What’s Really Propping Up The Economy?

BusinessWeek asks the million dollar question:  "What’s Really Propping Up The Economy?"

0639_57covsto_c_1

 

Their answer — not housing, technology, or finance — is health care:

"If you really want to understand what makes the U.S. economy tick these days, don’t go to Silicon Valley, Wall Street, or Washington. Just take a short trip to your local hospital. Park where you don’t block the ambulances, and watch the unending flow of 0639_bw_covdcdoctors, nurses, technicians, and support personnel. You’ll have a front-row seat at the health-care economy.

Without it the nation’s labor market would be in a deep coma. Since 2001, 1.7 million new jobs have been added in the health-care sector, which includes related industries such as pharmaceuticals and health insurance. Meanwhile, the number of private-sector jobs outside of health care is no higher than it was five years ago.

Sure, housing has been a bonanza for homebuilders, real estate agents, and mortgage brokers. Together they have added more than 900,000 jobs since 2001. But the pressures of globalization and new technology have wreaked havoc on the rest of the labor market: Factories are still closing, retailers are shrinking, and the finance and insurance sector, outside of real estate lending and health insurers, has generated few additional jobs."


Quite a picture:

0639_56covsto

The biggest surprise in the column was that Tech hasn’t created all that much in temrs of new jobs:

"Perhaps most surprising, information technology, the great electronic
promise of the 1990s, has turned into one of the biggest job-growth
disappointments of all time. 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. Those businesses employ fewer Americans today than
they did in 1998, when the Internet frenzy kicked into high gear."

Fascinating stuff . . . worth checking out the full article.

>



Source:
What’s Really Propping Up The Economy
Michael Mandel, Joseph Weber
Business Week, SEPTEMBER 25, 2006                 http://www.businessweek.com/magazine/content/06_39/b4002001.htm         

Print Friendly, PDF & Email

What's been said:

Discussions found on the web:
  1. ac commented on Sep 16

    I find this really worrisome.

    It seems like all the job creation in the past few years has been in fields that are not related to long-term wealth production.

    In fact, it seems like we’re outsourcing production and wealth-accumulation while in-sourcing consumption and debt-accumulation.

  2. wcw commented on Sep 16

    I do not find this datum — alone — worrisome. In the abstract, we could be using our productivity gains in amenable sectors to shift employment to those areas, like health care and construction, where no amount of technology or clever management will remove the verities of nursing or carpentry.

    Were the employment/population ratio a percent or three higher, I wouldn’t worry about this at all. As it is, I think worrying about healthcare misspecifies the real problems of a tepid job market.

  3. Zephyr commented on Sep 16

    As societies become more affluent they can increase the share of GDP spent on healthcare.

  4. dryfly commented on Sep 16

    As societies become more affluent they can increase the share of GDP spent on healthcare.

    True. But those same societies have to continue to produce new wealth via some sort of ‘tradeable’ or the affluence dries up & the trend reverses.

    You know… the ‘Rise and Fall of Empire’ type thing.

    What the article suggests is we had better find a new engine to drive prosperity & affluence or we will be going in reverse.

  5. dryfly commented on Sep 16

    Also, remember that most health care is ‘consumption’… meaning we consume resources to give us outcomes but it results in little we can later trade for future resources.

    There are exceptions – using health care to produce healthy workers who can work better & longer into life – but mostly we work hard (as a society) to be able to provide health care as a quality of life issue, not to be able to produce more tradeables to make us richer.

    We need to find something ‘productive’ that will support our health care Jones or we’ll have to go cold turkey eventually.

  6. drey commented on Sep 16

    Agree dryfly – I would equate resources poured into healthcare with resources poured into govt, defense spending. etc. which studies have shown do not produce much of an economic return and are in fact a drain on the economy.

    It’s wrongheaded to believe that the high % of GDP we spend on healthcare is a luxury afforded by our relative affluence – what it reflects is the incredible inefficiency in our health care “system” (anything but) which we pay a heavy economic price for.

    Last time I checked, we devote about 14-15% of GDP to health care vs. 11% or less in other industrialized economies. That can’t be a good thing…

  7. Mirco commented on Sep 16

    Healthcare really create wealth.
    Statistically, half of the cost of healthcare are expended in the last year before the death.
    So, if people live 70 years, and then them live 71 years, they postpone of one year to expend the 50% of their health costs.
    (I.E.)
    So from 0 to 69 they use 50$ , the fromt 69 tto 70 they use the last 50$.
    If you delay to spend 50$ for a year, you will be able to invest them and reap a profit, then a year after you cold have 51$ (2% profit).

