Calabria, 46, describes himself as a “recovering engineer’’ who four years ago traded his suit and tie for a mala (mantra meditation beads), quitting his job to follow his passion. It wasn’t an easy decision, leaving the security of his career, but Calabria said: “I felt like I was standing in two canoes. My income and training were in engineering, but my heart was in yoga, and I felt like I was being split apart.’’
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WASHINGTON — The aging of America may be good for the labor market.
A growing number of older people and rising health-care spending are driving demand for workers from nursing aides to surgeons. While the economy lost 7.5 million positions during the recession, health care expanded staff. Together with social assistance, it will add 4 million employees to become the second-biggest job gainer by 2018, behind only professional and business-services, according to the Bureau of Labor Statistics. Manufacturing is projected to lose 1.2 million jobs by then.
Health care — including doctors, nurses and hospitals — was the largest contributor to employment growth in the past two years, with a 22 percent share that was almost twice as big as manufacturing.
The U.S. workforce could use the boost: Monthly payroll gains are running below what’s required to reduce significantly the 8.5 percent jobless rate. Unemployment was 5 percent in December 2007, when the recession began.
“The first baby boomer just turned 65 last year, so when it comes to health-care jobs in America, we haven’t seen nothing yet,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York. These jobs “are going to literally explode over the next two decades.”
Almost 87 million, or one in four, Americans will be 65 or older by 2050, according to the Organization for Economic Cooperation and Development.
“The demographic story for health care remains good and will get better,” said Jim Paulsen, who helps oversee about $333 billion as chief investment strategist at Minneapolis-based Wells Capital Management. It still will be hard for investors to pick stocks in the industry, as prospects for hiring and profitability are clouded by lack of clarity on legislation.
The Supreme Court will hear arguments in late March on President Barack Obama’s health-care law, including the requirement that Americans either buy insurance or pay a penalty. Republicans competing for the White House have all said they’ll get rid of the law if they’re elected in November. Regardless of who wins, future presidents may try to turn the clock back on changes made by the previous one, Paulsen said.
“There’s going to be a chronic state of uncertainty in the health-care arena,” making it “really hard to place specific bets,” Paulsen said. “There will be opportunities on a value basis, rather than buy-and-hold.”
Aetna, the third-largest U.S. health insurer, and Humana, the second-largest Medicare provider, may offer some of the best rewards for investors, according to Matt Borsch, a health-care analyst at Goldman Sachsin New York.
Competition among health-care providers will limit costs for managed-care companies, many of which also have a low price- to-earnings ratio, he wrote in a Jan. 4 note.
“The labor market is improving very slowly, but at least we’re headed in the right direction,” said David Autor, an economist at the Massachusetts Institute of Technology. Employment in health care “is definitely going to continue” rising, and manufacturing jobs “will see a recovery” as demand picks up.
While factories still represent a larger share of the economy — 12 percent of gross domestic product compared with 7.6 percent for health care — they have fallen behind since 2008 as a percentage of total payrolls, according to data compiled by Bloomberg News. Health services accounted 11 percent of jobs in 2011, outpacing manufacturing’s 9 percent.
The shift reflects productivity gains as factories produced more goods by replacing workers with technology and by shipping jobs overseas to cut costs. Health services require more face- to-face interaction, which means “these jobs are protected from the forces of globalization,” Rupkey said. “We can’t imagine a time when we’ll be able to outsource the job of a home health aide giving a senior a bath or helping with physical therapy.”
Openings in health care are more broadly distributed geographically, even in economically distressed small towns where they often are “all that’s left,” said David Card, an economics professor at the University of California, Berkeley, and director of the Labor Studies Program at the National Bureau of Economic Research.
They also provide “pretty good” opportunities, particularly for women, he said. This was evident during the 18- month recession, when health care added almost half a million positions, while construction, which typically employs more men, shed 1.2 million workers.
More importantly, the industry’s projected expansion would generate more jobs young people can prepare for and absorb out- of-work Americans — even those without education beyond high school — once they adapt to the skills needed.
“One of the few bright spots in retraining has been health care,” Card said. “That’s a kind of reliable thing.”
Opportunities range from home health aides, who made an average of $21,760 in 2010, to surgeons, whose annual wages averaged $225,390, BLS data show.
Sharon Rudolph, 64, says she’s studying to be a nurse alongside classmates who previously worked in real estate and banking, as well as one who owns a nail salon. The Fort Lauderdale, Fla., resident was a radiologic technologist for two decades before taking a break during the 1990s to raise her family. Now she’s in a 27-month training program at the city’s Nova Southeastern University.
“I felt I’d become more marketable once I get out,” said Rudolph, who ensured that her licenses, including in registered diagnostic medical and cardiac sonography, remained current. “I have to work twice as hard as some of the kids” to keep up with the coursework, and the increased use of technology has “been a challenge.”
Registered nursing, which requires at least an associate degree, will have the largest growth of all occupations, according to the BLS projections, adding about 582,000 jobs between 2008 and 2018, to reach 3.2 million. Home health aides, who need on-the-job training, will surge by 461,000, or 50 percent, to 1.4 million. Hiring among physicians and surgeons will rise by 22 percent, or 144 ,100, to 805,500.
