The Progressive Ensign

insights and analytics to build an economy that works for all

Category: Heartland Economics (Page 1 of 2)

Recovery Friendly Companies Rebuild Labor Force

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: mswcareers.com

One of the major challenges today in building our labor force participation rate is the millions of young people we are losing to drug addiction.  New Hampshire is leading the way with 70 recovery friendly companies  participating in a program for recovering drug and alcohol addicts to begin working by receiving training and then a job with decent pay. These workplaces are willing to accept employment gaps and brushes with the law.  The firms view addiction as a medical problem – like maternity or surgery.  Their work environment openly encourages discussion of addiction and paths toward recovery offering mutual support for recovering employees.

Work provides a sense of self-worth and self-respect to people on a recovery path.  Plus, addicts join a community, ending the isolation they feel from their substance abuse.  In a supportive community they can stay sober and learn about the lifestyle changes they need to make to stay sober. There are about 22 million Americans in recovery according to U.S government data.  Yet, with a low 3.7 % unemployment rates 9.2 % of workers in recovery are involuntarily unemployed notes theRecovery Research Institute at Massachusetts General Hospital.

New Hampshire experienced the third highest rate of overdose deaths in the U.S. in 2016.  Taking the challenge of recovery head on, the state now has over 60,000 recovering addicts working and a state unemployment rate of 2.7%.

“Most thoughtful business leaders want to do the right thing by their employees when it comes to addiction, and to [addiction in] their families,” observed KeithFlynn, the spokesman for the New Hampshire Business and Industry Association. The idea for the came from Gov. Chris Sununu when he was operating a ski resort where one of his employees had an addiction problem.  Instead of viewing the addiction as a reason to fire the employee, he developed a program of recovery and continued work. When Sununu become governor in 2016 he set about developing the program now in place.  The program helps 60,000 recovering substance abuse users and their families, while opening up a new group of prospective workers to New Hampshire businesses.  It is time that we looked at addiction as a medical problem instead of a criminal one, and developed programs nationwide to turn the lives of addicts around while increasing the labor force participation rate.

David Sawyer, a PersianGulf War veteran, summed up his experience at a New Hampshire recovery friendly company this way,

“Is it finding work through recovery, or finding recovery through work?” he posed a question, continued by noting “I don’t think recovery would have been so successful if I hadn’t been working.”

GM: Case Study to End Share Buy Backs

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: GM Lordstown plant to be closed – gmauthority.com

Yesterday, GM announced a series of plant closings and layoffs of 15,000 workers in North America.  GM attributed the need to shift its focus to electric car development, trucks and SUVs that consumers were buying, as sedan sales are falling.  Actually, auto sales worldwide have been dropping for the past year.

Source: Bloomberg – 11/27/18

Jesse Colombo, analyst at Clarity Financial notes that while GM’s announcement focused on electric car development the plant shutdowns and layoffs really were driven by of slowing auto sales.  The auto market has been shifting rapidly with the development of driverless cars, ride sharing reducing the need to own a car, and urbanization causing policy makers to fund more public transit. The auto maker announced that it will end production of the Chevy Volt electric sedan with sales falling short of targets. GM has targeted gig economy drivers for ride sharing companies like Uber and Lyft by offering an on demand service for the Chevy Volt at $225 per week in Austin.  It is not clear what will happen with this on demand service marketing beta test with Volt production being halted.  GM has partnered with Lyft, and made a $500 million dollar investment in the ride sharing company 2 years ago.  Thus, GM has made some investments in key new markets and technologies, yet is behind in adjusting to sedan sales which fell by 11 % in third quarter.

At the same time the auto market is undergoing rapid change, GM executives have been taking care of themselves as a first priority.  Wolf Richter, editor of the Wolf Report blog reports that GM spent $13.9 billion in stock buy backs since 2014.

Sources: Wolf Richter, Wolfstreet.com, Y- Charts, Marketwatch – 11/27/18

GM stock purchases took shares off the market to reduce supply, while expecting stock demand would move the share price up.  However, as Richter notes GM share price has actually fallen 10 % in that four year period. So, much for boosting the price of shares to pad the executive stock compensation plan.  Instead of investing in new technologies, research, new plants, employee training, increasing wages and other key transition programs GM completely wasted $13.9 billion dollars.  Poor management judgement is now causing 15,000 workers to lose their jobs in the U.S. and Canada.  While we will not know over the last four years if good business investments would have prevented all the layoffs it is certain the economic damage to Midwest and Canadian communities could have been significantly mitigated.

