America's Make-Work Sectors (Healthcare & Higher Education) Have Run Out of Oxygen

Tyler Durden's picture


Submitted by Charles Hugh-Smith of OfTwoMinds blog,

We can no longer afford the expansion of healthcare/education or their out-of-control costs.

If we strip away obscuring narratives, we can clearly see that the two employment sectors that have expanded rain or shine for decades have functioned as gigantic make-work projects. I refer of course to healthcare and education, specifically higher education.

We can see the outsized gains in these sectors by comparing total population growth to the number of full-time jobs and the number of jobs in education/healthcare since 1990. Here is total population: a 27% increase since 1990:

To separate out the wheat (jobs that support households) from the chaff (part-time work that cannot support a household--even a job with one hour a week is counted as a P-T job), let's use full-time employment as a baseline. Full-time employment rose about 20% since 1990, less than population.

Education/healthcare employment rose by 81% since 1990--three times the population growth rate and four times the percentage increase in full-time employment.

For more on these sectors' growth, please read Mish's recent entry, Ominous Looking Picture in Healthcare and Education Jobs.

If education and healthcare had expanded to meet the needs of a larger population, employment in the sectors would have increased about 30% since 1990, not 81%. So 50% of the sectors' expansion is above and beyond population growth.

Have education and medical services improved by 50% since 1990? In many cases, it can be argued the yield on our investments in these sectors has declined even as employment in the sectors has soared. Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

While student loans have soared to over $1 trillion, with direct Federal loans ballooning from $115 billion to over $700 billion in a few short years, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college.

Why has employment soared in higher education? Look no further than bloated administration and non-teaching staff: New Analysis Shows Problematic Boom In Higher Ed Administrators:

In all, from 1987 until 2011-12--the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.“There’s just a mind-boggling amount of money per student that’s being spent on administration,” said Andrew Gillen, a senior researcher at the institutes. “It raises a question of priorities.”

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

As for healthcare in the U.S.: despite soaring employment and expenditures, life expectancy in the U.S. since 1990 has fallen well below that of the United Kingdom (U.K.), a nation whose healthcare system is widely criticized in the U.S. (World Bank, Life Expectancy at Birth)

Yes, there are many metrics of overall health, but the U.S. has not experienced a 50% increase since 1990 in any of them. If anything, the overall health of the populace has arguably declined, even as the nation pours almost 20% of its gross domestic product (GDP) into healthcare.

This is not a slam on those earning a living in these sectors; it is simply a description of sectors that have functioned as "make-work" sources of jobs.Consider the appallingly perverse dynamic of student loans: now that tens of millions of students need student loans to pay sky-high tuition and fees, colleges need huge administrative staffs to manage the student loan process.

The yield (in earnings) on the increasingly unaffordable college degree is declining sharply:

The enormous sums of money needed to pay for these make-work sectors is coming out of household incomes that are stagnating for 90% of all households.

If we subtract healthcare and debt service from household earnings, we find that wages/salaries are in recession territory:

In other words, the nation can no longer support these enormous make-work sectors, where employment and expenditures rise while the yield on those gargantuan investments actually declines--a classic case of diminishing returns.

Consider the percentage of healthcare employment that is paper-shuffling resulting from America's dysfunctional pastiche of private cartels and Federal programs; I have seen estimates of 30%, but this doesn't include the staggering sums lost to fraud, embezzlement, over-charging, useless or even harmful procedures, duplicate or needless tests, and so on.

As I have often noted, if we compare our per-person expenses for healthcare with other advanced democracies such as Australia and Japan, we find those nations spend roughly 50% of what the U.S. spends per-person, with better and more evenly distributed results. This strongly suggests that healthcare should cost half of what it currently costs, if the U.S. sickcare system wasn't so wasteful, ineffective and dysfunctional.

