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Today’s Economist: Casey B. Mulligan: The Incomes of Physicians

February 13, 2013 by Leave a Comment

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Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

Laws that govern training and licensing of physicians influence their incomes at least as much as health care demand does.

Today’s Economist

Perspectives from expert contributors.

Medical doctors are a critical part of the supply of health services and their incomes are an important determinant of health care costs.

While a desire to help people motivates men and women to become physicians and go to work every day, that desire has existed for centuries and will continue to exist in the future and thereby is not the primary variable that causes physicians’ incomes to fluctuate over time.

By law, physicians are educated people, the types of people who would have earned college degrees, if not advanced degrees, even if they had never become doctors. For this reason, the incomes of physicians depend on the supply-and-demand factors determining the incomes of college graduates generally, such as technological change and the emergence of worldwide markets in many products.

As the wages of scientists, accountants, lawyers and other college-graduate professionals have pulled ahead of the wages of high school graduates, so too have the incomes of physicians, because most aspiring physicians have the option to enter another profession instead (Figure 2, on Page 37 in this paper, shows how incomes of physicians have been pretty constant relative to those of lawyers since World War II).

You would think that a greater demand for health care, such as the demand associated with the aging of the population or perhaps a universal health care law, would increase physicians’ incomes as more patients (or insurance companies on the behalf of patients) compete for physicians’ time. And that’s true in the short run, because physicians take many years to train. But demand is less important in the longer term (a decade or two).

In the long term, a relatively small increase in the incomes of physicians could be enough to attract a substantial number of physicians from pursuing other careers or from pursuing medicine in other countries (that’s one reason my Economix colleague Uwe Reinhardt concluded that the slow aging process was not a major cost driver in health care). Indeed, some of today’s physicians began their careers understanding that the population was aging and the health care industry offered many job opportunities (see also this paper on career choice and industry prospects).

Barriers to professional entry may have a greater influence on physicians’ incomes than health care demand would by itself. Laws regulate the training and licensing of physicians and the tasks that can be performed by people without a doctor of medicine degree. The number of medical schools in the United States has hardly changed since the 1980s, despite significant population growth.

Perhaps the restrictions on medical training and licensing are desirable, even though they raise physicians’ incomes.

State laws are starting to widen the scope of medical services that can be performed by nurses and physician assistants to include services previously permitted only by medical doctors. Physician outsourcing has also been discussed.

It is possible that the new health care law, with its emphasis on reducing costs, will apply pressure to ease restrictions on entry into the provision of health care services. On the other hand, centralized health care policy may naturally seek the advice of industry experts – especially medical doctors – who may appreciate the merits of keeping medical doctors closely involved with the provision of health services.

Article source: http://economix.blogs.nytimes.com/2013/02/13/the-incomes-of-physicians/?partner=rss&emc=rss

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Economic Scene: In a Shovel, a Cure for Our Stunted Economic Growth

February 12, 2013 by Leave a Comment

At the end of last year, according to the nonpartisan Congressional Budget Office, the economy was still about 5.5 percent smaller than it would have been had it avoided the recession and kept growing along its long-term potential path, making full use of the workers and equipment currently sitting idle. A rebound is hardly around the corner. Growth this year will average only 1.4 percent, according to the budget office’s latest forecast. By the time we recover to our potential — which the C.B.O. expects will take until 2017 — the Great Recession set off by the implosion of the housing bubble more than five years ago will have cost us nearly half of one year’s entire economic production: about $7.5 trillion.

We will be paying the price for years. The slump is hindering capital investment, stunting the careers of college graduates and encouraging workers to drop out of the labor force, potentially blighting the economy over the long term. The C.B.O. expects unemployment to remain above 7.5 percent through next year.

And low growth is crimping government finances — reducing tax revenue while, at the same time, increasing the cost of programs like unemployment insurance. Last year, the budget office calculated that sluggish growth alone was responsible for more than a quarter of the budget deficit over the last four years.

And yet the government is doing little to turn things around. The collapse of public spending, mainly by state and local governments, explains most of the subpar growth since 2009, according to the C.B.O., more than sluggish consumer spending or business investment. In the final three months of last year, the economy may have even shrunk a bit, dragged down by declining military spending.

Now, the government is expected to deliver another wallop to the struggling economy. This year, the budget office expects that budget tightening — including the so-called sequestration, the battery of spending cuts set to take effect on March 1 unless the White House and the Republicans agree on an alternative plan to cut the budget — will cut economic growth in half.

