The Welfare-Industrial Complex Is Booming

[Knight]

© Provided by The Wall Street Journal
Drill into the nation’s 3.7% unemployment rate, and you’ll find a growing welfare-industrial complex beneath the seemingly strong labor market. Government, social assistance and healthcare account for 56% of the 2.8 million net new jobs over the past year, and for nearly all gains in blue states such as New York and Illinois.

The tens of thousands of migrants pouring into big cities need to be tended to. So do the hundreds of thousands of drug-addled and mentally ill homeless living on the streets. Progressive government doesn’t do anything on the cheap. America’s welfare state has thus become a proverbial Big Dig, and it keeps getting bigger.

New York City is spending $394 a day—or $143,810 a year—to house and feed each migrant, many in formerly posh hotels.

Opinion | The Welfare-Industrial Complex Is Booming

And people claim tax money is being wasted

 

[VaughanJB]

Sadly, article is pay walled in the UK.

You can't do anything in this world without it costing something.

I never truly understood why a social safety net was never a priority in the US.

 

[fuzzybuddy]

We could save a bundle by letting those thousands of immigrants drop dead in the street from starvation.

 

[dilettante]

Paywalled here as well. Why such things are indexed by search engines escapes me.

 

[Knight]

Sadly, article is pay walled in the UK.

You can't do anything in this world without it costing something.

I never truly understood why a social safety net was never a priority in the US.

© Provided by The Wall Street Journal
Drill into the nation’s 3.7% unemployment rate, and you’ll find a growing welfare-industrial complex beneath the seemingly strong labor market. Government, social assistance and healthcare account for 56% of the 2.8 million net new jobs over the past year, and for nearly all gains in blue states such as New York and Illinois.

The tens of thousands of migrants pouring into big cities need to be tended to. So do the hundreds of thousands of drug-addled and mentally ill homeless living on the streets. Progressive government doesn’t do anything on the cheap. America’s welfare state has thus become a proverbial Big Dig, and it keeps getting bigger.


Quote
"social assistance and healthcare account for 56% of the 2.8 million net new jobs"

That is in essence the gist of the article.


Service-related industries contributed 234,000 to the total job growth, while goods-producing industries added just 29,000. Average hourly earnings in the leisure and hospitality industry were flat on the month, though up 4.7% from a year ago.
Payrolls soared by 336,000 in September, defying expectations for a hiring slowdown

It's not rocket science to understand that service industry jobs are on the lower end of the pay scale. Or that hiring more government employees to distribute the taxes from the lower paying job by hiring more goverment employees is not in the best interest of tax payers.

IMO better to use that tax money to provide better health care & needs for those that could use that help.

 

[Knight]

We could save a bundle by letting those thousands of immigrants drop dead in the street from starvation.

Or follow the law in place to not need to hire more government employees that don't produce saleable goods to distribute the tax money that could help the tens of thousands of migrants pouring into big cities need to be tended to. So do the hundreds of thousands of drug-addled and mentally ill homeless living on the streets.

A shrinking tax base with a rising deficit probably won't affect me. IMO as time passes the ability to continue to fund will decrease. Then what?

@fuzzybuddy. Do you think the tax base will continue to be able to fund all the social services programs like they are now?

 

[VaughanJB]

Given that two-thirds of the US economy is service based, this seems about right. I'm not sure why the 56% being social assistance and healthcare is an issue. And I wonder if there's a more detailed breakdown somewhere. As for it not being best for tax payers, I guess that would depend on whether you're one of the people finding themselves in a job. Give them a wage and a task to do, or pay unemployment?

This is a brighter look at it:

Solid US hiring lowers unemployment rate in latest sign of a still-sturdy job market

 

[Knight]

Given that two-thirds of the US economy is service based, this seems about right. I'm not sure why the 56% being social assistance and healthcare is an issue. And I wonder if there's a more detailed breakdown somewhere. As for it not being best for tax payers, I guess that would depend on whether you're one of the people finding themselves in a job. Give them a wage and a task to do, or pay unemployment?

This is a brighter look at it:

Solid US hiring lowers unemployment rate in latest sign of a still-sturdy job market

Not much to do today except rest up from late last night celebrating the new year. Thought I'd read the article from the web site you posted.

Quote
"And most of last month’s job gains were concentrated in just a few sectors. The health care industry — doctors’ offices and hospitals — added 93,000 jobs in November. Hotels and restaurants added 40,000, and governments 49,000, accounting for nearly all the job growth. By contrast, retailers, shipping and warehousing companies, and temporary help agencies all cut jobs.

Still, last month’s hiring gain raised the proportion of Americans who are employed to 60.5%, the highest level since the pandemic struck, though it remains below the pre-COVID level of 61.1%.

In the meantime, wages are growing at a slower but still-healthy pace. In November, average hourly pay rose 4% from a year earlier, matching the previous month’s figure, which was the smallest since June 2021. Still, average pay is now growing faster than inflation, which should support consumer spending."