As for tuition costs: I have demonstrated in my book The Nearly Free University and The Emerging Economy: The Revolution in Higher Education that the tuition for a four-year bachelor's degree could (and should) cost $5,000, not $100,000 or $200,000. The technology and tools already exist to accredit the student, not the institution and provide distributed courses, adaptive learning and real-world, workplace-based workshops for a tiny fraction of the ineffective, unaffordable system of higher education we are currently burdened with.

Once costs decline 95%, there is no need for student loans or the bloated bureaucracies needed to manage the parasitic student-loan system.

Why is employment in these sectors finally slowing? For the simple reason that they've run out of oxygen: we can no longer afford their expansion or their out-of-control costs. Much cheaper and more effective systems are within reach, if only we look past failed models and politically powerful cartels and fiefdoms.

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Mon, 02/10/2014 - 09:54 | 4419557 Johnny Cocknballs
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er, what about the financial sector?


Mon, 02/10/2014 - 09:55 | 4419564 LawsofPhysics
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"what about the financial sector?"-  Better ask Hank "tanks in the streets" Paulson or John Corzine...

Let me be clear, roll the motherfucking guillotines, nothing changes otherwise.

Mon, 02/10/2014 - 09:57 | 4419572 GetZeeGold
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they've run out of oxygen


Oxygen panels?


Mon, 02/10/2014 - 09:58 | 4419579 mayhem_korner
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Total Recall.

Mon, 02/10/2014 - 10:09 | 4419598 Uncle Remus
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"Consider that a divorce."

Mon, 02/10/2014 - 11:03 | 4419738 Clint Liquor
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President Urkel is committed to 'investing' in education and healthcare, so everything should be fine.

Mon, 02/10/2014 - 16:19 | 4420888 hobopants
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For some reason I thought this was hilarious. I'm waiting for the day when everything goes to hell and he just gets up to the podium and says "Did I do that?!" with a canned laughter track rolling.

Mon, 02/10/2014 - 10:12 | 4419601 BLOTTO
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The guillotine is only good when you sever the right beasts head.


Thats why we keep going around in circles.


We aren't snuffing out the right monster.


Wake me up when the Royals are brought down, Rothschild, etc...not just sock puppets.

Mon, 02/10/2014 - 10:14 | 4419614 Mad_max
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"Let me be clear, roll the motherfucking guillotines, nothing changes otherwise."


too quick,_drawn_and_quartered

Mon, 02/10/2014 - 10:23 | 4419643 eclectic syncretist
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If you want to go Medieval nothing beats impalement for making a lasting impression.

Mon, 02/10/2014 - 10:37 | 4419674 Hubbs
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Now yer talking my my language.

Mon, 02/10/2014 - 11:09 | 4419789 Ban KKiller
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Some of the major criminals AT THE TOP..Northern Trust. Complete crooks and traitors whose god is power.

Mon, 02/10/2014 - 12:16 | 4419997 dtwn
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Nice phrase to start the week:

"roll the motherfucking guillotines"

when I read that, I hear Samuel L. Jackson saying it. . . . . .

Mon, 02/10/2014 - 10:03 | 4419589 Mister Kitty
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I don't care about the financial sector.  I'm an ignorant pauper.  What I really want is socialized medicine.  My teeth need fixing, and I want Uncle Sam to pay for it. 

Mon, 02/10/2014 - 10:10 | 4419604 ArkansasAngie
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If ignorant paupers wanting good teeth were the problem, we could have solved that trillions ago.

It's the layers of disintermediation that prolifierate in all directions that allow the few to rule the many.

Mon, 02/10/2014 - 10:24 | 4419641 LawsofPhysics
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Yes, too many over compensated paper-pushers who's labor is of no real value.

Mon, 02/10/2014 - 16:17 | 4420880 Offthebeach
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Early '70s I go to town hall with my father with his hand drawn plans for a building permit for a ranch house. 30 minutes, maybe 50$.