Next Steps:

Goldman Sachs estimates that S & P 500 corporations will complete $1.0 trillion dollars in stock buybacks this year.  One trillion dollars will be wasted by U.S. corporations as productivity investments have lagged over the past 5 years, and average real wages have been stagnant for the 80 % in income since the Great Recession.  As the GM example demonstrates, besides hurting employee wages, making U.S. companies less competitive and inflating stock prices now workers are losing jobs due to executive mismanagement and myopia on stock price.

Prior to 1982, the Securities Act of 1934 held that stock buybacks were a form of ‘stock price manipulation’ and were not allowed by the SEC.  This policy was overturned by an E.F. Hutton executive, John Shad as SEC Chairman appointed by President Reagan.  He created a ‘safe harbor’ policy where corporations could purchase their own stock, only a certain times during the trading day, with disclosure quarterly and blackout periods prior to earnings reports. Corporations have used buy backs since then but stock buy backs took off in 2015 to $695 billion and almost doubled to $1 trillion for 2018.

We recommend an end to the stock buyback safe harbor provisions and a return to the pre-1982 policy, management in many corporations has lost their bearings on why the company exists – first priorities being workers, their families, customer communities, society and the nation not their own compensation plan. Making the corporation profitable and valuable to shareholders is a means to achieving our societal goals of a decent wage, quality housing, and the ability of families to support their children.  In October, we posted an analysis on how major corporations like Boeing, GE and American Airlines underfunded their pension plans while executing  billions of dollars in stock buy backs. Executives need to take responsibility for full funding of all pensions not wasting money on stock buy backs. It  is time with so many middle class and economic investment needs that corporations receive a direct SEC policy shift to end stock buy backs.

Building the Economic Power of Youth

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: opportunityinsights.org

Last week a non-profit research and policy organization, Opportunity Insights published a startling map and database linking the success of children in poverty to their neighborhood to climb out of poverty.  A key finding is that children growing up in neighborhoods where there is low income continue to live in poverty as adults.  Though of more interest is that all factors being equal children where there where two parents in the household did significantly better than children in one parent households.  Family structure made a significant difference.

Source: Opportunity Insights – 10/4/18  (areas in blue, children who grew up in low income areas tended to make more money, children in dark red far less)

Certainly, households with just one bread winner, generally automatically means that there  is less income in that household.  Opportunity Insights notes that often single parent communities do not have the same ‘social capital’ as two parent communities.  In terms of parents that can support their children, tutoring after school, going to after school activities and a father who is there to provide support to the mother.  Particularly, for boys having a father in the household seemed to be determinative in future opportunities boys enjoyed in adult life.  Key to forming the right skills for a higher income is an example of a mother or father working a job, focusing on nurturing their children’s skills and being an advocate for the child in the school system.

John Hope Bryant, CEO of Operation Hope, a for purpose non-profit group helping low income people through financial coaching and skills development to build a secure economic future. Bryant notes that 63 % of middle income Americans cannot afford a $500 car repair or $1000 in emergency health care. Without financial independence, people cannot protect themselves from social injustice, economic manipulation and profiling, People need to learn how to build personal ‘capital’ to dig out of the community that keeps them in poverty. He observes growing up in Compton, a California low income community, that children in the neighborhood grew up with no positive aspirations.  They continue to be surrounded by negative roles models: drug dealers, loan sharks, and criminals who have the economic power.  Yet, they don’t have the ‘capital’ or knowledge on how build wealth in a positive way and key relationships.  A person with no hope is a dangerous person, who becomes angry, vengeful and desperate. Bryant says there are three types of issues for children in poverty neighborhoods:  low aspiration and few opportunities for 25 % of the problem, poor role models and a negative family and community environment for another 25 % and finally low confidence and self-esteem for 50 %.

