Walmart, Health Care and Higher Education

I came across an interesting map recently that shows the largest employer in each state.

As you can see, Walmart is the leading private employer in most states---22 in all.

However, what I found most interesting was the fact that in 23 other states the largest employer was either a hospital/health system or a public state university.

There were only 5 states that any other type of employer was the state leader. Those included Boeing in Washington, MGM Resorts in Nevada, the Denver International Airport in Colorado and a grocery store chain in New Jersey and Maine.

If you want to understand why healthcare and higher education costs have outstripped every other inflation category over the last 20 years you might want to consider the map above.

If you want to understand why health care and college costs are unaffordable, look at the chart below. Both hospital costs and college tuition have vastly outpaced average wages in the last 30 years.

What do higher education and healthcare have in common?

They both receive massive infusions of government money annually.

There is absolutely no way that healthcare and higher education would have been able to push those costs as high as they have without massive government payments and subsidies.

For example, this chart compares college tuition gains with income gains in constant dollars.

Quite simply, without the infusion of billions of federal dollars, there is simply no way colleges could have increased tuition the way they have.

The following charts, although a few years old, give you a sense of the federal money that has fueled cost inflation in the higher education segment.

Tax subsidies---Up 600% in real dollars in the last 20 years.

Federal sponsored student loans---Up 400% in real dollars in the last 20 years.

I shouldn't have to explain anything regarding the federal government's massive increase in spending in the healthcare market over the last 50 years.

In 1965, the federal government was spending next to nothing on healthcare. That is also the last time that health care costs matched closely with average incomes.

Medicare. Medicaid. Obamacare. They all brought massive new amounts of federal dollars into the healthcare market.

Healthcare costs, like higher education costs, lost all relationship to average wages and incomes.

Today the federal government is spending close to 6% of GDP on health care. That represents almost half of all spending on health care in the United States.

Health care costs also could not go up without a seemingly endless supply of money to pay for it. Just as is the case with health care costs, college costs have become heavily dependent on the flow of federal money into the system.

Health care costs generally tracked overall inflation in the economy until government programs were introduced and normal market forces were disrupted  The same has been true with student loan money. Student loans were basically unheard of when I went to college 50 years ago. As more student loan funds became available, the easier it became for colleges to raise tuition costs.

Ironically, a program that was designed to assist students to afford college seems to be making it more unaffordable with each passing year. That is what occurs over and over when a well-intentioned "liberal" idea meets the real world.  A desire to do good by government ends up being the undoing of the very people it was intended to help.

Isn't also ironic that liberal Democrats are also now promising "free" health care and college education for everyone. Nothing is free. The costs will be high for everyone. That "free" stuff will also come with significant government strings attached. It will decide who gets medical care and when it is received. It will decide who goes to college and where. The highest cost will be loss of freedom. You can count on it. There is no other way.

That employer map above speaks volumes.

Isn't it interesting as well that almost everything Walmart sells (food, clothing, toys, tvs) have gotten cheaper relative to wages while those things that the government has gotten deeply involved with have gotten more expensive.

Coincidence?