BUSINESS IS BOOMING

Having grown up in (and returned to, like a bizarro-world Prodigal Son) the Midwest I am all too well acquainted with dying cities. All of the signs of torpor, the economic drain-circling, and the post-industrial malaise of the Daytons and Fort Waynes of the world are well known to me by this point. Or at least I thought I could spot them all; in the past year I've discovered a new Big Red Flag: boasts about the growing "health care sector" of the economy. It turns out that a booming health care sector is a way of saying "All the young people have left and someone has to care for our elderly, dying population."

Visit the website of any derelict Rust Belt city and search for references to the number of hospitals or the strength of the health care sector. It won't take long to find them. It turns out that along with local government and, of course, prisons, hospitals are one of the few things that remain open when everything else closes. They may not have jobs anymore, but someone still needs to lock 'em up and occasionally stitch 'em up. The hundreds of Fast Company-style articles in the business media over the past few years proclaiming nursing as THE NEXT BIG THING in the job market always puzzled me…is it really a sign of the strength of our economy when the best job (supposedly) is to take care of the rapidly increasing number of dying old people? There's reason to be alarmed when reading things like this:

Americans spent $2.6 trillion on health care in 2010 — ten times more than in 1980. That revenue boost has, in turn, driven job growth; the health care industry last year created more than 540,000 jobs in Michigan alone, making it the largest private employer in the state, according to the Detroit News. The trend holds true at the national level too, with the health care industry remaining one of the few reliant drivers of job growth in the aftermath of the financial crisis, according to The New York Times.

Hear that, Michigan? The auto industry may be gone but there's a good buck to be made sticking tubes and needles into the people too old, too poor, or both to flee the state. What is a quote like this other than an admission that our population is aging and, given our level of material wealth as a society, staggeringly unhealthy? We're number one! …in elderly diabetics.

No one seems to know what we'll do with all of these nurses and "home health care professionals" when the Elder Care Bubble bursts; thinking that far ahead has never been our strong suit. If the best thing that can be said about the economic condition of a city is that it has a lot of hospitals – you know, because a lot of its residents are on the verge of dying – then that city might not have a lot going for it. On the national level, if the best thing we can tell college students and adult job-seekers is that America is going gangbusters at generating sick people, we might want to step back for a moment and ask if that's the kind of growth industry that defines a strong economy.

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47 Responses to “BUSINESS IS BOOMING”

  1. US in the UK Says:

    it is after all, bbbbbBBBIG Business!

    Not a direct quote but as close as I can remember, from John Ralston Saul:

    Growth, as we currently understand it, classifies education as a cost, thus a liability. A golf ball is an asset and the sale of it a measureable factor of growth. A face lift is an element of economic activity while a heart bypass is a liability which the economy must finance. Holidays are activity while childcare a cost.

    If "we" focus on these things, are we surprised by the outcomes…?

  2. middle seaman Says:

    Industries, cities and empires die. Our ability to predict the next winners doesn't amount to much. Climate change may drive people away from Texas back to the cooler Mid West. Personally and culturally the death pains and overwhelm. For society facts such as Britain dwindling from an empire to insignificance makes little difference; many Brits live well.

  3. Weird Old Tip Says:

    Providing jobs by being sick & old
    is just my way of giving back.

  4. FMguru Says:

    I'm always wary of those "there's a huge shortage projected for labor sector X! labor sector X is going to be the next hot career! big money for life if you get a job in sector X!" claims. 99% of the time its the industry in sector X trying to drive young workers into their fold so they have a larger pool of job applicants to drive down salaries. Here in California, nursing has been the hothothot trend of the future, and now the state has an oversupply of nurses, and salaries are going down and the powerful activist nurses' unions are feeling the pressure.

    Shit, I can remember a New York Times article circa 1990 talking about the coming shortfall in professors because the ones that were hired in the 1960s to teach the boomers were all on the verge of retiring and there'd be an enormous number of openings very soon. How'd that work out for everyone involved? Pretty well for institutions, who have an nearly unlimited supply of adjuncts willing to teach piecework courses for hobo wages.