Next Steps:

The Labor Force Participation Rate for  adults ages 24 – 54 is 82.5 % is at a new low, and has been declining since the Great Recession. The opioid crisis, a symptom of the hopelessness that many of our young people feel today is causing millions of otherwise productive people to not join the labor force.  Deutsche Bank completed an analysis of how the opioid epidemic is hurting labor participation in many states.

Sources: OECD, Deutsche Bank Research – 9/10/18

Researchers found that states in the South (overlays the poverty areas in the neighborhoods map above) Alabama, Mississippi, Arkansas and East Central – West Virginia there is a high correlation of opioid prescriptions and labor force rate.

It clear from a moral, ethical and economic standpoint we need as a country to invest in our young people who face increasing challenges in becoming upwardly mobile.  How do we do it?

John Hope Bryant is investing in people in these neighborhoods by providing families and individuals with tutoring to increase credit scores (maps of FICO scores of under 500 map into the above areas too) and how to get low cost loans.  Bryant sees developing entrepreneurial skills in starting new businesses as a way to move economically ahead as well.  More important is learning how high income people became wealthy through building relationships and developing the courage and skills to start a new business.  As he notes, moving from one failure to the next to learn and see trial and error as a necessary part of the path toward creating a product or service of value. The entrepreneurial process builds self-esteem and confidence so crucial in transforming lives and creating opportunities.

Opportunity@Work, a non-profit group originated in the Obama White House, then spun off is tackling the education issue head on with training focused on helping those outside of the economic mainstream to get jobs in the new economy. The group helps candidates get the skills they need in high tech, then making the connection between employers and workers with a non-traditional resume.  In addition, they are pioneering new ways to finance education so that students will not be saddled with thousands of dollars of education debt when they start their careers.  Opportunity@Work is targeting assistance for 1 million people to get hired in the next decade.

We have proposed that a Marshall Plan-like initiative with an entrepreneurial approach be led by the federal government, venture capitalists, corporations, health providers, non-profits and universities to gain a beachhead in many low income communities particularly in rural areas of the Midwest and South. The Heartland Initiative brings key leaders in many fields to focus with high impact on enabling a community and its people to join the economic mainstream from upgrading Internet speeds to providing local access to affordable health care and counseling for mental health issues.  It is a multi-faceted project because there are connected issues, it is one thing to provide a young person with training, but if they are still taking opioids they will fail a drug test by a hiring firm.  Details about the Heartland Initiative are in our post, calling for a new approach to social programs using an entrepreneurial model with seed financing and cooperative groups to spring into action.

We need to bring those that have been on the economic sidelines back into the mainstream of our economy if we are to make any progress as a nation on building an economy that works for all.  With mounting national debt in the trillions of dollars, student debt at $1.5 trillion and opioid deaths at epidemic levels we need to see building the economic power of our youth as one solution to our economic challenges.

Building Economic Independence Can End Hopelessness

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Image: operationhope.org

The greatest threat to a civil society are people without hope.  They are angry, feel the system is rigged and look for scapegoats as the cause of their poor economic standing. This group left out of the economic mainstreams is located in rural regions where globalizations has taken jobs, and in inner cities where companies have fled to the suburbs. These people that John Hope Bryant calls, The Invisible Class, are off the economic grid, and largely left out of the political mainstream as well except when they demonstrate on the streets when a policy has gone too far.

Economic independence is crucial if we have an economy that works for the 99 % not just the 1 %. To build economic opportunities our governmental policies and programs must ensure a level playing field for all people and support a high quality education for all income levels.

It is about building our society for the common good. It means enabling building enterprises, non-profits and organizations that serve people. Our policies should be about enabling the ability of people to build. We need to rethink our framing of labor from a cost to an asset which it always was. Capital means in the Latin root ‘knowledge in the head’ derived from the capital end of a column at the top in a building.  Poverty is not about money so much as a dearth of relationships and know how to build the skills toward a productive life, where money is a indicator of success.

