chung at February 8, 2007 09:20 AM

Dr. Mandel:

I just heard your speech and I have one point of contention. You said that most of the IT that has been implemented in health is in the back room, and has done little to increase life expectancy, the aim of health care. You do allow that the back room IT and the aim is related.

I heard a different story. The IT revolution has yet to take hold in Health Care. See

Posted by: Nelson Chung at February 8, 2007 03:53 PM

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