Aid to the Needy: 2017 Census of Governments Data

For the past 25 years, there has been a bi-partisan consensus in favor of unlimited spending of later-born generations’ future income to meet the ever-escalating perceived needs of those who perceive themselves to be needy.

Executive pay had soared during the late-1990s stock market bubble, as executives had claimed to have personally created “shareholder value.” Since then every time stock prices have gone down toward something like fair value, the federal government has intervened to keep them inflated, so huge bonuses based on “shareholder value” could continue, even as the overall economy rotted away.   Because that’s what rich and older asset holders needed and deserved.

Unionized public employees had already been promised retirement benefits far in excess of what other Americans were going to receive.  But in many locations, such as New York, these were repeatedly enriched, because such employees need to do less for other people and for a shorter period of time.  While retirement benefits for others were cut, because unionized public employees and retirees need lower prices for better goods and services, and that requires other workers to be lower paid.

The richest generations in U.S. history, those now over age 62, needed to be able to sell their houses to poorer later-born Americans for high prices in order to live in the style to which they had become accustomed. So every time the cost of housing threatened to fall to a level that reflected the lower incomes of later-born generations, the government intervened to keep prices high.

And since those over 62 and the rich expect to get benefits out of society but don’t want to pay for them, their taxes have been repeatedly cut, with lots of special deals for capital and retirement income and property taxes for seniors.  Even as spending on everything other than seniors, retired public employees, and bailouts for the rich and big businesses have gone down, both at the federal level and in states where seniors are a higher share of the voting population.

It has been an era of unlimited generosity for those who have enormous perceived needs, the cost to everyone else and the future and those who live in it be damned.   Massive income redistribution upward to the already better off that isn’t even allowed to be called what it is, so the entitled beneficiaries don’t have to feel bad about it.  But what about state and local government spending on people who are objectively worse off, those who were once thought of as the needy?  Well, that’s another thing entirely!

Hospitals, Social Services, and Housing: Census of Governments Employment and Payroll Data for 2017

Health care vies with elementary and secondary education as the largest destination for federal and state government spending.  In fact, when I added it up in 2006 the federal, state and local governments were already paying for 75.0% to 80.0% of third party (insurance and public program) health care expenditures nationwide, which is to say expenditures other than co-payments and services people pay for themselves in cash (such as cosmetic surgery).  Directly (Medicare, Medicaid, the VA Hospital system) or indirectly (health insurance purchased on behalf of civilian public employees and their families, the exclusion of employer funded health insurance from taxable income, other tax breaks).

Socialized Medicine? Get Real, It’s Already Here

Since then the population has aged, leading to more Medicare and Medicaid spending, Medicaid has been expanded to more working people, and Obamacare has added another form of indirect federal support for private health insurance.  For all the discussion of “socialized medicine,” here in the U.S. the government share of third party health care expenditures is probably up to 85.0% or so, and as a percent of GDP it probably exceeds the cost of the entire health care system in developed countries.

Health care and social services, however, are provided by the government primarily through payments to private sector organizations, generally non-profits in New York City and throughout the Northeast.  Therefore in this, the fifth post based on my tabulation of state and local government employment and payroll data from the 2017 Census of Governments, data on related private sector organizations from the Bureau of Labor Statistics will take center stage.   And this analysis features the most shocking trend I have found so far.

Health Care and Social Services: Census Bureau Public Employment and Payroll Data for March 2016 and March 2006 (And Related Private Employment)

For more than a century, the City of New York and State of New York have provided more health care and social services for city and state residents than the U.S. average, and employed more state and local government workers and paid for more workers in the non-profit sector to do it.  I had always associated the shift from health and social service provision by slothful, wasteful public agencies to non-profit social service organizations with the failure of the public sector in the wake of the unionization and public pension increases of the late 1960s and early 1970s, when New York City social services became contracted out on a large scale.   But reading Greater Gotham, I find the same issues and institutional battles were repeated in the early 1990s.  In the (actual, original) Progressive era, the shift was from the slothful, wasteful, contracted out services provided by non-profits, religious and political organizations to “more efficient” public agencies.  Basically, it seems any publicly-funded organization, whether public or private, will, in a generation or two, descend into self-dealing.

In March 2016, the City of New York employed 877 full time equivalent local government workers per 100,000 city residents in the Census Bureau’s “Public Welfare,” “Hospitals,” and “Housing and Community Development” functions combined.   (I’ll take about the Public Health function in a later post, because it combines regulation and service provision). That was down from 1,023 FTEs per 100,000 in March 2006.  The U.S. average was 302 local government workers, down from 309, and the Rest of New York State averaged 309, up from 296 but similar to the U.S. as a whole.   New Jersey and Connecticut were lower than average at 148, down from 191, and 91, down from 103, but in these small states there is more employment in these categories at the state government level.  Despite extensive local government health and social services employment, New York City’s 2016 private health care employment, at 5,715 workers per 100,000 residents, exceeded the U.S. average, at 4,737 per 100,000 residents.  And NYC’s private social assistance employment, at 2,142 per 100,000 residents, nearly doubled the U.S. average of 1,108. Unlike local government employment, private, substantially government-funded employment in many industries in these sectors keeps going up.

Health Care and Aid to the Needy: Census Bureau State and Local Government Finance Data for FY 2004 and FY 2014

New York City was long known as America’s welfare capital, with a large dependent poor population and extensive services for them. But one doesn’t hear much about that anymore. New York State has also had the highest Medicaid spending in the United States, but one doesn’t hear much about that anymore either. The data shows New York still spends more on aid to the needy than most other states, as a share of its residents’ personal income, but the gap between New York and the rest of the country closed between FY 2004 and FY 2014. As the gap closed, aid from the federal government to New York shifted to other places. Today, moreover, most of this “social” spending is on health care, and thus on older people, not on those with lower incomes.   A discussion of these trends, with tables and charts, follows.