Somehow the early accountants leading to the Venetians who invented double entry accounting systems with debits and credits called assets money, land and equipment while labor was labeled an expense.  Labor is viewed as an expense to this day because the owner-entrepreneur has to pay employees to work.  Workers have had the ‘cost’ yoke around their necks ever since.  Yet, are employees really a cost?  The staff are the ones doing the work, creating the product or service and solving the problems – money does not create the product or service only people do. CEOs are often heard to say that employees ‘are our key asset’ but then treats them like second class citizens in making policies in the company, gaining a fair share of the profits or enjoying job hours flexibility. Today, Wall Street applauds wages being stagnant for the 80 % while profits go up and wealth accumulates for The Elite.

We need to change our perspective about people and their labor. How do we build an economy that works for all? One way is to focus on enabling, The Invisible Class with economic independence.  Bryant points out that most of these people have credit scores at 550 or below, so they can’t get jobs, buy automobiles, or purchase a home.  In short they can’t participate in the economic mainstream. Bryant’s Operation Hope program teaches those in poverty how to increase their credit scores, start businesses and strategies for accumulating wealth.  By bringing them into the economic mainstream they can begin to feel more confident about their lives and the future. Operation Hope has partnered with Bank of the West who invited Bryant to locate Operation Hope offices inside their branches. Bank of the West in a far reaching vision understands educating prospective customers on the good use of credit and finance will make them better customers and likely to come back for additional services.

We need to learn from programs like Operation Hope, understand its key elements and see how to implement its tenets and power on a major scale like the Marshall Plan if we are to make a dent in the level of poverty in the Heartland or cities.  The only way we are going to increase the size of our economy in a fundamental way is to empower millions of workers who are out of the economic mainstream.  We have more companies going bankrupt then new businesses being started for the first time since WWII. It  is time to recognize we have people who are assets with innovative skills to can build an economy that works for all.

Working Class Left Out of Economic Recovery

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab. Click on the Index Topic Name at the beginning of each post to see more posts on that topic on PC or Laptop.)

Photo: thedailybeast.com

As the stock market continues to defy gravity and news stories herald the second longest economic recovery since WWII, yet many working class people are left out of the recovery.  A recent report by the St. Louis Federal Reserve shows that non college graduates have lost ground or are just maintaining their economic status since 1998.

Sources: The New York Times, Federal Reserve Bank of St. Louis – 9/14/18

College graduates continue to make strides in income and dramatically increased wealth versus the median since 1989.  Though college graduates who were Black or Hispanic actually saw a decline in their wealth levels versus the median.  However, non-graduate whites while gaining some income versus the median saw their income largely stagnant and wealth accumulation flat.  Non graduate Hispanics and Blacks fared even worse than whites in the case of blacks making zero progress over the median in wealth and half the progress of whites in income over the last 30 years.

William R. Emmons, an economist at the St. Louis Fed and a co-author of its report, noted in a New York Times story, ‘the most striking result was the steep declines among white families headed by someone without a college degree. Members of this group — labeled the white working class — not only were left behind financially, but also lagged in other measures of well-being, like self-reported health, homeownership, and marriage or cohabitation rates.’

Next steps: 

We have noted in posts the urgent need for a comprehensive ‘Marshall Plan’ like imitative in our nation’s Heartland.  Unemployment is two to three times higher there, high quality education is not as accessible, the opioid epidemic is gripping major sections of the Midwest and rural South while there is a failing infrastructure with slow Internet speeds.  All this lack of investment leaves our Heartland citizens out of the economic and career opportunities that other regions have enjoyed since the Great Recession.   We recommend that the federal government provide seed funding, borrowing from the successful Silicon Valley mode of venture investment, for partnerships between universities and colleges to develop innovation centers for job training, health services, enhanced apprenticeship programs, startup incubators and installation of high speed internet fiber optic systems.  There is no time to waste, this initiative needs to be implemented immediately to prevent even further widening of the economic gap between coastal regions and our Heartland.

Declining Mobility Limits Millennials Careers, Economy

 

Image: dailymail.co.uk

More millennials are living with their parents than ever before due to lack of income, availability of housing and marriage later in life.  Moves by people under age 35 are continuing to decline.  Seniors are moving a bit more but overall they are staying put in their homes for retirement, as the cost to move to a new home is soaring.  Home prices have increased on average by 6.7 % per year over the past five years, skewed toward large square foot homes for upper income buyers.