    Either that, or its a smokescreen to bring in foreign workers and H1B employees. Companies like Microsoft and Google and Facebook love to talk about the enormous shortfall in computer and technology workers in the US and how they need to bring in programmers from overseas, which is rather hard to square with their incessant bragging about how only 2% of the people they bring in for interviews ever get a job offer.

  5. Tim H. Says:

    An interesting thing, health care being the last industry growing in the rust belt, when for-profit health care was a powerful force driving de-industrialization, along with business strategies that sounded good on a golf course…

  6. RosiesDad Says:

    I'm glad I am old enough that I won't have to worry about this shit for more than another 10-15 years.

    I feel sorry for my kids, though. Their world is a tougher place than ours was.

  7. Major Kong Says:

    I've been hearing about a looming "pilot shortage" since as long as I've been in aviation (30 years). It has yet to materialize.

  8. Alex SL Says:

    Well, the thing is that there are two ways it can go in the future: Either (1) world population peaks at some point because people have less children, meaning that shortly afterwards there will be an unprecedented high number of elderly people relative to young people, or (2) it peaks because hundreds of millions starve and die of malnutrition and diseases. There is no third option because there is simply a limited amount of resources.

    If the first happens, there are again two ways it can go. Either (1a) we decide collectively that caring for our elderly is actually a pretty decent thing to do, and that money invested there makes more sense than money invested in the next iGadget or whatever, and that this has the nice side effect of employing many people who would otherwise not find gainful employment, or (1b) we don't, because holding on to our money is more important to us than helping others to spend the last part of their lives in dignity.

    Seen from this angle, nursing must indeed become a major part of the world economy if we want to have a future worth living. Sadly I am not very optimistic. If asked to make a bet, I would put most of my money on (2), with a side wager on (1b).

  9. Infidel753 Says:

    The increase in non-aging-related health problems is mostly being driven by the obesity epidemic, and that's indeed a problem that need to be dealt with. But the increase in the number of elderly people is being driven by the fact that people are living longer, and that certainly isn't a bad thing. If medical science had been frozen in 1980, most of those elderly dying people we have now wouldn't be elderly and dying because they'd already be dead.

    To some extent the effect is mitigated by people staying youthful longer ("60 is the new 50", etc.), and over time we'll get better at that; but in the meantime, the rising number of elderly is clearly a positive regardless of what kinds of effects it has on the economy (to which, remember, those now-elderly people contributed in their earlier lives).

  10. fuzzbuzz215 Says:

    I live in Flint, MI and they have mixed hospitals with college (so called knowledge industry) in order to salvage any hope of economic foundations for the city. So not only have we invested heavily in the elderly care bubble but we have also invested in the school loan bubble as well. Theres something really wrong with how short sighted we can be and we're setting ourselves up for failure in a town already awash in failure.

  11. Seeker Says:

    Why are health costs going up? Because the population is getting sicker and developing more lifelong chronic illnesses, in large part because in many places the air and water are toxic and the only affordable food is low-quality (but filling) refined carbohydrates. Because too many people are rushing from one low-wage job to another and are chronically sleep-deprived and exhausted. Also because the person who would have died from a heart attack in 1950 is now being saved to limp on in poor health for another 2 or 3 decades, needing constant care.

  12. skyskier Says:

    There's one key feature of the health care system that hasn't been mentioned, its ability to be a self-perpetuating machine. The "supply-driven" side of the equation makes it unique among industries. There is a well-known effect that the more you build the supply (more hospitals, more specialists, more operating centers, etc) the more the population will use those services in a region. That's why as a business, it's the perfect market opportunity. You build it, they will come and money will flow your way. Either private or public, nobody cares, it's money, big money.
    Check out the Dartmouth Atlas of Health Care for detailed and quantifiable examples.

  13. c u n d gulag Says:

    Conservative POV:
    Sick and elderly?
    Need care?

