Five Million Jobs

A few years ago, I co-chaired the National Academies Healthy America Initiative.  The members of this committee came from both the Institute of Medicine and the National Academy of Engineering.  Our assignment was to wrestle with issues surrounding the effectiveness and costs of healthcare delivery.  However, we wanted to put this in a larger context.  We eventually agreed on an overarching goal of fostering a healthy, educated and productive population that is competitive in the global marketplace.  This essay suggests how to accomplish this goal.

There are roughly 10 million unemployed people in the U.S. right now, down from 15 million a few years ago.  The current unemployment rate is 6.7%.  If we could cut that in half, we would be very close to what is considered full employment in the U.S.  Five million jobs would achieve this goal and, as laid out below, accomplish several other important things in the process.

I propose that we create jobs in three areas.  First, we need to invest in improving and maintaining the nation’s crumbling infrastructures, especially in urban areas.  It is estimated that fixing infrastructures after they crumble, e.g., after the bridge collapses, costs five to ten times more than properly maintaining them.  In the process, we could also add smart sensors and other technologies to both target and decrease maintenance costs.

The U.S. Department of Transportation estimates that each billion dollars spent on infrastructure investments creates 30,000 jobs; 10,000 in construction, 5,000 in manufacturing, and 15,000 “other jobs” due to the other businesses benefitting from the new construction and manufacturing jobs.  (I will use this 2:1 ratio for the other investments as well.)  For reasons that will become clear, we need to create 1,560,000 jobs in this manner, which will cost $52B.  This will save enormous amounts for unplanned maintenance, but that cannot be elaborated here.

There are 117 million people in the U.S. with chronic diseases.  It has been repeatedly shown that regular attention from health coaches and care coordinators can help them to better manage their diseases.  The Agency for Healthcare Research and Quality, a unit of the U.S. Department of Health and Human Services, reports that such programs can lead to reduction of patient visits to specialists by 24%, emergency department visits by 13%, and hospitalizations by 39%.  These savings are far greater than the costs of such programs.

Assume that, on the average, each patient with one or more chronic diseases is provided one hour of attention per month by both a coach and a coordinator. Some, of course, would receive much more attention and others much less.  This would require 702,000 health coaches, 702,000 care coordinators, and total 1,404,000 jobs at a cost of $56.2B per year assuming each job averages $40,000 per year. Using the 2:1 ratio noted above, the total number of jobs created would be 2,808,000.

As indicated, this would save more than it costs due to reduced use of more expensive healthcare services.  Further, these patients would be healthier and more productive.  Thus, the return on this investment would be substantial.

Three million students drop out of high school per year; 45% in 9th grade; 34% in tenth; 23% in eleventh; 16% in twelfth. (The sum of these percentages is greater than 100 because each successive year includes a smaller base of students.)  If they all stayed in school until graduation, we would need an additional 158,000 teachers and 158,000 teaching assistants, totaling 316,000 jobs, at a cost of $14.2B per year assuming each two jobs, teacher plus assistant, average $90,000 per year. Again using the 2:1 ratio discussed earlier, this generates 632,000 jobs.

Note that this assumes each teacher plus assistant focuses on 16 high-risk students.  This 8:1 ratio will enable providing students the attention needed to help them feel more engaged.  It is likely that this will also require that the content of instruction be varied to better target these students’ aspirations.

80% of the people in U.S. jails and prisons are high school dropouts.  The annual costs of incarceration are $80-90 billion.  If we eliminate high school dropouts, we would only need to reduce incarceration costs by 16-18% to beak even on this investment.  It is easy to imagine doing better than that.

Thus, we create 5,000,000 jobs (1,560,000 + 2,808,000 + 632,000) jobs for annual investment of $122.4 billion ($52.0 + $56.2  + $14.2).   This amounts to 4.1% of our annual Federal tax revenues.  If we consider the costs savings of reduced unplanned maintenance, reduced use of expensive health services, and reduced costs of incarceration, these investments should yield a quite impressive return on investment.  They will also yield significant income tax and social security tax revenues.

Beyond the economics of these investments, we get a healthy, educated, and productive population that is competitive in the global marketplace, plus state-of-the-art, well-maintained infrastructures.

Leave a Reply