Source: Trulia – 1/31/2018

Overall Americans are not moving like they used to in the 1990s, and before the Great Recession. In 2017, 34.9 million Americans moved to new residences, translating to a household mobility rate of 10.9%, which is the lowest rate in the last 50 years since the Census Bureau has been tracking this statistic. Lack of mobility is showing up in total household formations including rental units, new and existing home figures.  For all of 2017 there were only 400,000 household units formed, notice this is a similar pace to the aftermath of the Great Recession.

Source: Federal Reserve of St. Louis, 1/2018

The mobility that is taking place is from major cities to major cities or coast to coast.  We noted in our post on Heartland Economics that one of the issues that faces many rural regions in the South and Midwest is lack of new jobs, digital infrastructure, health and education services.  When young people in these regions cannot receive the education they need to build a career where there are jobs in the cities they stay where they are in low wage jobs with few prospects of advancement. The opioid epidemic is worst in rural regions in the country where a sense of hopelessness has set in for many people.  While in the last quarter some of these regions have seen an increase in jobs, this increase in economic activity is likely to be a passing surge from a very low economic base to begin with that will not last without long term investment.

Next Steps:

Why should we be concerned with lack of workforce mobility?  Because, when people do not move to take on new jobs, or start families or get away from home, home purchases decline, furniture sales drop, appliance sales fall and the overall economic life blood of our economy stagnates. What do we need to do?  Raise wages for workers to a decent level in each metro and rural region of the country, so people can build a nest egg and make a down payment on a home.  Rental unit pricing needs to be addressed in a way that is fair to the multiunit owner while holding down rental costs. The most recent Tax Bill passed in December of 2017 eliminated the provision for tax deductions by employers or workers for unreimbursed moving expenses.  This provision needs to be reinstated to drive the costs of moving down.  Interest on first mortgages should be made tax deductible for all regions of the country with a special emphasis on low income first time buyers. In rural regions we recommend special tax zones be established to offer incentives for investors to setup businesses there, with partnerships with local universities to build incubators for startups much along the model pioneered in Silicon Valley yet tuned to the needs of the region.  The size of our workforce is declining, we have young people staying at home so we need to address the issue of lack of mobility head on to provide the  life opportunities to our young people that earlier generations enjoyed.

Driver Connects Patients with Cancer Treatments

Image: wahospitality.org

Cancer treatment in the U.S. cost $87.8 billion in 2014, with 1.7 million new cases being diagnosed each year.  In a analysis by the American Cancer Society, patients paid $3.8 billion in out of pocket expenses for their care in 2014.

Source: American Cancer Society – 4/2017

One of the major problems in cancer care is the physician centric model the U.S. has today, which can create major delays in treatment and sometimes mismatches the patient with a specific type of cancer with the correct care program.

Driver, a startup with over $100 million in venture backing has developed an application on the Internet to help patients correctly identify the type of cancer they have and match them to clinical trials and treatment programs. The software allows the patient to be proactive about managing the course of treatment without being totally dependent the treatment processes of their healthcare provider. Driver has partnered with the National Cancer Institute (NCI) to provide access to the latest information on cancer treatment trials. NCI has also validated the matching process that Driver employs.

“There is an air gap between knowledge and patients that has existed in cancer care since the 1850s,” said Driver co-founder Will Polkinghorn. “We want to close that space, “ in a recent Bloomberg interview.

The Driver app puts the patient in the driver’s seat so they are empowered to take command of their care.  As time is of the essence in cancer care, educating patients and giving them access to the information to initiate their care is crucial.  While the target is to provide the application and cancer identification workup at low cost, the initial trial starting this month in the U.S. and China will cost patients $3,000.

We have been an advocate of innovative ways to provide health care to patients.  Empowering patients to take direct management of their care instead of being dependent on a bureaucracy in a health provider network is an interesting approach.  Providing updated information, access to clinical trials with direct identification of the specific cancer the patient has, will possibly ensure greater accuracy and speed in the treatment process, thus saving more lives and reducing costs. Innovative solutions that disrupt the present status quo of extremely expensive health insurance, provider, drug manufacturers and federal government complex need to shift if we are to see a lower cost, higher quality healthcare system.  In particular, our Heartland healthcare providers are falling behind in providing standard health care to our people.  We need to turn this spiraling down in care with soaring prices, now.