Our protracted stagnation calls into question the priorities of our elected officials, who are consumed in a debate over how to cut spending even as the economy drifts. “We should be thinking about all the tools of economic policy to get the economy to escape velocity,” said Lawrence Summers, President Obama’s former top economic adviser.

This is bringing us back to the questions that were hotly debated over the Obama administration’s fiscal stimulus package of 2009. What power does the government have to pull the economy out of its rut? How much do tax cuts or spending programs stimulate growth? Even if Mr. Summers’s priorities were shared across the political spectrum, there is little consensus on what kind of tools should be used.

Jared Bernstein, the former chief economic adviser to Vice President Joseph Biden who is now at the Center on Budget and Policy Priorities, argues that while fiscal consolidation would have been necessary at some point, the government slammed the brakes on spending before families were ready to spend again, while they were still working to reduce large debt burdens.

“The stimulus didn’t last long enough,” Mr. Bernstein said. “We pivoted to deficit reduction too soon.”

Not everybody agrees. Conservative economists, and most Republicans in the House, make the exact opposite argument: that spending cuts stimulate growth by giving businesses confidence that the government will be able to pay its debts.

While few economists share this view, many are indeed skeptical of deploying more government spending now to pull the economy out of the hole. When the Obama administration unveiled its first fiscal stimulus package, in the early weeks of 2009, the federal government’s debt to the public amounted to only 35 percent of our gross domestic product. Today, it amounts to about 75 percent. That kind of debt scares people.

E-mail: eporter@nytimes.com; Twitter: @portereduardo

Article source: http://www.nytimes.com/2013/02/13/business/in-a-shovel-a-cure-for-stunted-economic-growth.html?partner=rss&emc=rss

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Preoccupations: Bridging the Hiring Gap for College Graduates

November 11, 2012 by Leave a Comment

So, this fall, I talked to about a dozen C.E.O.’s in a variety of industries, along with more than 135 graduates, to try to get to the bottom of this paradox.

Instead of finding shared interests linking those who need work and those who need workers, I uncovered a serious divide that limits the success of both.

Every C.E.O. I met described recent graduates as lacking the skills and discipline required in today’s workplace. They complained that young employees deemed themselves entitled to promotion before mastering their assigned tasks. All concluded, in effect, “Let them grow up on someone else’s payroll.”

I replied that my interviews with young people showed that many had records of part-time jobs and excellent grades at selective schools that seemed to make them promising candidates. But executives countered that recent graduates had emerged from universities whose weakened requirements didn’t prepare them for the complex jobs that companies must now fill.

Recent graduates say they are equipped to add value to any employer who hires them. An economics graduate from the University of North Carolina told me: “I’m sick of the bashing our generation gets. I had a 3.6 G.P.A. in a demanding major. Everyone in my dorm knew it would be difficult to land a job, so we held study groups where people in different disciplines shared information. We invited alumni to tutor us in skills and office protocol employers value. All I ask is a chance to prove I’m as good as the best of any generation.”

It’s true that companies are actively seeking petroleum engineers, systems designers, supply-chain analysts and other graduates armed with “hard” skills. But those who majored in English, philosophy, history and other liberal arts subjects are far less likely to be offered an interview, much less a job.

At one time, employers recruited liberal arts graduates whose broad education shaped an inquiring mind and the ability to evaluate conflicting points of view. Their education also brought a freshness of vision that saw alternatives to outdated practices. Graduates entered corporate training programs armed mainly with potential, but soon absorbed business disciplines. Veteran employees seeing that growth didn’t laugh when a trainee suggested a different approach to a chronic problem.

Rotating through departments let young people showcase their abilities; the most promising were selected by managers eager to mentor them. Several C.E.O.’s I spoke with, including those most critical of recent graduates, had this type of training. Today, such programs are more likely to recruit those with immediately applicable skills that can be honed on the job. As one hiring manager told me: “We no longer have the luxury to hire bench strength. If an applicant isn’t ready to step into an open job we don’t hire them.”

But I’ve found many broadly educated employees to be quicker than technical staff members to develop the intuition that’s crucial on a work floor where gray — not black or white — is the dominant color. Many of the best general managers with whom I work as a consultant entered the workplace with broad educations and not with technical degrees. It was their intuition that helped them ascend — their ability to suspect a flaw even when data appeared correct, to read the mood of customers and employees, and to sense potential in a product others disdained.