While the additional jobs will lift employment, many pay low or very low wages, according to the BLS. That means these workers will have less ability than employees in higher-paid industries to boost consumer spending, the biggest part of the U.S. economy.
“It is fine to have low-skilled jobs as part of the mix or portfolio of employment opportunities,” said Michael Spence, winner of the Nobel Prize in economics in 2001, and a professor at New York University’s Stern School of Business. “It is better than no jobs. But the mix is important too.”
Charles Roehrig, director of the nonprofit Altarum Institute’s Center for Sustainable Health Spending, said that every 10 jobs in health care ultimately generate an additional 12 elsewhere in the economy. Without the industry’s hiring growth, the unemployment rate would have been 9.5 percent in December, instead of 8.5 percent, he said.
For now, having more jobs “outweighs any other concern,” he said.
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Jay Mallin/Bloomberg
Lawrence Summers, former U.S. Treasury Secretary.
Lawrence Summers, former U.S. Treasury Secretary. Photographer: Jay Mallin/Bloomberg
Former U.S. Treasury Secretary
Lawrence Summers said the latest jobs report shows the economy
is “on the right road” while Glenn Hubbard, an adviser to
Republican presidential candidate Mitt Romney, said he’s
skeptical about the meaning of the January numbers.
“Unlike many of the favorable past reports, if you look
beneath the surface of this one almost every indicator within it
is favorable,” Summers said today on ABC’s “This Week,” where
he appeared with Hubbard, dean of the Columbia Business School.
Employers added 243,000 jobs in January, the biggest gain
in nine months, and the unemployment rate dropped to 8.3 percent
from 8.5 percent in December, the Labor Department reported last
week in Washington. The improvement exceeded the most optimistic
forecasts in a Bloomberg News survey of economists.
Summers, director of the National Economic Council under
Democratic President Barack Obama until last year, said the
administration needs to build on the momentum of the easing
unemployment.
Hubbard, who was chairman of the Council of Economic
Advisers under Republican President George W. Bush, said the
improved employment data was driven by a drop in the number of
people who are looking for jobs while the rate of
underemployment remains high. Administration policies have stood
in the way of the recovery, he said.
“There needs to be a serious debate on what we can do in
tax policy, in health care, in regulation and financial reform
to actually create jobs,” Hubbard said.
Obama administration officials offered a guarded public
response to the report last week, with nine months to go before
the November election and the U.S. economy still vulnerable to
risks such as a worsening of the European debt crisis.
Obama said that while too many people in the U.S. still
don’t have jobs, the data show “the economy is growing
stronger” and “the recovery is speeding up.” In remarks Feb.
3, Obama appealed to Congress to pass an extension of
unemployment benefits and the payroll tax cut.
“Do not slow down the recovery that we’re on,” Obama
said, directing his words at lawmakers. “Don’t muck it up.”
Romney, 64, said upon winning Nevada’s caucus yesterday
that Obama didn’t deserve credit for January’s drop in the
unemployment rate.
“Mr. President, we welcome any good news on the jobs
front,” Romney said. “But it is thanks to the innovation of
the American people in the private sector and not to you.”
Douglas Holtz-Eakin, president of the American Action Forum
and former economic adviser to U.S. Republican Senator John McCain’s 2008 presidential bid, said today that unemployment
will go up before it comes down in a permanent way and the
economy still needs steady job growth.
“We got one month’s good news in the labor market, that’s
great, but the truth is the debt is bad and the recovery is not
very strong, and we have a long way to go,” Holtz-Eakin said on
CNN’s ”State of the Union.”
Alice Rivlin, senior fellow at the Brookings Institution
and former vice chairman of the Federal Reserve, said on CNN
that she expects “good, slow recovery with gradual reduction in
the unemployment rate.”
Rivlin said that as much as she’d like to see continued
growth of GDP and employment, the key to the U.S. economy’s
future is for congressional Republicans and Democrats to work
with the president to address the country’s long-term debt.
“Gridlock is the greatest threat, much greater than
anything else that could happen to our economy,” she said.
To contact the reporters on this story:
Cheyenne Hopkins at
Chopkins19@bloomberg.net;
To contact the editors responsible for this story:
Steven Komarow at
skomarow1@bloomberg.net
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Obamas won’t be invited to royal wedding, London paper says
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President Obama signed a temporary extension of the George W. Bush tax cuts into law today, saying the disputed package will “grow our economy” and “create jobs for the American people.”
Without the bill, all of the tax cuts that Bush signed into law would have expired at the end of the year, and American families would be looking at thousands of dollars in higher taxes, Obama said at a signing ceremony.
The legislation is “a substantial victory for middle-class families across the country,” Obama said. “They’re the ones hit hardest by the recession we’ve endured. They’re the ones who need relief right now.”
The event featured a first-time visitor to an Obama bill signing: Senate Republican Leader Mitch McConnell, R-Ky. It also featured some notable absences, including outgoing House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev.
