Factories Fading, Hospitals Step In

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The Wall Street Journal

Factories Fading, Hospitals Step In
By CONOR DOUGHERTY
April 15, 2008; Page A1

BANGOR, Maine -- In this aging manufacturing region, where old-line industries like paper factories are falling away, health care has emerged as the employer of last resort. Between 1998 and 2007, the Bangor metropolitan area (pop. 150,000) lost about 3,700 jobs in manufacturing, but gained 3,500 jobs in health care. For many residents in Bangor, the hospital is replacing the mill as the passport to the middle class. For others, it means lower wages and fewer opportunities to advance. This trend extends nationally, and it could help blunt the effects of the faltering U.S. economy. Demand for health care tends to stay strong during recessions. Cash-strapped consumers are more likely to cut back on new appliances or cars than emergency-room visits.

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Growth in health care is fueling local economies across the country, as medical facilities replace factories. In Duluth, Minn., 20% of the jobs are in health care, compared with 14% a decade ago. In the Canton, Ohio, area, which lost the maker of Hoover vacuum cleaners and dozens of other manufacturers, the health-care industry is expanding rapidly. A similar story is unfolding in Anderson, Ind., once a major producer of cars and car parts. There are downsides to health care's ever-increasing role. A community that relies on health jobs can end up with a weaker economy, one overly dependent on government programs like Medicare and Medicaid. Greater inequality is a risk, too. In health care and other service industries, there tends to be a wider income gap between what the highest- and lowest-paid workers earn than there is in manufacturing. Surgeons can have salaries in the high six figures, while personal-care attendants often make little more than minimum wage.

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More health-care workers means more diversity for this almost all-white city. At Thistles, an Argentine restaurant in Bangor, owner Santiago Rave says that 10 or so Latin doctors new to the area regularly patronize his restaurant. Monthly "Tango Tuesdays" are popular events. In 1990, 16% of the jobs in the Bangor area were in manufacturing, while 12% were in health care. In 2007, 6% of the jobs were in manufacturing and 20% in health care. Without the shift, Bangor's unemployment rate, which averaged 5.1% last year, would almost certainly be higher. There are other benefits: The move from manufacturing has helped cut Maine's on-the-job injury rate in half since 1990.

The health-care boom has also upset the economic balance in this sprawling, largely rural state. When manufacturing drove the economy, well-paying factory jobs were spread throughout Maine's rural and urban counties. But higher-paying health-care jobs are concentrated in urban areas. Bangor's Eastern Maine Medical Center, the city's biggest hospital and largest employer, offers sophisticated cancer treatment, open-heart surgery and other specialized care. Jobs are available not only for doctors but also for highly trained nurses, and X-ray and laboratory technicians. Rural areas have a larger share of lower-paying health-care jobs such as nursing assistants and personal-care attendants. In 2005, the average health-care wage in Maine's rural counties was $26,841 a year, $10,000 less than in the urban counties. Statewide, the average wage for all jobs was $32,393.

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Health care also requires more training in order to advance. Unlike in manufacturing, where workers could start right out of high school and ride a seniority escalator to better wages and benefits, health-care workers primarily move up the ladder through education.

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