Now? Same house is illegal. Dictated 50% cost increase. Fully done Architect plans. Plus one or more engineer stamps. Approval might take a year on a taxed buildible lot. Or not. If not forget getting tax money back. You'll need a lawyer too. By and large more money is spent on gov and "helpers" then the laborers and trades that do the actuall work work.

Mon, 02/10/2014 - 16:31 | 4420941 hobopants
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It's amazing how the species has survived so long without building inspectors and architects! We should have all been crushed under blue-print free wigwams and adobe buildings long ago... 

Mon, 02/10/2014 - 10:05 | 4419592 toady
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Shhhhh... They're doing Gods work, don't ya know.

It's every other sector, group, party, etc. Not the global ponzi known as the financial sector.

Mon, 02/10/2014 - 10:14 | 4419610 Hubbs
Hubbs's picture

Wrong department. Try looking under theft and embezzlement.

Back to the topic:I get criticized at the hospital when I state, Do you think we are really paying for all this largesse?

Mon, 02/10/2014 - 10:28 | 4419654 Jannn
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Guest Post: The Gold Market, Part 2

Mon, 02/10/2014 - 13:47 | 4420285 Offthebeach
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So long as there is a nickle to be vacumed, a gold tooth or organ to be harvested, or a freeman to be serfed, there's opportunity for the hungry.

There is, at least, a hundred years of sheeple shearing.

Scale man, scale! The world is a big place and there's lots of thieving to be done. Not all of it will go smoothly nor successfully. After the easy kills, the sheeple get progressively craftier.

In short, plenty of work .

Mon, 02/10/2014 - 18:43 | 4421505 hobopants
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Don't forget prisons!...oh wait that is part of the healthcare and education thing huh?

Mon, 02/10/2014 - 09:54 | 4419558 LawsofPhysics
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Don't worry, their lobbyists on K-street will make sure your "representation" steals more of your wealth.

see the real problem yet?

Mon, 02/10/2014 - 10:14 | 4419611 asteroids
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When the theft stops, expect to see a total collapse of both systems.  When? Don't know, but the sooner the better.

Mon, 02/10/2014 - 10:16 | 4419616 ArkansasAngie
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The theives are not going to have a v-8 moment and say "wow ... we should stop doing that."

Theives stop when they get caught and forced to face the consequence.

Mon, 02/10/2014 - 12:20 | 4420011 FredFlintstone
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The theft will stop when there is nothing left to steal.

Mon, 02/10/2014 - 09:57 | 4419562 Sudden Debt
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Here's a Asperine for that braintumor of yours!!







Mon, 02/10/2014 - 13:08 | 4420169 TBT or not TBT
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Health care costs would go WAY down if we just shot sick and injured people DEAD, right then and there. No fukkin health care costs anymore. Bada bing bada boom.

Mon, 02/10/2014 - 09:58 | 4419578 mayhem_korner
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Mon, 02/10/2014 - 10:01 | 4419582 Duc888
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Government is the biggest "make -work" program in existance.

Mon, 02/10/2014 - 10:28 | 4419650 NoDebt
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Amen.  Everything they touch (take over) becomes a make-work program.  And then you get this little gem:

"In other words, the nation can no longer support these enormous make-work sectors, where employment and expenditures rise while the yield on those gargantuan investments actually declines-"

Obviously, they MUST be supported and they WILL be supported until such point as the government can no longer borrow/print to cover the largesse.

Mon, 02/10/2014 - 10:05 | 4419591 devo
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Healthcare is growing and will continue to grow.

Mon, 02/10/2014 - 10:09 | 4419603 toady
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It's all part of devolution.

Mon, 02/10/2014 - 10:34 | 4419671 cro_maat
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Great comment. Few realize that the vast majority of us are devolving and that evolution is not automatic. We have to leave the matrix to evolve. All the Statist apparatus is designed to put us to sleep and deactivate any connection with our own inner Divine. The AMA is a perfect tool of the black lodge as they can mandate harmful chemicals (vaccines, psych meds, etc.) and put up barriers to entry ensuring monopoly status of sanctioned healthcare. Meanwhile they will villify anyone who attempts to live naturally (in harmony with Nature) and spiritually evolve.