EVEN the most technologically innovative companies benefit from having a balance of employees — most with technical degrees, others with broader educations. Valuable products and services emerge from the clash of ideas between analytical professionals and managers whose greatest strength is their intuitiveness.

Can’t someone who can conjugate French verbs, write statistically dense research papers and explicate the poetry of William Blake be trained in computer programming, supply-chain management and other skills valued by hiring managers? An entire generation hopes that C.E.O.’s somewhere believe that giving them an opportunity is the right — and the smart — thing to do.

Robert W. Goldfarb is a management consultant and author of “What’s Stopping Me From Getting Ahead?”

Article source: http://www.nytimes.com/2012/11/11/jobs/bridging-the-hiring-gap-for-college-graduates.html?partner=rss&emc=rss

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Economix Blog: Fatalism and the American Dream

November 23, 2011 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

Two of my colleagues have alluded to a recent Pew Research Center report on American exceptionalism, paying particular attention to the fact that Americans are more likely to say their culture is superior to others than are people in Germany, Spain, Britain or France.

One finding of the report that received little attention, however, was about cultural attitudes toward success. Of the five nationalities polled, Americans were least likely to believe that success in life was determined by forces outside our control.

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Just 36 percent of Americans believe in this fatalistic statement, while the vast majority of their compatriots are greater believers in self-determination. Put another way, Americans are (not surprisingly) more likely to believe in the American dream.

Americans with less education are more fatalistic, however. The study found that 22 percent of college graduates believe they have little control over their fate, compared to 41 percent of Americans without a college degree.

Even so, American nongraduates still seem to think they have more control over their destinies than the average German, Frenchman or Spaniard does. Almost three-quarters of Germans, for example, believe that success is determined by factors outside our control.

These findings are particularly interesting when juxtaposed with a separate report from the Pew Economic Mobility project. That report, which examined economic and social mobility in 10 Western countries, found that Americans actually appear to have less control over their success in life than their counterparts do.

In particular, the educational attainment of a person’s parents — a factor usually determined before that person’s birth — seems to matter more for mobility in the United States.

“There is a stronger link between parental education and children’s economic, educational and socio-emotional outcomes than in any other country investigated,” the report says.

As Richard Wilkinson suggested in a recent TED Talk, if you want to live the American dream — and have greater control over your own likelihood of success — you should probably move to Denmark, where the poor have a better chance of moving up in the world.

Article source: http://feeds.nytimes.com/click.phdo?i=1a4c4840c69345f04695ebdf1fbdf323

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Economix: College Is (Still) Worth It

July 22, 2011 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

The Bureau of Labor Statistics has produced the following chart showing weekly earnings by ethnic group and education, broken down into quartiles. It provides yet another excuse to talk about why college is worth it:

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Take a look at the right side of the chart, which shows earnings by education. The median weekly earnings for college graduates are $1,043. Not bad, especially when you consider that the median weekly earnings for a high school graduate are $643.

What’s more impressive, though, is that even the economic underachievers among college graduates earn more than the typical high school grad: A college graduate at the 25th percentile makes $730 per week, which is still 13.5 percent more than the median high school grad.

Things only get worse for high school dropouts. A high school dropout in the 75th percentile — that is, a worker who earns more than do three-quarters of all equally educated workers — makes less than a college graduate in the bottom quartile of his or her educational class.

The bottom line is that college can be very expensive, and certainly doesn’t guarantee a high-paying job and a cushy lifestyle, but at the very least it almost guarantees a higher-paying job and a cushier lifestyle than what you’d get without it.

Article source: http://feeds.nytimes.com/click.phdo?i=103cdb0a78721a7219f0bc5c7846c94b

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Economix: A Decade Makes All the Difference

June 2, 2011 by Leave a Comment

A couple of weeks back I wrote about the job market for recent college grads, based in part on data from the labor economist Andrew Sum.

Professor Sum has updated his calculations on young grads’ employment patterns. His figures now include data for October 2010 through March 2011, the most recent six-month period for which numbers are available.

He found that during this period, 74.4 percent of college graduates under age 25 had jobs. Of this same demographic group, 45.9 percent had jobs that actually required a college degree. The rest of this group were in lower-skilled jobs like bar tending or waiting on tables; pounding the pavement looking for work; or out of the labor force altogether, perhaps because they were back in school.