    Better health let people to work more, more longer and stronger. What make westers more productive is that they are more healthy (in mind and body) than other populations, so we are able to work more, live more, amass more whealt and so on.

  8. ac commented on Sep 16

    As societies become more affluent they can increase the share of GDP spent on healthcare.

    True, but if those societies do not produce more than the consume, they will not remain affluent.

  9. New Condos commented on Sep 16

    Unfortuantely….the war is what is proping most of all of this!

  10. Blissex commented on Sep 16

    «”As societies become more affluent they can increase the share of GDP spent on healthcare.”
    True, but if those societies do not produce more than the consume, they will not remain affluent.»

    The solution most G7 governments have chosen to this problem has two aspects:

    * Drive house prices as high as possible.
    * Encourage as many young immigrants as possible to come and work for low wages and to buy expensive houses.

  11. Bob A commented on Sep 16

    Based on the volume of newspaper advertising for condos in the Seattle area, which appears to be about 500% of what it has been the past few years, I’m gonna take a wild stab that newspapers could be doing fairly well for the last six months or so…

  12. mrmanny commented on Sep 16

    I once was considering my options on where to retire. Costa Rica was one country I looked at. I was amazed to find out that the life expectancy there was virtually the same as the US but they spend about 1/10 of what US citizens do on health care.

    http://www.who.int/countries/usa/en/
    http://www.who.int/countries/cri/en/

    Now one could argue that for that extra health care spending Americans enjoy a higher quality of life rather than a longer life and this does come through in the statistics that measure heathy life expectancy which is about 2yrs longer in the US than in Costa Rica.

    So after spending $5k more per year for 77yrs or $385k
    the american gets 2 more years of non-disabled life.

    As a perspective.. if an american receives $1200/mo for 15 yrs in social security. ( i have no idea if this is average or not) he will receive $216K.

    Instead of spending this on the current health care system he could potentially receive almost 3 times as much social security ( $600K). Of course he/she could still spend any amount of this on health care if so desired.

    Of course this is just an Einsteinian thought experiment and has no real basis in any future reality .. ie don’t expect the current health care economic beneficiaries to give up the current system without a herculean fight.

  13. Brian commented on Sep 16

    The health care spending is from money borrowed from foreigners just like everything else.

  14. royce commented on Sep 16

    Seems like a poorly titled graphic, since jobs are not sole component measuring the state of an economy. It should have been, “What’s propping up the job market?” But that doesn’t sound as sensational.

  15. andiron commented on Sep 16

    health care is a cost to the economy..as for some one living longer , one could say that life beyond 70 is also largely unproductive..with millions of 70+ americans – and increasing rapidly afterwards- bodes ill. Heck, the whole SS and medicare thingy would resolve itself if people on avg die earlier…In fact if most survive to 100, conditions will be very dire…

  16. ac commented on Sep 16

    …heathy life expectancy which is about 2yrs longer in the US than in Costa Rica.

    So after spending $5k more per year for 77yrs or $385k
    the american gets 2 more years of non-disabled life.

    Yes, but that extra spending on health car enables Americans to eat cheese covered donuts and bacon every morning, with the same life expectance. So in the end it’s worth it.

  17. Kris commented on Sep 17

    I have seen some numbers talking about demographics and the need for physical therapists and health care related workers and if they hold true the demand will essentially be unfillable.

    Of course these are not high-level jobs but since they are based on demographic trends they should be true for more senior jobs like doctors, administrators and hospital architects.

    Some of the posters above are right to point out that a good healtchare system is a national asset however our system still has pretty big holes vis a vis coverage and cost.

  18. OkieLawyer commented on Sep 17

    Health care is one of the industries that is expected to keep growing in the next 20 years. We are all getting older, and as the baby boomer generation reaches retirement age, the law of large numbers will tell you that, as they age, they will need more access to health care as their bodies break down from old age. There will be more cancers, broken bones and diseases that will afflict them. Ergo, there will be a need for more health care workers, home health aides and jobs related to the health care industry.