Of course if you really want to grow spiritually you need some petty tyrants to stir up your defective egos. Petty tyrants we have in spades so all in all it is a good time to do the Work.

Mon, 02/10/2014 - 13:16 | 4420181 TBT or not TBT
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The film "Idiocracy" proposes a far simpler, already pervasive mechanism for devolution. I'm going with that, as opposed to various conspiracy theories requiring thousands of bad smart people to act in concert, yet with hermetic secrecy and no credible motivation. Occam and all that.

Mon, 02/10/2014 - 19:58 | 4421831 RafterManFMJ
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You do realize Occam was a treasonous agent of the Lizard People, right?

Mon, 02/10/2014 - 10:31 | 4419661 Winston of Oceania
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As planned people are starting to go without.

Mon, 02/10/2014 - 11:51 | 4419925 Emergency Ward
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And being forced into back-alley treatments when the front doors are shut.....Wait: I thought that was only for, uh..........what will be the hidden death toll of the ACA?  It will not be publicized.

Mon, 02/10/2014 - 13:20 | 4420197 TBT or not TBT
TBT or not TBT's picture

There was no unemployment in the USSR, just as there are no gays in Iran, and no vicious political operatives in our civil service(such as the unionized, 100% democrat IRS).

Mon, 02/10/2014 - 10:08 | 4419596 Debt Slave
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How do you starve a parasite? Kill the host!

Mon, 02/10/2014 - 10:13 | 4419605 Calculus99
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US health care costs are a fucking joke.

I'm English, was in Florida a year back and forgot some run-of-the-mill pills that need a subscription. I went to the local hospital, sat down with a nice lady Doctor, explained my needs and she wrote out said sub. Pay over there she said.

When I was going to pay I naively though the pills would be no more than $30.

Guess what the bill was, $350!

The only solace I can find is that at least they weren't ripping off the limey foreigner, US citizens seem to take it up the arse as well.

Mon, 02/10/2014 - 10:32 | 4419659 Winston of Oceania
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That is because American drug companies are forced to sell at a loss to countries with socialized medicine like GB or Canada and the US customer pays full fare and enough to cover the cost of the foreign subsidy.

Mon, 02/10/2014 - 10:41 | 4419695 Debt Slave
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Yeah I went to my Dr last week and got an Rx for some antibiotic ear drops. Went to the pharmacy and found out they wanted $250 for a 7.5mL bottle. Are you effin kidding me? No way I'm not paying for that even with my company's insurance. I told them forget it and I'll get what I need that is more REASONABLE, like $15.

What a joke. No wonder the Dr is always asking if I have Rx insurance. Next time I am gonna say NO, I don't.

Mon, 02/10/2014 - 11:55 | 4419933 Big Corked Boots
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Go back to your doctor and ask him what he got in exchange for writing that perscription. Those pharma reps get around....

Mon, 02/10/2014 - 13:21 | 4420214 TBT or not TBT
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Pharma reps are kinda hot, very often.

Mon, 02/10/2014 - 12:08 | 4419978 WillyGroper
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Welcome to the party!

It's my understanding from my limey friend that your NHS is in the process of being privatized also.

we're screwed.

Mon, 02/10/2014 - 10:17 | 4419609 Sean7k
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Pretty sure the cost of everything changes if you get rid of government and the law. Solves that pesky entitlement problem as well. Might have to carry a gun and form communities that are supportive, but is that so bad?

Mon, 02/10/2014 - 10:36 | 4419669 shovelhead
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Ask the people in Afganistan.

They're currently working with a govt. overreach problem.

Unfortunately, it's not their own.

Mon, 02/10/2014 - 10:42 | 4419687 Sean7k
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We're bringing slavery to the masses and making them pay for it. Nice work if you can get it( and you don't mind that whole luciferian thingy).

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