The Economist on the Death Care Industry

The most recent issue of The Economist has articles on a shake up in the “death care” industry, a $16 billion per year industry that it describes as “stodgy and exploitive.”

https://www.economist.com/news/leaders/21740406-changing-social-norms-competition-and-technology-are-shaking-up-stodgy-and-exploitative

Undertakers have long been able to get away with poor service. Their customers are typically distressed, under time-pressure and completely inexperienced (people in rich countries buy more cars than they do funerals). As a result, few shop around, let alone haggle. With consumers docile, providers can keep quality low and prices high—much like tourist-trap restaurants, another one-off purchase made in haste with little information. Some sellers have made matters worse with techniques ranging from opaque pricing to emotional blackmail. The asymmetry in knowledge between undertaker and grief-stricken client allows ludicrous markups on things like coffins. It also makes it easier to sell services that people do not realize are mostly unnecessary.

Funny, but all the factors that The Economist believe are characteristic of the death care industry are also characteristic of another industry.   One with annual U.S. revenues not of $16 billion, but rather $3.5 trillion, or more than 2,000 times as much.  Want to guess which one?

https://www.reuters.com/article/us-usa-healthcare-spending/u-s-healthcare-spending-to-climb-5-3-percent-in-2018-agency-idUSKCN1FY2ZD

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America’s Debts: Those Who “Came of Age in the 1960s and Early 1970s” are Still In Charge

Federal Reserve Z1 data on total U.S. debt for 2017 was released in March, and it appears that while it took eight years, the Obama Administration finally had an economic year it could be proud of.   A year when inflation-adjusted GDP increased moderately, in this case by 2.3%, but the increase was not driven primarily by rising debts, with Americans continuing to sell off its future to consume today. Total U.S. non-financial debt actually fell by 0.5% of GDP, from 253.5% of GDP in 2016 to 253.0% of GDP in 2017. Federal government debt fell from 86.0% of GDP to 84.9% of GDP, the first decrease of the Obama Administration. Household debt edged down from 78.8% of GDP to 78.7% of GDP. These improvements took place, aside from 20 days, after President Obama had left office, but while the policies he had hashed out with Congress mostly remained in effect.

By the end of 2017, however, the new President and “King of Debt” Donald Trump finally began to get some of his agenda through. His huge, deficit-increasing tax cut was signed on December 22, and will take effect in 2018.   A huge deficit increasing spending bill followed this March. And he has been moving to get rid of government restrictions intended to prevent the financial sector from lending people more money than they could pay back, and from speculating on derivative bets while having taxpayers bailout their losses. Last year I wrote that Generation Greed was planning one more economic and fiscal orgy at the expense of its children and grandchildren, and at the expense of the future of the United States. This year, in light of the Harvey Weinstein brouhaha, the term “orgy” seems too consensual.   The last economic and fiscal gang rape is probably more like it.

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New York Local Government Employment: 1990 to 2017

The Bureau of Labor Statistics released annual average Current Employment Survey data for 2017 this week, and rebenchmarked prior data to the latest unemployment insurance tax records, something it does every March.   The news was good for metro New York. Its total employment for December 2017 was 57,600 higher than had been reported prior to the adjustment, and its increase from the prior December was 22,900 greater.   For New York City alone, the December 2017 estimate of total employment was 25,400 higher, and the change over the year was 3,500 greater. The greatest source of error in this data is an unexpected number of jobs in new businesses, since these cannot be surveyed and must be estimated.

With the 2017 data out, I’ve repeated my charts of local government employment for New York City and the rest of New York State. The charts show that prior trends are continuing, with less local government employment relative to private sector employment. Mostly because more and more tax dollars are going to debts and retirement benefits for those no longer working, rather than workers still on the job and producing public services. For that reason New York City faces fiscal issues, and New York State and the MTA face budget deficits, even though New York City has added an incredible 500,000-plus private sector jobs over five years.

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Medicaid by State in 2016: I’ll Take What I Can Get

Some years go the Medicaid Statistical Information System (MSIS) State Datamart, which I once used to compare New York State with the U.S. average and adjacent states with regard to Medicaid expenditures and beneficiaries, was shut down. The most recent data I tabulated was for 2011.   Now, the Centers for Medicare & Medicaid has released their new system, T (Transformed) MSIS.

https://www.medicaid.gov/medicaid/data-and-systems/macbis/tmsis/index.html

I spent a long time looking around the site to try to find the data I once used, but was unable. But I was able to find some more recent Medicaid expenditure data by state and type of service here…

https://www.medicaid.gov/medicaid/financing-and-reimbursement/state-expenditure-reporting/expenditure-reports/index.html

Including 2016. And was able to get some limited data on spending per enrollee from a secondary source.

https://www.kff.org/state-category/medicaid-chip/

So after three and half years, I’ve decided to write an updated, if limited, post about how New York State’s Medicaid expenditures compare with the U.S. average and adjacent states.