Lest you think such low employment rates are due to this generation’s laziness, take a look at what the employment numbers were like exactly a decade ago for under-25 college grads (who are technically members of the same generation):

DESCRIPTIONAndrew Sum; Bureau of Labor Statistics

As you can see, a higher share of college graduates under age 25 were employed in 2000 than in 2010 — 81 percent versus 74.4 percent. And a higher share of this demographic was employed in jobs that required college degrees a decade ago than last year — 59.7 percent versus 45.8 percent.

The mix of jobs for these young workers has a big effect on pay, since positions that require bachelor’s degrees generally pay better. That college premium has also gotten bigger in the last decade. While the median earnings of college grads in high-skilled jobs have risen in the last 10 years, the median earnings of college grads in lower-skilled jobs fell.

DESCRIPTIONSource: Andrew Sum; Bureau of Labor Statistics Numbers for 2010 refer to January through October of that year.

The damage this recession will do to these young people may be permanent, too. Starting one’s career in a lower-quality job or one with low pay places workers on a worse pay trajectory for years to come, as research from Columbia’s Till von Wachter (among others) has shown.

Article source: http://feeds.nytimes.com/click.phdo?i=bfb735bdc1ae6eeb03fa8721394de6c3

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Economix: College Majors and the Job Market

May 20, 2011 by Leave a Comment

In my article today on the job market for recent college grads, I mentioned that academic majors seem to have a big effect on whether students are employed — and employed in jobs that use their college degrees — after they graduate.

In 2009, the Labor Department’s American Community Survey began asking people what discipline they majored in, if they graduated from college. Andrew Sum, a labor economist at Northeastern University and leading expert on the youth labor market, has analyzed the resulting answers, and then looked at what types of jobs graduates of each major held. If the type of job is one that typically requires a college degree (based on other Labor Department data), he categorized these people as being in the “college labor market.”

Here’s a look at his results, which show 2009 employment rates for college alumni under age 25. (We won’t have 2010 data until this summer, unfortunately.)

DESCRIPTIONSource: Andrew Sum, Northeastern University, using 2009 American Community Survey data

As you can see, across all disciplines, 77.6 percent of college graduates had jobs. But only 55.6 percent of all college graduates had jobs that required college degrees. (Some of the remaining grads who didn’t have jobs were looking for work, but some weren’t, perhaps because they were enrolled in school.)

The major that produced the most graduates in jobs that required degrees was education and teaching; 71.1 percent of this discipline’s alumni had jobs for which a bachelor’s was a prerequisite. This is probably not surprising, since so many of these grads became teachers.

Engineering had the next-best track record, with 69.4 percent of its graduates placed in college labor market jobs.

The majors with the worst placement records were area studies (44.7 percent in degree-requiring jobs) and humanities (45.4 percent).

Why do we care if these grads get placed in jobs that require degrees?

Part of the reason people go to college is to get better jobs. It’s by no means the only reason, of course; a liberal arts education can enrich a person’s life in ways besides better employment. But better employment is surely one of the crucial goals, and jobs that require college degrees generally pay better than jobs that don’t. This is true for graduates of every major:

DESCRIPTIONSource: Andrew Sum, Northeastern University, using 2009 American Community Survey data

Across all majors, the typical graduate who finds a job requiring a college degree will earn $26,756. The typical graduate who find a job that does require a degree, by contrast, will earn just $15,896. That’s about an $11,000 premium.

The disparity is bigger for certain majors than others.

Health majors appear to have the most to gain by finding a job that requires their degree, since their typical earnings in such a job ($30,819) are nearly two and half times their typical earnings in a job that doesn’t require a degree ($12,843). The premium is lowest for area studies majors.

Interestingly, college majors also seem to have an effect on earnings in jobs that don’t require having gone to college. Note that engineers, for example, still earn more in non-degree-requiring jobs than humanities majors get in degree-requiring jobs.

This may have something to do with the types of people who choose to major in these disciplines, or perhaps where they live. It may also mean that the type of knowledge you acquire in each major can enhance your abilities or productivity in all kinds of work, even that usually done by lower-skilled people.

Article source: http://feeds.nytimes.com/click.phdo?i=4a96d5b7eabf3982230fdea6570e3c68

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