"Health Care: Booster Shot For Jobs"

“Health Care: Booster Shot for Jobs?” is the title of a new post by Michael P. Scott, an associate with the Denver-based urban consulting firm Centro, appearing in NewGeography.com.  I agree with everything about Scott’s title--except the question mark.  As his piece makes clear, healthcare is a booster shot for jobs. 

Scott starts with a paradox: Why it is that cities and their economic-development officials so often ignore the bird in the hand (the palpable reality that lots of people work in healthcare) in favor of the more speculative, perhaps even non-existent bird in the bush (the jobs to be found by luring in tourist attractions).  As Scott puts it: 

The local medical center complex is often the largest employer in town, it would seem that strong fiscal returns would be rewarded to those cities that strategically aligned their economic development efforts to capitalize on growing this sector. Unfortunately, the health industry has historically been viewed as a local disaster, replete with quality of care issues, bureaucratic inefficiencies and high costs.

As noted here many times at SMS, the dominant policy classes in Washington and New York, plus satellite nodes in Cambridge, San Francisco and elsewhere, have concluded that economic growth is great--but not in healthcare.  In healthcare, as we know, we have to “bend the curve” downward.  To be sure, these “Scarcitarian” elites wrap up their arguments in statistics,  but as far as I can tell, this is basically an aesthetic judgement these elites are making: we spend too much, and so we should spend less.    

But of course, aesthetics often makes for poor economics.   In this case, it means that the policy elites wish to provoke a recession in the healthcare sector even as they seek to “stimulate” the economy out of the recession.  Given that healthcare is one-sixth of the economy, it’s a challenge to shrink such a huge component while seeking to enlarge the overall whole; and, as we have seen, policymakers have not been very successful in this hit-the-healthcare brake-while-hitting-the-macro-accelerator approach.    


But the mantra of cutting healthcare, no matter what the cost, has been heavily programmed into these policymakers, so they keep going, and going, and going, even when they are no longer making policy.

Typical of this persistence is a recent post from Peter Orszag, the former director of the Office of Management and Budget in the Obama administration until last month.  Just a few days ago, he published a blog-post for The New York Times, in which he linked cuts in healthcare to not only the cause of deficit reduction, but also to increases in take-home pay and even improvement in public education:  

Containing health care costs is not just an abstraction central to addressing our long-term fiscal gap. It is also central to raising workers’ take-home pay, because increasing costs for health care are holding down wages.   And perhaps most unexpectedly, slowing the growth of health costs may be among the best things we can do to help the next generation attend a high-quality public college.

But as Scott laments in his post: 

Little attention is given to health care jobs as springboards to enliven local and regional economies. The steady parade of doctors, nurses, technicians and support staff at our medical establishments provide cities with a huge multiplier effect on nearby housing, restaurants and retail businesses. The trickle-down effect spreads outward to hospital manufacturers, suppliers, pharmaceutical companies, and other ancillary firms that serve as the lifeblood of a functioning health care system. The economic activity of the medical business extends well beyond hospital walls; it's a high-octane job engine, with the buying power of health professionals helping to sustain struggling communities.

But unfortunately, as Scott describes, cities with big healthcare complexes ignore those healthcare complexes, the bird in the hand, in favor of speculative new stadiums and museums.  As Scott describes the situation in Cleveland:

Cleveland, Ohio, is a prime example of a city that has undermined its economic potential by permitting dubious redevelopment efforts – centered on sports complexes and museums – to overshadow assets such as the Cleveland Clinic and the University Hospitals Health System, which together encompass 51,000 employees.

Like most Rust Belt cities, Cleveland sorely needs an infusion of jobs outside of the long diminished blue collar sector. It could build collaboratively on its health care niche, creating complementary clusters of medically related firms in the life sciences and health information systems that would bring new opportunities and life to the area. The city's world-class medical establishments could supply the ideal springboard for branding Cleveland as a global medical hub, rather than as the home of the Cleveland Cavaliers and the Rock and Roll Hall of Fame museum.

One Cleveland-area organization, BioEnterprise, is taking the lead in fueling the growth and commercialization of health care companies in the bioscience sector. A collaborative effort between top medical and higher education institutions in the region, BioEnterprise is a promising attempt to alleviate Cleveland's persistent difficulties in generating jobs and economic growth.

Scott further notes that these are good jobs at good wages; nationwide, the average salary is $43,000.   And Scott describes efforts to use health care as an economic engine in cities as different aOakland, Sacramento, and Spokane.  He concludes:

When cities and regions choose to create synergies between their communities and their medical campuses, the prognosis is promising for an economic cure.

And oh, by the way, in addition to the economic benefits of healthcare, there are other benefits, too, that one can’t get from another urban galleria.