New York doesn’t make anything anymore

The jobless during the Depression. These days they’d get jobs as Temps. From Wikipedia.

A rather chirpy story from UPI (chirpy if you work in medicine) hit the papers today.  Per the headlines, nine of the 20 largest employers in the State of New York are hospitals or healthcare networks. The North Shore-Long Island Jewish Health System is the #1 employer in the state, with some 37,000 employees. That’s about a third more than the state’s second largest employer, Walmart. In fact, healthcare companies muscled out almost every other kind of business in the state. Retail, banking, and service companies (Verizon and Con Ed) round out the list. IBM was the only company listed in the report that actually, you know, makes things. By things, I mean ‘tangible products that can be sold’.

But not a surprise.  The BLS predicted that service jobs (most of which don’t require college) would be six of the seven fastest-growing employment fields this decade. And while one of the fast-growing fields in medicine is for Registered nurses (as the boomer generation leaves the field), far more of the jobs in medicine will be for low-paying positions such as home health attendants, orderlies and nurses’ aides. And the report doesn’t note this (but I will), but many of the jobs in medicine are going overseas. X-Rays and slides can be sent via PDF to anyone with a computer in the world. And billing can be handled by anyone who speaks English and can type–those jobs are being put over the Internet as well.

The UPI story goes on to compare our current big hire companies to the top ten NY employers in 1984. Big differences–lots of manufacturers (IBM, GM, GE and Kodak). Grumman Aerospace was also in the top ten. I remember relatives bemoaning the end of the Cold War, when the days of Grumman (and its well-paying jobs on Long Island) were numbered.

Look, I think employment is a wonderful thing. But for me, this report is something of a wake-up call. Employment in services doesn’t create value-added export products. And if you have a patient population living on subsistence wages, that will put downward pressure on hospital fees and employment rolls.  I’m glad that we’ve got great cardiologists in the city, and there’s probably no other place you’d want to go for knee replacement and therapy. But a nation of hospital orderlies and Walmart clerks probably won’t make enough (or have sufficient medical care coverage) to afford those things. And on the national scene, a nation of ‘hospitality’ workers (euphemism for waitresses and hotel room cleaners) and Walmart clerks can’t pay enough in taxes to keep our military on call 24/7. They also will have a big lift to support all those Boomers reveling in Early Bird Special.

Former Reagan Treasury official Paul Craig Roberts called out this trend several years ago:

Economists and policymakers continue to ignore the fact that all employment in tradable goods and services can be moved offshore (or filled by foreigners brought in on H-1b and L-1 visas). The only replacement jobs are in nontradable domestic services, that is, those jobs that require “hands-on” activity, such as ambulatory health services, barbers, cleaning services, waitresses and bartenders–jobs that describe the labor force of a third world country. Even many of these jobs are now filed with foreigners brought in on R-1 type visas from Russia, Ukraine, Thailand, Romania, and elsewhere.

The tell on this problem is the awful Christmas season just passed. America did much of its shopping at Dollar Stores–and it wasn’t for presents. CEO Howard Levine told analysts that his company’s customers were unable to afford toys this holiday season and focused instead on basic needs such as food. Levine said that his customers “clearly don’t have as much for discretionary purchases as they once did.”

Even for those working in ‘office jobs’, prospects are bleak. We are now moving increasingly into the ‘temp economy‘, where ‘contractors’ with no health insurance or benefits do much of the office work in companies. How are all our temps and domestic workers going to pay for all those newly-hired in the medical field?  Who is even asking the question?

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