    HA!
    BS!!!

    They're just lazy old moochers, takers, and parasites!

    Take SS away, and Medicare, and put them back to work!

    You'd be surprised how healthy elderly people will discover they are, when they have to work to live and eat, and pay for their own medication!

    These old moochers, takers, and parasites, need to pull themselves up by their diabetic shoelaces, and hospital booties, and get back to work!!!!!

    #snark – lest anyone be confused.

  14. Xynzee Says:

    Hey that sounds exactly like where I'm living. Except we still have both heavy and light manufacturing—where heavy goes "moo", and light goes "baa" ;)
    Right now we're trying to get funding for a regional aged care facility.

    The problem with the aged care care as industry is that in reality for long term care the price cannot be too high. Some oldie (and children) runs out of money then what?

    Nursing—like teaching since the St Ronbo era—has always straddled a gulf between being a respected, well-paid career path, yet paradoxically is not as well-paid or respected as it should be. Given the scenario you've described nursing looks set to become a McDonalds like job that actually requires a degree.

    Not sure I want a seriously pissed off professional, with a ton of debt, who gets paid minimum, jabbing needles in me or performing life saving procedures upon me.

    I'll also guess that in the future the low wages will not attract the best and brightest to the profession.

    Our head of finance has a saying: soon the economy will be based on one half of the population selling burgers to the other half selling blow jobs.

  15. Dave Dell Says:

    RosiesDad –

    "I feel sorry for my kids, though. Their world is a tougher place than ours was."

    I highly recommend Alan Weisman's new book – "Countdown". The chapter on Japan is particularly interesting since they will be the first industrial economy that will face the shrinking population, stable (not growth powered) economy problems.

  16. US in the UK Says:

    @middle seaman

    HAHAHAHAHHAAA!!!

    I live in the UK and I can assure you that there is no Advanced Industrial Democracy with a lower *overall* quality of life.

    To be clear, I dont' long for the USA but rather the European continent.

    As I tell my friends, having lived in 5 foreign countries in the course of my life of a wide variety, the UK is the best 3rd world country that I've lived in.

  17. Rich Says:

    In a certain sense it's better than hucksters looking for bigger suckers than themselves to sell useless stuff which seems to be what's propping up the sunbelt. Actually, health care for retirees is a bubble for places like Florida and Arizona, too, except the new cohorts of aging retirees won't be able to retire to those places, indeed, they may not be able to retire at all.

    Places where the medical bubble supports research, spinoffs like high tech medical equipment and cutting edge health care probably will weather the storm better than places that just have crappy for-profit hospitals and nursing homes. The latter are chain businesses that have been bought and sold so many times, they can only afford to deliver negligence. So, places like Cleveland, Pittsburgh and Cincinnati may survive a bubble but Fort Wayne, Kalamazoo, Saginaw, and Toledo may not be so lucky.

  18. Skipper Says:

    Oddly, this same point was made 20 years ago by Charles Reich in his prescient book "Opposing the System." It should have made an impact, but was largely ignored because we were in the grips of the tech bubble. Everyone was going to be a billionaire by next week. People were quitting their low-paying jobs to become "day traders," i.e. Chronic gamblers.

    For the record, health care costs are going up because we have made health care a for-profit corporate activity, which used to be against the law. The corporations have figured out how to extract as much money out of the system, while providing as little care as possible.

    A few years ago, I had to have a polyp removed from my throat. I went into the hospital outpatient department at 2 p.m. They wheeled me into a treatment room, gave me a drug to make me forget what they did to me, and removed the polyp. I "came to" shortly thereafter, got a cup of ice and a tissue. The nurse took my blood pressure and told me to get dressed. I was in the car on the way home at 5 p.m. The bill to my insurance company: $27,000. They only paid $17,000, but had I not had insurance, I would have been on the hook for $27,000.

