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More Health Care Jobs

Sep 16, 2011 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Government, Labor, Macroeconomic Measurement, Thinking Economically • 107 Views    No Comments

The health care industry has added 300,000 jobs to the U.S. economy during the past 12 months. New jobs, new construction, new technology, more care. Should we be pleased?

This Dr. Seuss-like animated short from marketplace.org presents the downside of health care job growth. Discussing the issue further in a report on suburban Detroit, they explain that a new medical center can indeed help one community. However, a proliferation of medical facilities means higher health insurance premiums and soaring Medicare and Medicaid expenses. Consequently, although one community might benefit, overexpansion means the entire nation will suffer.

Here are additional statistics on the health care jobs boom. And here is another perspective in a previous econlife post.

The Economic Lesson

Sometimes what is good for one person becomes bad when everyone does it. If there is a fire at a public event, one person can rush to the exit but everyone simultaneously cannot. Enjoying higher prices, one farmer can decide to plant more and earn more. However, when all farmers together produce a bumper crop, price dips. Called the fallacy of composition, sometimes what is good for the individual is bad when everyone does the same thing.

An Economic Question: How does building too many medical centers result in the fallacy of composition?

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