The content about jobs in the article you posted confirms the content in the article I posted. Service jobs & government account for nearly all the job growth. There is job growth in jobs that either rely on taxes or typically pay lower wages. Not identified were the kind of jobs being filled in doctors offices or hospitals.

Don't get me wrong, getting a job beats collecting some form of public assistance or unemployment. Right now any job looks good, our politicians are kicking the can down the road & younger people just don't seem to care about the future. Soc. Sec. for American's is another topic for wandering what is going to happen in about 8 years. Meanwhile there is AI that is ever increasing relative to jobs. So many factors affecting the future that are in the head in the sand, don't want to think about category. Maybe you can't access this so here is a brief paragraph within the article about AI

Overall, AI is designed to mimic cognitive functions, and it is likely that higher-paying, white-collar jobs will see a fair amount of exposure to the technology. But our analysis doesn’t consider the role of AI-enabled machines or robots that may perform mechanical or physical tasks. Recent evidence suggests that industrial robots may reduce both employment and wages. Moreover, jobs held by low-wage workers, those without a high school diploma, and younger men are more exposed to the effects of industrial robots.
Which U.S. Workers Are More Exposed to AI on Their Jobs?

But the increased federal government jobs
Is it hard to fire a federal employee?
Firing a federal employee is significantly more difficult than firing an employee in the private sector. Whereas private sector employers can often fire their employees without any cause whatsoever, federal employers must abide by federal law and regulations. Dec 13, 2023

 

[Nathan]

I never truly understood why a social safety net was never a priority in the US.

The economic power elite will never allow it...the working class are controlled by economic suppression.

 

[againstthegrain]

Two point eight million NET NEW jobs. That's cause for concern.

A question for the OP - have you shorted all your stock positions indicating that you have no faith in the economy or are you like most of us betting the US economy will continue to grow and increase our worth through higher stock prices?

 

[Knight]

Two point eight million NET NEW jobs. That's cause for concern.

A question for the OP - have you shorted all your stock positions indicating that you have no faith in the economy or are you like most of us betting the US economy will continue to grow and increase our worth through higher stock prices?

To answer your question.

At my age the slow conversion from higher paying jobs to lower paying service jobs won't impact use. If I was in my late 50's or early 60's I'd be concerned about all that is happening that would impact my finances. Betting on stock prices has never been our strategy. For me unless buying a block of 10,000 shares & hoping for a significant gain just doesn't make sense. Buying dividend paying stocks since 1985 & reinvesting those have put us in a really nice financial position. The accumulation & price increase works for us. As for selling, proceeds not needed, our plan is to leave our sons a decent inheritance.

One indicator of why I think there will be a change in the future.

In this report, the Congressional Budget Office describes its long-term projections for Social Security. One set of projections reflects a scenario in which the program continues to pay benefits as scheduled under current law, regardless of whether the program’s two trust funds have sufficient balances to cover those payments. Another set of projections reflects a scenario in which Social Security outlays are limited to what is payable from annual revenues after the combined trust funds are exhausted, which, in CBO’s current projections, occurs in fiscal year 2033.

CBO’s 2023 Long-Term Projections for Social Security

That doesn't mean there will be no payments just that taxed income didn't meet the outlay of money. Projecting that to other social services programs I don't think funding will be there to sustain the levels that will be in place.

 

[dilettante]

From what has been begun already I'm not sure the long term trends will continue. Globalism is already unwinding, and that means repatriating productive jobs. For the US a lot more physical production will move to Mexico and even Canada, with US growth in jobs being in high-value-add positions designing, advising, supporting, and managing manufacturing, mining, etc.

This will alter the job sector proportions. More people will have better jobs open to them and unproductive middlemen who thrived by parasitizing offshoring will find opportunity withering.

All of this comes with needed infrastructure build-out and repair, providing more productive jobs that will support working class and lower middle class families.

Deglobalization military draw-downs will shift spending away from the global rathole, slowing deficit growth and improving the economy in general. Sure the big military welfare states (Virginia, California, New York, and Texas) will feel a pinch, but it's a big win for most of the country.

It looks pretty positive unless we get a much more globalist administration over the next two terms.

 

[againstthegrain]

To answer your question.

Yes it does, seemingly in love with spreading the doom and gloom yet continuing to invest in the US economy. hmmmmm

Here is what I do, try to ignore what people say, like your gloom and doom scenarios, but pay attention to what they actually do.

The WSJ opinion above is a right wing, political hit piece, not to be taken as serious journalism which brings me to the old saying - "figures never lie, but liars can figure."

 

[ElCastor]

The economic power elite will never allow it...the working class are controlled by economic suppression.