  19. Brian M Says:

    Fort Wayne is my hometown lol. Its not QUITE as destitute as a Flint or a South Bend or a Danville, IL and their like, but damn is it ugly. As much as because of horrific American urban planning preferences as the overall economy…and these predate deindustrialization to a degree.

    All that government money dumped into a downtown of a major (300,000 people) American City…and the place feels eery empty. It may be worse than downtown Peoria!

    Unlike you…I WILL NOT RETURN. Hate the climate, dislike the landscape, don't really care for the cityscape on the whole. And…my profession is paid very very poorly there.

  20. Barry Says:

    Major Kong Says:

    "I've been hearing about a looming "pilot shortage" since as long as I've been in aviation (30 years). It has yet to materialize."

    I've watched this since the 1987 article prophesying a shortage of Ph.D.'s and professors (which I believe was later found to be a deliberate fraud perpetrated by the federal science agencies to help push down post-doc wages).

    Every single time it's be a lie, with the single exception of a few years in the late 1990's, when there was an actual across-the-board tight labor market.

  21. mothra Says:

    Well, as our economy gets worse and we lose more and more jobs, even hospitals won't be able to make money because no one will be able to afford insurance or to pay their bills. Even the ACA won't be able to stop this inevitable march into hell. I just hope I die before it gets that bad.

  22. MS Says:

    The important thing about healthcare is that it's paid for from somewhere else. In the case of old people, those hospitals are funded directly by Washington D.C. So as long as you can keep the Medicare dollars coming in, you can support some kind of local economy no matter how poor the local conditions are. Same story with prisons, largely the same story with colleges. These are all ways to funnel some central money to outlying areas. So yes, when you read "booming healthcare industry" you should think "no local economy whatsoever".

    And yes, when enough of the old people die, and (since all the young people moved out) not many new ones are being created, those hospitals will start to close, nurses will be laid off, and the declining spiral will continue. Medicare-based hospital employment is staving off the inevitable by 10 or 15 years, but that's it…

    Of course, if you're actually a desirable place for old people to move to, Florida or whatever, then your healthcare bubble may continue for a long, long time.

  23. Bitter Scribe Says:

    One good thing: The new competition will drive up customer service.

    I'm not kidding. A few years ago, I was hospitalized for the first (and only) time in my life after a minor operation went wrong. I was amazed by the level of care I got. Even the food tasted great (although the fact that it was my first solid food in 48 hours may have had something to do with that).

    It turns out that hospital was locked in a dispute with another hospital over expansion plans and they were trying extra hard to buff their image, especially among people who lived in the town (as I did).

    But this post is absolutely dead on, in that the health care sector, while vital, isn't really that productive from a purely economic point of view. It's certainly not something we can base our long-term employment policy on.

  24. Stephen Says:

    Some of the fastest-growing cities have this problem too: almost all their growth is in education (i.e., what to do with all the new kids arriving with their parents) and healthcare, which simply aren't primary industries. So you get a lot of population growth in cities in the South, but not a lot of attendant economic growth.

    Then the places that are seeing a lot of wealth are too NIMBYish to let more people move there. Wheeeee~

  25. Xecky Gilchrist Says:

    The elder care bubble should go on quite a while – it's now the Boomers who are driving up the proportion of elderly folks, and all of them will leave to at least 120 so they can keep annoying everyone younger than them with complaints about how much the music sucks now.

  26. Patrick M. Says:

    http://youtu.be/Qxx65rOzKEc

  27. Elle Says:

    @US in the UK

    I live in the UK and I can assure you that there is no Advanced Industrial Democracy with a lower *overall* quality of life.

    To be clear, I dont' long for the USA but rather the European continent.

    As I tell my friends, having lived in 5 foreign countries in the course of my life of a wide variety, the UK is the best 3rd world country that I've lived in.

    Really? I've lived in a bunch of countries too, and have no difficulty in discerning the difference between the UK and LDCs. I like my weather with more pronounced seasons, and less endless rain, but on things I value (rights, equality, culture, books, sarcasm, democracy, transport links to other places I want to go) it ranks pretty decently.