The Internet Connects Us All in Common

 

Image:  Your Little Planet

We all enjoy the connectivity the Internet provides us today with instant messaging, email, hyperlinking, websites and news.  It was built by the Defense Advanced Research Projects Agency (DARPA) contracting with universities and research centers to build a powerful internetworking protocol and network for the Department of Defense beginning in 1969.  The network evolved with more research centers and government organizations using the system for communication and joint projects.  By the mid 1990s the Internet was opened to the public primarily for email, though soon websites and messaging systems were established.  Commercial common carriers were offered government contracts to provide more communication network support and services.  In 1993 the Internet provided 1 % of all two way communications, by 2000 51 % of all communications were over the Internet, then growth exploded to 97 % of all telecommunications information in 2007.

Built by taxpayer money by DARPA  for military communications,  next universities and research centers, then open to the public and commercial enterprises. So, why do companies like AT & T, Verizon, and Comcast think they should control how Internet is offered to our people?  We paid for it, as it evolved the Internet was envisioned as a wonderful new way to engage citizens in the political process and to level the playing field for new companies.

We certainly, have seen how innovation with a plethora of new services has emerged in the last 20 years, yet now a few giants run the content side: Google, Facebook, Netflix, Disney and the network side run by AT &T, Verizon, and Comcast.  As the content companies merge with networking companies we have huge companies deciding how to make more money from a network entity that is actually a public trust built by taxpayer money.

One way we see inequality growing is access to the Internet for many in poor, or rural  regions of the country is limited in speed and services.  Without Internet speedy Internet access or innovative services for universities, hospitals, and companies in these regions it is difficult for the working class to gain the skills to get a better job, or companies to compete with their high speed competitors.  Investment is declining in some regions of the Midwest and South due to poor Internet infrastructure which means fewer jobs for people living in the area.

The Internet is really a Common Good. It is a utility, not a platform for companies to make profits and not take responsibility for equity in access, speed and content which was the original purpose in designing the Internet as a peer to peer protocol rather than hierarchical.

The present GOP administration installed a company lobbyist as chair of the FCC who immediately decided that the network neutrality doctrine of the Obama administration should be overturned, giving control to for profit entities to charge whatever they wanted for speedy access or content. It is as if we turned the interstate system of freeways over to GM, so GM could give special lanes to GM cars and the others would have to go in slower lanes.

No, we don’t see the Common Good being protected by a for profit doctrine, it just can’t do the job.  Recently, when firefighters in the California Mendocino fire went over their mobile data plan limit, Verizon throttled their data transmission to 1/200 of the speed.  After the outrage over such predatory practices Verizon relented and will now offer all western state first responders standard data plans without throttling.  Why should they even be able to throttle?  If a user needs more data then just charge more over a certain limit – but throttling their network speed is coercive.

Network neutrality for all content, all websites, all messaging is the just doctrine for a Common Good like the Internet built with public funds. The fact that corporations think they should be able to do whatever they want shows once again that The Elite has control and power over the public interest.  Their position needs to shift to supporting the public interest as priority one, not profits. We need to have the common carriers see they have a public trust, and social responsibility in operating a public Internet utility.

Mississippi Life Expectancy Same as Libya – Why?

Photo: newsok.com

An insightful analysis in the Journal of the American Medical Association and the World Health Organization shows how far we are behind in Heartland medical care. A comparison of life expectancies in many of our Heartland states are as poor as many war torn or developing countries in pairings like, Mississippi – Libya, Tennessee – Gaza Strip, in a similar range as Libya and Gaza fall Kentucky, West Virginia, Arkansas, Louisiana, and Alabama.

Sources: JAMA, WHO, Signal The Wall Street Journal, The Daily Shot – 6/18/18

Many of these states in the South and Midwest have the highest rates of cancer, diabetes, and opioid use in the U.S. As globalization took many factory jobs away from the Heartland, medical service providers, doctors and other health professionals left for cities or the coasts where they had transferable skills and could make a better income. Plus, the number of rural hospital closures has been accelerating in the past 8 years with 120 going out of business since 2005. Researchers at the University of North Carolina who led the study believe the trend in more closings will continue to accelerate as costs go up, people move out and businesses are financially challenged.  Good health is often found where there are good incomes and healthy businesses.