In that case you should be just delighted and dancing in the street to hear that California‘s Governor Newsom just announced that California’s “Illegal” immigrants will get free medical care. Personally you can count me among the less than delighted,

 

[VaughanJB]

In that case you should be just delighted and dancing in the street to hear that California‘s Governor Newsom just announced that California’s “Illegal” immigrants will get free medical care. Personally you can count me among the less than delighted,

It would be better is EVERYONE had a basic set of free medical services, I agree.

From what has been begun already I'm not sure the long term trends will continue. Globalism is already unwinding, and that means repatriating productive jobs. For the US a lot more physical production will move to Mexico and even Canada, with US growth in jobs being in high-value-add positions designing, advising, supporting, and managing manufacturing, mining, etc.

Isn't that just a continuation of the service industries that already represent the majority of the US economy? And the issue with globalization are more concerns about production of goods, and there's no indication that's "coming home". They're moving out of China and going to Vietnam etc.

What would really help is a fairer distribution of the wealth in the country (and other countries). The US is, on paper doing very well, but if you ask the working classes, they may not agree.

 

[ArnoldC]

Indeed, the Welfare-Industrial Complex (WIC?) is booming. It's not about to go bust anytime soon. If anything, it will go into boom-booming overdrive.

Who pays for all this? Let me guess. People like me in the (former) middle class. Once those of us in the silent and boomer generations die off, who will have the resources to fund the Welfare-Industrial Complex? Middle class, or what's left of it, is getting wrung dry in support of welfare programs and to me it looks like the never-ending flow of illegal immigration will never end.

Administration is proposing building 500,000 houses to "relieve the housing crisis." Let me guess who will get priority for that fill - and, again, at taxpayer expense. Is the DC beltway tone-deaf? Single home ownership is way down and upcoming generations are trending toward multi-tenant apartment living as their preference.

Dunno. Bewildered and confused I am how all this is going to work.

 

[VaughanJB]

Indeed, the Welfare-Industrial Complex (WIC?) is booming. It's not about to go bust anytime soon. If anything, it will go into boom-booming overdrive.

Who pays for all this? Let me guess. People like me in the (former) middle class. Once those of us in the silent and boomer generations die off, who will have the resources to fund the Welfare-Industrial Complex? Middle class, or what's left of it, is getting wrung dry in support of welfare programs and to me it looks like the never-ending flow of illegal immigration will never end.

 

[dilettante]

I think the US will indeed bring home a lot of manufacturing. Partners like Mexico will do the things that fit there, lower-end to middling complexity. We can also expect some relief as ag operations get redistributed to natural and sustainable climate zones instead of the highly subsidized perpetual terraforming in areas like California's interior.

 

[VaughanJB]

Single home ownership is way down and upcoming generations are trending toward multi-tenant apartment living as their preference.

Isn't this simply because, economically, they're forced into multi-tenant living? That's not a choice, is it? If they could choose, would they not choose a house?

 

[VaughanJB]

I think the US will indeed bring home a lot of manufacturing. Partners like Mexico will do the things that fit there, lower-end to middling complexity. We can also expect some relief as ag operations get redistributed to natural and sustainable climate zones instead of the highly subsidized perpetual terraforming in areas like California's interior.

So you think consumers are willing to pay higher prices?

 

[dilettante]

Isn't this simply because, economically, they're forced into multi-tenant living? That's not a choice, is it? If they could choose, would they not choose a house?

I think it happens. Probably large-scale social engineering intended to keep the megacities viable through high density growth.

 

[Knight]

Yes it does, seemingly in love with spreading the doom and gloom yet continuing to invest in the US economy. hmmmmm

If current events bother you then don't read my posts about what is taking place that doesn't paint the rosy picture liberals want to project as happening.

 

[dilettante]

So you think consumers are willing to pay higher prices?

With less military spending and other subsidies to the favored regions net costs could be far more favorable. Even as prices rise we might see a return to higher quality production creating longer-lived and repairable products again, more sustainable all around.

 

[VaughanJB]

I think it happens. Probably large-scale social engineering intended to keep the megacities viable through high density growth.

Oh, that's 100% true. It's happening in the UK all over. Housing is used as an investment, and our economy needs the growth in prices to continue. The trouble is, we're at a point where homes really aren't affordable. So we have weird schemes where you can buy half a house, rent the other half. Or 60 year mortgages, and so on. Along with that - house sharing. It's just a way to keep house prices high.

This will eventually come unglued. There's going to be a lot of problems. But we're barreling toward a disaster. In London it starts with "reconstruction". Normal people call it "gentrification". Developers choose a working class area (such as the Elephant and Castle in London), and they build luxury apartments, knock down old homes and build new ones etc. Suddenly, the people living there can't afford rents and are forced to move out as the wealthy move in.

So the cycle goes.

 

[Knight]

With less military spending and other subsidies to the favored regions net costs could be far more favorable. Even as prices rise we might see a return to higher quality production creating longer-lived and repairable products again, more sustainable all around.

That sounds good, one can only hope that is does come to pass.