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Imported Oil: It Seems The Donald is Yet Another Gutless President

Last week, the federal government slapped a 30 percent tariff on imported solar panels, based on the finding that the Chinese are manipulating the market to promote their own solar industry, with the effect of reducing solar panel production within the United States.   Most of the U.S. solar industry, the purported beneficiary or the tariff, was opposed, because with the cost of the panels falling so low they only account for one-third of total solar costs, the production of ancillary equipment and solar system installation is booming here.

http://time.com/5113472/donald-trump-solar-panel-tariff/

“The Solar Energy Industries Association has projected tens of thousands of job losses in a sector that employed 260,000. The tariffs are just the latest action Trump has taken that undermine the economics of renewable energy.”

https://www.washingtonpost.com/news/wonk/wp/2018/01/22/trump-imposes-tariffs-on-solar-panels-and-washing-machines-in-first-major-trade-action/?utm_term=.f12a7cff072b

“It boggles my mind that this president — any president, really — would voluntarily choose to damage one of the fastest-growing segments of our economy,” said Tony Clifford, chief development officer for Standard Solar in Rockville, Maryland. “This decision is misguided and denies the reality that bankrupt foreign companies will be the beneficiaries of an American taxpayer bailout.”

This tariff, which also included imported washing machines, was the first by “tough trader” Trump.   But if manipulating the market and American jobs are the issue, rather than tribalism and trying to harm some Americans to the enjoyment of others, what about imported oil and OPEC?   Manipulating the market to gain market share at high prices is its very mission.

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The New York Labor Force: Is The Donald Chasing People to To NYC?

In mid-2016, looking at Bureau of Labor Statistics (BLS) data for that year, I found that after years of rapid growth New York City’s labor force, people working and looking for work, had stopped growing when compared with a year earlier, and in some months had declined.   I wondered if the millennials, faced with low wages (or just freelance gigs), high rents, high taxes and declining services were finally leaving, or not coming to, New York.

https://larrylittlefield.wordpress.com/2016/07/31/the-millennials-treated-like-serfs-may-have-started-to-flee-new-york-city/

Checking data for other metros, I found that labor force growth had slowed or reversed in other large coastal metro areas with high costs of living, such as Boston and San Francisco, while picking up in other metros that were more affordable.

https://larrylittlefield.wordpress.com/2016/08/14/the-u-s-labor-force-running-away-from-metros-with-high-costs-of-living/

A year later, American Community Survey data from the U.S. Census Bureau was released for 2016, and had similar findings.

https://boston.curbed.com/2017/12/18/16780366/boston-peak-millennial

Boston appears to have hit what some demographers call “peak millennial,” according to an analysis from Time magazine. That analysis looked at the number of millennials—the nation’s youngest cohort of adults—who have exited Boston proper in recent years. Roughly 7,000 exited in 2016, after the city reached a record high of 259,000 millennials calling Boston home in 2015.

Other larger East Coast cities such as New York and Washington are seeing a similar trend and the reason is clear: Housing costs. Millennials get to a certain ripe old age—say, 27—and decide they want space for themselves and a potential family more than they want convenient access to decent avocado toast. While things might change given the effects a federal tax overhaul could have on the Boston housing market, the trend of millennial exodus is expected to continue.

But has it? I downloaded the latest BLS data to find out.

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Proposed: A Federal Department of Science, Statistics, and Public Information

In the wake of 9/11, when about 3,000 civilians were killed on U.S. soil despite $billions spent on defense, a series of failures was revealed.   Various agencies had the information to identify and stop the attack, but failed to cooperate. Despite a huge military posted all over the world, there were only two military airplanes defending the entire East Coast of the United States, only one of which was armed. And the non-military agencies tasked with defending the U.S., such as the Coast Guard, U.S. Customs Agency, and Immigration and Naturalization Service, were distributed among a variety of federal departments, with little emphasis on any of them and no coordination between them. To remedy this 22, agencies were removed from other Departments and integrated into a new Department of Homeland Security.

Today, we face the equivalent of 9/11 in every part of the country every year. Life expectancy is falling, due to the cumulative disadvantage foisted on later born generations by those who came before, an opioid epidemic, and rising suicide. Life expectancy is set to fall for the third consecutive year for the first time in 100 years.

https://www.economist.com/news/united-states/21733980-thats-not-really-meant-happen-developed-countries-life-expectancy-america-has

But this crisis has been building for two decades, its scope not understood until a couple of economists, with expertise not in vital statistics but rather in value added taxes, brought it to public attention.

https://larrylittlefield.wordpress.com/2015/11/08/death-is-the-ultimate-statistic-ii-the-most-important-news-in-ten-years/

The belated realization of what is happening is a failure for this country’s policy wonks and journalists every bit as large as 9/11 was for our intelligence agencies and military. And a similar response is required.

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