    As far as technology, how much more innovation can be squeezed out of the market? There does not seem to be a lot of improvements left to be had in the speed of processors (at least not from what I can see here in the middle of the country) and a lot of the software development is coming from cheaper labor in India.

    Are there any industries out there that show any promise of a breakout in the next few years?

  19. Leisa commented on Sep 17

    Healthcare costs will continue to rise due to (1) aging of the population and (2) rise in obesity. The former is uncontrollable, the latter is controllable and further exacerbated by age. The statistics are astounding for chronic diseases (diabetes, asthma, COPD, CAD, hypertension and hyperlipidemia to name the big ones) for (1) the increase in both the prevalence (how many currently “have” it) and incidence (how many will “get” it) and (2) the increase in costs associated with treating the diseases. Everyone wants a magic pill, when the very simple (I first wrote easy, for we all know that it is not) solution for many of these diseases are adequate exercise and proper nutrition. The problem is, that all of us pay for the poor choices that people make regarding their health. I would say that this healthcare crisis is no different than the energy crisis….people fail to take responsibility for their choices, but rather see the magic bullet (or pill if you will).

  20. JGarcia commented on Sep 17

    Does this article take into consideration all the self employed, and small business creation?

  21. cm commented on Sep 17

    Leisa: I would comment, but my comment gets rejected as spam, presumably because of keywords.

  22. cm commented on Sep 17

    Leisa: Second attempt. In good part poor choices are enabled by doctors pushing pills. I heard to stories from a coworker:

    (1) In a talk a dietician recommended certain medication for an obesity-related condition. When somebody from the audience suggested exercise and moderation, the lecturer acknowledged the effectiveness, but said “but you are never going to do it, so you will have to take the pill, and I won’t recommend things to you that would work but you won’t/can’t do”, or something to that effect.

  23. cm commented on Sep 17

    (2) When said coworker achieved a marked improvement in cholesterol with a die-et/exercise regime, her doctor (unrelated person) did not believe this and insisted she took medications without telling.

    This indicates aside from possible individual incompetence or “incentives” that there is a general mindset of favoring pills over “lifestyle repair”, and indeed using pills to enable/maintain unhealthy lifestyles.

  24. cm commented on Sep 17

    The word “d-i-e-t” did me in. I didn’t expect to have to turn to spammer techniques to get my comments through.

  25. me commented on Sep 17

    ” When said coworker achieved a marked improvement in cholesterol with a die-et/exercise regime,”

    You are probably not aware, but diabetics could exercise 24 hours and day and their cholesterol would not come down.

    “Does this article take into consideration all the self employed, and small business creation?”

    What exactly do you mean., On another blog a person checked Social Security contributions and there are no missing self employeds.

    “The biggest surprise in the column was that Tech hasn’t created all that much in temrs of new jobs:”

    Go to your local Borders or B&N and look at the tech book section. They used to have several aisles of books. Now, there is an aisle and a half. There are no computer books, because there is no interest, because there are no computer jobs.

  26. Leisa commented on Sep 17

    Me: diabetics/cholesterol: exercise is an important part of a diabetic’s care regimen, and cholesterol control in a diabetic is similar to that of non-diabetics. Therefore, there are also non-diabetics where exercise may not necessarily bring down cholesterol.

    Effective, chronic disease management requires an informed doctor (and many are not aware of the evidence based guidelines for treating common chronic conditions–the New England Journal of Medicine did a huge study, and the indictment of our care system was embarrassing) and an informed, motivated patient. Unfortunately, many patients are ill-equipped to discuss their condition or understand their doctors’ instructions–thus the burgeoning of disease management and health coaching programs since the late 1990’s to support both medical practioners in complying with evidence based guidlines and patients to comply with their doctors orders.

    It’s a huge issue that effects all of us, because ultimately it is reflected in the premiums that we pay and the benefits that we enjoy.

    And I write this acknowledging that I don’t exercise enough or eat as well as I should. So this thread is a nice motivations to practice what I preach! (Though my intent was not to sound preachy).

  27. cm commented on Sep 18

    me: I was talking about people who are (presumably) basically healthy, and whose weight and cholesterol values are quite plausibly from sedentary lifestyle and overindulgence in unhealthy foods. At any rate, when giving a health talk in front of employees, the lecturer should assume to talk to mostly healthy people.