We noted in our blog of March 25th that:

“Personal Income growth rates in heartland regions continue to lag the coasts by 3.8 to 2.0 % comparing income growth from 2016 to 2017.  The following chart from the US Bureau of Economic Analysis shows how large the gap is:”

Source: US Bureau of Economic Analysis, The Wall Street Journal, The Daily Shot – 3/26/18

“Core issues for the lack of growth are young people moving out, industrial companies leaving for non-union states or moving factories overseas, automation, poor health, slow Internet speeds and fewer education opportunities.  Added to these issues which have trended in these ways over the past 20 years are now tariffs on imports with soybean farmers threatened in the Midwest with a possible loss of $624 million where they already are competing with lower price soybean products from Brazil.”

As the Trump Trade War heats up prices of many Heartland agriculture crops have been falling such as soybeans by 2.20 % and corn by .62 % today alone.  As prices and foreign customers find other suppliers Midwest and South farmers will find their customers have moved onto other countries hurting sales.

Other tariffs in steel and aluminum are squeezing Midwest businesses.

“In the advanced manufacturing sector which is based in the Midwest and South will likely see increases in imported aluminum and steel prices of between 10 – 25 % used in their products they resell. These price increases threaten their ability to compete and may have to lay off workers.”

The situation is in a downward spiral, as federal tariff and trade policies don’t help in turning around the economic, health and educational opportunities for these mostly rural regions.

Next Steps:

Our heartland neighbors continue to feel under siege from many different directions.  We discuss these issues in our blog – The Hallowing Out of America’s Heartland.  We recommend that a major set of investments be made with the federal government providing seed funding for a partnership between non-government organizations, health services providers, universities, corporations and state and local government.  To bring focus to the development process we propose that Heartland Development Centers (HDCs) be located in key regions maybe near a major university – land grant universities are good candidates located in rural communities. Experts from across the country in HDCs would join together with local leaders in customizing solutions to build entrepreneurship centers, high quality health services, high speed Internet services, job and career training and other services necessary to renew the economic vitality of these regions.

Opioids Are Killing Our Young People Reducing Our Labor Force

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Image: thetab.com

The Opioid Epidemic is devastating for our young people.  The size of the opioid addiction death wave is so high that it is leading to a sharp decrease in the size of the 24 – 54 year old labor force group.

Sources: JAMA Open Network, Marketwarch – 6/7/2018

A paper recently published in the Journal of the American Medi­­cal Association found that 20 % of all Millennials deaths in 2016 were caused by opioid overdoses.  From 2001 to 2016 opioid deaths have increased by 292­­ %.  Experts believe the dip in the size of the 25 – 54 year old group is in part caused by the opioid epidemic compared to other developed countries.

Source: OECD Employment and Labor Market Statistics – 6/7/18

A comparison to OECD countries finds the U.S. labor force in the key mid-career 25 – 54-year-old group at 5 % less, which converts to millions of our young people left out of the labor force. When our labor force is not growing in this key age segment we are in store for a continuing decline in GDP growth, standards of living and few people to support our retired population. The total labor force even with the recovery since 2008 has been dropping to a 10-year low of 63 % overall:

Source: Department of Labor, The Wall Street Journal, The Daily Shot, 6/3/18

Certainly, more than the opioid epidemic is contributing to our low labor force participation rate including: companies automating many jobs so they are not hiring more workers, workers leaving the work force due to not finding work, a skills mismatch between job openings and candidates with the right skill set and the baby boomer population aging into retirement.

Next Steps:

The opioid epidemic strikes hardest in our Heartland as we recommended in an earlier blog on Heartland Development Centers that among other development investments to fund mental health, addiction and counseling services to help our young people in rural regions of the Midwest and South to return to active productive lives. Every day, families are suffering from the drug addiction crisis and our economy is suffering along with our young people.  Our Congress, corporations, non-government organizations, government and health services groups need to establish a partnership to target the problem of drug addiction head on, with a major funding commitment, the latest strategies in drug rehabilitation, and job training programs which include high quality apprenticeship skills development leading to good paying jobs.

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