  28. sluggo Says:

    @ Xecky Gilchrist

    Your music does suck.

  29. US in the UK Says:

    Hi, Elle,

    Undoutbedly the UK has some upsides. On a sunny day in the summer, with nothing to do but punt, drink, and talk – it is hard to find a better place. Obviously those don't converge often but when they do, truly can be magical.

    This is a land of legends. When a cool fog sets in over uneven landscape, it is both myterious and seductive.

    English humor is worth getting to know well. Especially the sarcasm/dry delivery/high end versions.

    However, there are profound shortcomings in the other areas.

    rights – the least private democracy in the world (i.e. cctv)
    equality – this is a fair point – at least they try
    culture – castles, old things. Not unique to UK
    books- they have books? I guess this is better than not having books but where is that in the West?
    sarcasm – see above
    democracy – least representative (majoritarian system, aka. Westminster system) and they have a f-ing monarchy (doesn't matter that it is ostensibly neutered. They have a monarchy! in the 21st century)
    transport links – I assume you mean Heathrow or something. a ticket from my town exactly 55 minutes from St Pancras is nearly $95. For a 55 mile ride. In Italy, France, and Germany, the cost is closer to 22 Euros ($30). But, that's what the UK gets for the only private train service in Europe. The most expensive domestic travel. Nice. I am sruprised the US train industry hasn't jumped on this gravy, ahem, train.

    All joking aside, the UK is ok. But from personal experience, there isn't a more uptight, stab-you-in-the-back middle class in the world.

  30. sluggo Says:

    "there isn't a more uptight, stab-you-in-the-back middle class in the world."

    Ever been to the The American South?

  31. Elle Says:

    But from personal experience, there isn't a more uptight, stab-you-in-the-back middle class in the world.

    Have you ever lived in Sweden?

    I should have been clearer, I think. I mostly (I spend a lot of time in the rest of Europe for work) live in the UK. There are other places that I've lived very happily, but I do like it here. I'm not sure I really recognise much in your assessment, but thanks for explaining.

  32. Kaleberg Says:

    When Medicare was passed in the 1960s, there was a huge boom in medical services. I remember all sorts of doctor's offices and clinics popping up. Even a supermarket we used to shop at got turned into a medical clinic. I don't think the ACA will have quite the same impact, but I wouldn't be surprised if business is booming.

    It's not a bad thing either.

    Starting with Medicare, the medical business has been increasingly funded out of general US government and, to a lesser extent, state tax revenues. An institution like a hospital or medical clinic provides not just health care, but jobs as well. There are other institutions like that, for example, colleges. I remember reading the Middletown books, great anthropological studies of Muncie, Indiana, and their discussion of how the local teachers' college helped keep the place going during the Great Depression. (Muncie was originally an energy boom town.)

    It may not look like much, but having a hospital or two, a college or two and other such institutions can get a place through the bad times. If nothing else, these channel nationally funded subsidies into the local area, and when the time is right, they can serve as a nucleus for growth. Colleges are especially valuable for that. At first, all the graduates will head off somewhere else to find work, but at some point a few will figure out how to make it locally, and they will hire others.

  33. April Says:

    "a ticket from my town exactly 55 minutes from St Pancras is nearly $95. For a 55 mile ride. In Italy, France, and Germany, the cost is closer to 22 Euros ($30). "

    In China I can go from Nanjing (where I live) to Shanghai (where I shop) which is 180 miles in two hours on the bullet train for $24. ($29 first class.)

    But then, you know, communism.

  34. Townsend Harris Says:

    healthcare
    government
    prisons
    schools and colleges

    … are all that's left in loads of towns. You'll be okay if you can keep a steady job in one of those industries. Your dangers are two-fold: privatization and bosses always looking to cut labor costs.