  28. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  29. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  30. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  31. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  32. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  33. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  34. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  35. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  36. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  37. College Courses.com Education & Career Blog commented on Oct 5

    Health Care Propping Up the Economy, According to Business Week

    Despite the upswing in Information Technology jobs discussed yesterday, this industry is only trying to recoup the losses of nearly 1.1 million jobs in the last five years. The future of the tech industry is looking brighter, but it has hardly fulfill…

  38. chucho commented on Apr 3

    Hello I want to congratulate to them by its site of the Web of the exelente looks like entertained and very good very to me it elaborated. I invite them to that they explore a little on my site of the Web.
    Costa Rica Real State
    In our real estate listing, we offer a great variety of land properties of all kind all over Costa Rica, from nice city houses, including condos, lots, country houses and farms, to splendorous luxury properties with extraordinary ocean views or located in front of the most beautiful beaches of Costa Rica.
    But we don’t just find those properties for you. We also give you all the legal advising regarding Costa Rica land properties regulations; our knowledge and expertise allow us to offer you a confident and dependable advice. Likely, we will advise you on how to make the best possible real estate investment anywhere in Costa Rica.

    Our real estate listing includes great opportunities on Costa Rica Central Valley’s provinces such as San Jose, our Capital, with remarkable cities as Escazu at the west, or Curridabat at the east, experiencing a great development on both commercial and residential properties, making their real estate pricing highly attractive to investors; on other hand, Alajuela city gathers places with a very special warm weather such as Grecia, La Garita and Atenas, or beautiful farms for agricultural, cattle or nature preservation purposes as those located on San Carlos or Sarapiqui. We also offer land properties in Guanacaste, which is the province, along with Puntarenas, with the most beautiful tropical beaches on the Pacific Coast such as Tamarindo, Playa Grande, El Coco, Playa Hermosa, Nosara, Samara, Herradura, Jaco, Manuel Antonio, Dominical and Golfito, where the real estate business occupies the first place as the local economic activity.
    We can’t leave outside our real estate listing, land properties of great beauty on the Costa Rica Carribean Coast like Tortuguero, Limon, Cahuita, Puerto Viejo and Gandoca Manzanillo.

    We invite you to take a tour on our website, and if should more information is required.
    http://www.costa-ricarealstate.com

  39. costa rica real estate commented on Apr 10

    Good first that nothing is possible to say that to this pagina this very complete, is very interesting, and has everything what occupied to know, I entertained much visitanto and sailing in her. I invite to them that they see a little my Web site

    Costa Rica Real Estate
    Properties in Costa Rica Real Estate Company is located in San Jose, the capital city of this beautiful country. We are a group of professionals whose main goal is to provide you with clear insight into the meaning of investment and purchasing real estate in Costa Rica.
    We are a proven resource for Real Estate in Costa Rica. Our expertise covers a wide real estate collection in ideal locations for living, retiring or investing in Costa Rica. Our real estate inventory features a special assortment of: Costa Rica beach properties, upscale residential homes for sale, condos, investment real estate, farms, mountain properties and vacation rentals.
    We understand that relocating or purchasing a vacation property is not an easy job. Moving to Costa Rica and doing business abroad requires a lot of research and reliance upon the company you may be using. We provide you with trustworthy Costa Rica real estate assistance on every step of this process.
    Properties in Costa Rica main goal lies in leading you to a successful real estate transaction. We can help you get the Costa Rica real estate property or investment of your dreams.
    Our real estate listing in the Central Valley combine desirable locations in West and East San Jose such as Escazu, Santa Ana, Rohrmoser, Sabana, Sabanilla, Montes de Oca and Moravia among others.
    You will also find attractive real estate properties in the Central Valley provinces of Heredia and Alajuela, where locations such as la Garita and la Guacima are very appealing because of their wonderful weather, nearby facilities, very nice neighborhoods, farms and homes.
    Additionally, we provide you with real estate services in both, the Pacific and Caribbean beaches and coastal regions of Costa Rica. Find your vacation home in the beach and smart investment oportunities close to the ocean. We offer quality real estate for sale in Guanacaste, Puntarenas, Manuel Antonio, Dominical and other special locations outside the Central Valley.
    Costa Rica is a wonderful, peaceful and stable country, experience life at it’s best!
    We invite you to take a tour of our web side: http://www.costa-ricarealestate.com

Read this next.

Posted Under