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Date: Fri, 18 Feb 2005 18:47:43 -0500
To: improvetheworld &AElig umich.edu
From: Chris Kiekintveld <ckiekint &AElig engin.umich.edu>
Subject: Re: Keep the Security in Social Security!
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I agree; certain segments of the labor market are likely to grow.
However, these all seem likely to require high levels of education and
training (reinforcing my point that we need to be pumping money into
education). The segments of the market I am concerned about are
primarily the unskilled blue-collar labor segments, which represent a
significant fraction of the total market. Are we equipped to transition
20%+ of our workforce from unskilled to skilled labor?

As for the specific three areas you mentioned, the elderly are the
primary consumers in those groups. Every increase in those markets means
an extra dollar spent from the fixed incomes of the elderly, or an extra
dollar spent by medicare. The money to pay for this has to come from
somewhere (ie, other segments of the economy, or savings). Growth is
going to be limited by how much we can afford to pay for these things.

Even a and c aren't completely immune to foreign competition. People
already go to Thailand for plastic surgury, and some retired people are
moving to foreign countries to strech their savings. How much cheaper
does it have to be before we ship grandma to a retirement home in mexico
over the one in Florida?

Anyway, as I said, there are some definite reasons to be optimistic,
including growth possibilities in current skilled industries (and new
ones yet to be discovered). How well we can exploit these opportunities
will depend on how well we prepare for the changing world. Right now, I
don't think we're doing a very good job of that.

Chris

> One thing to note here: The very thing that threatens SS with insolvency 
> (i.e. the shrinking ratio of retirees to workers) means an improved 
> labor market. In particular
> a) the medical industry (doctors, nurses)
> b) the pharmaceutical industry (drug manufacturers and designers)
> c) the elder care industry (nursing home workers, physical therapists, etc)
> will all grow relative to the general GDP, and these are just off the 
> top of my head. This is fairly good news, as all three have limited 
> prospects for further automation (for the time being) and a and c can't 
> be replaced by foreign-based labor.
> 
> Matt