  35. Anonymouse Says:

    @US in UK: I live 15 miles from Washington, DC. An AMTRAK train ticket costs $25 each way and there's only 1 train on the weekends. OTOH, parking can easily cost $50/day and it wouldn't be at all unusual to spend 90 minutes to 2 hours just trying to get there or back during rush hour (6 – 9 am and 3 – 7 pm). There is a local train that's about $15/day round-trip, but the parking lot at the nearest station fills up before 6 am. The nearest light rail stop is 18 miles away and costs $5/day to park at the station on top of the fare (your best best is the $10 all-day-anywhere ticket).

    If I want to visit DC, I try to find a seniors bus trip and charm my way into buying an unsold ticket to that–they usually run about $10 – $20 and someone else deals with the parking and traffic (but you have to listen to a lot of whining about how a non-senior is getting a perq). If I have to do business in DC, I pay through the nose and complain a lot.

  36. Khaled Says:

    @Kaleburg-
    See Pittsburgh or Columbus vs Cleveland or Youngstown or Dayton.

    Pittsburgh has recovered because of Pitt and Carnegie Mellon (Duquesne to a lesser degree). Columbus has OSU. Columbus is the only metro area in Ohio that actually has good job growth and doesn't just seem to grow outward by destroying its core.
    Cincinnati is a mixed bag- it has UC and Xavier, but they don't have the pull for $$ that a Pitt or Carnegie Mellon or OSU has. And I do know that Case Western is in Cleveland, but it's not big enough to make a huge difference- Pitt helps makes Pittsburgh because kids from all over PA come to Pitt and stay put in the city/region.
    Youngstown is just a dying city- it doesn't even have "good health care" jobs.

  37. Ed Says:

    Youngstown is the worst place I've ever seen. I can't believe anyone lives there.

  38. Bitter Scribe Says:

    Ed, I'm sure you already know this, but Nancy Nall linked to this post this morning (and led her own post with it).

    For those who don't know Nancy, I urge you to check out her blog, nancynall.com. Way cool. She writes about national and Detroit-area politics from a progressive standpoint, with lots of interesting personal stuff.

  39. US in the UK Says:

    @Elle

    That's cool. I don't like it here (you can just make that out in my description) and it may simply be that I have no patience for drafty windows/doors in the 21st century….
    : )

    @sluggo

    I'm from Tennessee (with parents in AL and GA). I stand by my statement.

    @April
    Exactly. God, if the private train market gets any 'better' here, I won't be able to afford traveling at all.

    @Anonymouse

    When I lived in DC that first thing I did was sell my car, walk, and hitch out to the SkyLine Drive to do some camping

  40. Elle Says:

    @ US in the UK

    I hope you get to move somewhere you like better, soon. It's rough living in a place that you're not that into. I know what you mean about the drafts, although I spent my early childhood in a new house in a really hot place. My apartment building is 150 years old, and I have a strange fondness for creaking floors and blankets and fluffy socks.

  41. Mo Says:

    The Servant Class, Part 2:

    You could also pour coffee if you don't want to bathe incontinent oldz

  42. Fred Says:

    Recall the SNL sketch about "The Scotch Tape Store" in the mall where everybody is going out of business but the tape store doing great because all the stores need tape to stick the "going out of business sale" signs on their windows.

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  45. Mark Johnson Says:

    I haven't been to Dayton in well over a decade but last time I was there it seemed like a decent town – certainly not in the dire straits Cleveland, Detroit, St. Louis, etc. are. I hail from Grand Rapids, MI which is about the same size as Dayton and seems to be holding its own economically despite the dual disadvantages of being mid-sized and in a State that's experiencing decline almost everywhere else. Brewing has really taken off there, and they still have a lot of light manufacturing (especially Steelcase, Haworth and Herman Miller). They have also invested to become the health care magnet for the rest of West Michigan.

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  47. Ursula Says:

    I'm so behind on my Gin and Tacos reading, and no one will see this. But DaVita Dialysis seems to be moving into a lot of buildings that used to house retail stores or restaurants, and it seems only marginally better than an abandoned building.