Obama acknowledged that many of his fellow Democrats opposed the agreement, which extends all the Bush tax cuts for another two years. Democrats such as Rep. Peter DeFazio, D-Ore., criticized the fact that the extensions include the nation’s top tax brackets, even as the federal debt has hit $13.7 trillion.
Some Democrats, and some Republicans, also noted that the deal will add another $858 billion to that debt.
Obama, who also opposed high-end tax cut extensions, said he had to accept things he didn’t like in order to avoid tax hikes for all Americans, many of whom are already struggling in a bad economy.
That would have also “been a blow to our economy,” Obama said, “just as we’re climbing out of a devastating recession.”
The agreement also includes items that Republicans don’t like, Obama said, and “that’s the nature of compromise.”
Obama stressed the items he negotiated into the bill, including a 13-month extension of unemployment benefits, as well as middle class tax cuts devoted to such items as college tuition, child care and business expansions.
Said Obama: “Putting more money in the pockets of families most likely to spend it — helping businesses invest and grow — that’s how we’re going to spark demand, spur hiring, and strengthen our economy in the new year.”
Some Democrats accused Obama of caving in to the Republicans during negotiations, and of favoring the rich over such items as new breaks on estate taxes.
“The bigger issue here was some differences over the actual policy,” said Rep. Chris Van Hollen, D-Md., speaking on Bloomberg Television. “There were questions about the process, but at the end of the day, the members that had the most problems with the bill were able to point to specific things.”
During the signing ceremony, Obama extolled bipartisanship, but warned that he and Republicans face major fights next year after the GOP takes control of the U.S. House, particularly over how to cut down the federal debt now set to exceed $13.7 trillion.
“There will be moments, I am certain, over the next couple of years, in which the holiday spirit won’t be as abundant as it is today,” Obama said. “Moreover, we’ve got to make some difficult choices ahead when it comes to tackling the deficit.”
Also absent from today’s ceremony: House Republican leader John Boehner, R-Ohio, who will replace Pelosi as Speaker of the House after Republicans take control of the chamber next month.
“The bill was negotiated by the White House and Sen. McConnell, so McConnell is going,” said Boehner spokesman Michael Steel before the ceremony.
(Posted by David Jackson)
See photos of: Barack Obama, Nancy Pelosi, Harry Reid
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Terry Keenan
While the White House celebrated Friday’s Bureau of Labor Statistics’ announcement that the unemployment rate slipped to 8.3 percent and 243,000 new jobs were created, there appears to be storm clouds on the horizon.
Trouble is, the January jobs report wasn’t the most important press release coming out of the Labor Department last week.
Two days earlier, Labor released its employment projections going out to 2020, and that document paints a picture far broader — and far less rosy — than one month’s numbers.
Indeed, the report underscores what almost every American has already figured out — that the quantity and quality of job opportunities for most Americans won’t be improving anytime soon.
Take, for example, the number of Americans who are in the workforce in the first place. While there was much dispute about whether an apparent 1.2 million decline in the number of job participants in January was a statistical quirk born out of a seasonal adjustment or some other sleight-of-hand, the overall trend is clear.
Not only has work-force participation dwindled dramatically during the Obama years, to a 30-year low of 63.7 percent, the Labor Department projects that the workforce will grow just 0.7 percent in the current decade, about half the pace we saw in the 1990s.
What’s more, that dismal prediction comes with the Labor Department’s sunny assumption that we will be in an environment of full employment at decade’s end — probably a 50/50 proposition at best.
And what types of jobs will be most available over the next eight years? Well, the report packs good news if you want to make a career out of changing bedpans or serving lattes, not so good if your dream is to work in financial services or information technologies.
In fact, more than a quarter of all the new jobs the Labor Department expects to be created by 2020 will come from the health care and social-assistance sectors, where pay is well below that of the average manufacturing job, and pension and insurance benefits are typically sub-par.
Compare that with the projection that only about 3.5 percent of new jobs will be in the highly paid financial services industry, and just 0.7 percent in technology, and you can grasp the growing disparity.
That’s why a comprehensive jobs policy aimed at creating high-quality jobs to replace those lost over the past two decades in high-end manufacturing is paramount. It’s why the Keystone Pipeline project, with its promise of thousands of new well-paying jobs, should have been quickly approved by the White House.
Of course, opportunities for job hunters will also lie in the tens of millions of existing jobs that will turn over between now and the end of the decade — but don’t expect the nation’s Baby Boomers to ease quickly into retirement.
If the Labor Department is correct, job-hungry Baby Boomers 55 and older will constitute a full 25 percent of the workforce by 2020, up from just 19 percent today, pulling jobs away from those who are just entering the workforce or starting a family.
Sure, like this winter’s weather, the January jobs numbers were full of pleasant surprises at a time when President Obama needs them most. But a few good reports, papered over with lots of low-paying jobs, and fewer Americans even bothering to apply for them, won’t be enough to reverse a jobs deficit that is eating away at the middle class of this country.
Growing job sectors ’12-’20
Retail sales +70%
Home health care +69%
Registered nurses +58%
keenan@email.com
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