We Need to Change How We Look at Health and Education

As the GE data visualization on Working in America notes, in the last half century the number of education and health jobs has increased by a factor of seven while the overall workforce doubled. Is this good or bad?   

In an economy desperate to create jobs, one might think this good. After all from 2008 to 2012 the U.S. labor force declined by over 1 million but health and education added one million jobs.   

But jobs for jobs sake are not the goal, even in a troubled economy. After all, John Maynard Keynes once famously wrote that government could create jobs by putting money in wine bottles and burying them in abandoned mines, which people would then work to dig up.

Health and education are not mining for wine bottles, but they are inefficient sectors that are a drag on income growth. In fact, they suffer from Baumol's disease, which refers to the notion that industries which can't boost productivity as fast as the economy suffer from increasing costs, ultimately becoming unaffordable. And this is exactly what are seeing in health care and education. Health care costs tops 18 percent of GDP, while state and local governments struggle with budgets in part because of growing education costs and families struggle to afford skyrocketing college tuition. 

In part this is because we are consuming more health care and education, particularly as Americans get older and as more young people go to college. But it's also because productivity growth in health care and education has lagged and so more and more of the American workforce must be devoted to producing this output. The answer has to be innovation to drive productivity and free up workers for other activities. There is little reason, for example, to have thousands of professors all teach the same introductory course to freshmen. The move to massive open online courses in college (MOOCS) would allow hundreds of thousands of students to take courses online, at a fraction of the cost of having them all sit in classrooms in front of a professor. If GE does an infographic in 2022, it would be great news if jobs in education and health hardly grew at all because America transformed them through innovation.