Where Americans Work

Healthcare and education are two of the most important sectors of the US economy. Together they comprise over $8.44 trillion in annual expenditure. When including the $1 trillion-plus health insurance industry, these three industries of private education and healthcare, public education, and insurance carriers altogether comprise some 32 to 33 percent of GDP —larger than manufacturing (25 percent) and nearly four times as large as all construction (8.6 percent).¹ For nearly every national election in living memory, at least one campaign issue has centered on this socially necessary complex of schools, hospitals, pension funds and health insurance. 

And yet in the 2024 US presidential elections, the economic future of these crucially important sectors of the American economy are far from the center of campaign rhetoric. While Tea Party concerns about government “death panels” have grown into Ron Johnson-Marco Rubio bans on “critical race theory” and “gender insanity,” neither the basic structure of payments or employment in the sprawling network of “care industries” on which the quality of American life rests is up for debate in the November 2024 contest. 

To ask about the greater meaning of the “care economy” and its absence from US party politics, PW spoke with Gabriel Winant, an economic and social historian of the US healthcare industry at the University of Chicago. Winant has argued that the growth of care employment has been a decisive characteristic of capitalist development over the past century, one driven by political systems of both the right and the left—not always intentionally, but persistently nonetheless—as patterns of family care organized around the family wage dissolved. Necessitating new forms of socialized care for an aging population and insecure workforce, these transformations leave both business and the state searching for solutions neither seem able to propose.

An interview with Gabriel Winant

Andrew elrod: The health insurance issue seems conspicuously absent from the election. What do you make of that? 

gabriel winant: In some ways, both parties would find it convenient for the issue to be absent. But despite their efforts—partly to suppress it and partly to express subsections of the issue opportunistically—the social service industries nonetheless have a way of working themselves back toward the surface. 

Just a few examples: JD Vance has talked about repealing Obamacare, without acknowledging that’s what he’s talking about. He’s floated the idea of separating more acute, sicker healthcare subscribers into their own insurance pools—which would basically repeal Obamacare’s pre-existing conditions regulation. But when pressed, he denies it, which is symptomatic of the general way that Republicans can’t generate a coherent popular line on healthcare. That arises from the pathologies of the sector itself. Republicans learned their lesson on Obamacare. It was politically remunerative to them for years to campaign against Obamacare when it was unpopular. The turning point was the struggle over “repeal and replace” in 2017—public opinion had changed. Enough people had become enrolled in Medicaid through its higher income eligibility and in other plans through the subsidies for the exchanges that Republicans can no longer actually campaign against it openly. They may translate it into questions about gender-affirming care or reproductive care—which is also a way of talking about it without talking about it. But unlike before, they’re not campaigning on private “health savings plans.”

The Democrats have a different problem: they’re accountable to conflicting constituencies, one of whom is the master, one of whom is not. If there were a primary process, the politically weaker left wing of the party would have had a chance to assert itself and extract some symbolic concessions, given the popularity of lowering healthcare premiums, rolling back hospital prices, and expanding Medicare and Medicaid coverage as voting issues. Harris would now be trying to back away from certain political concessions to the left. That was how she came to endorse “Medicare for All” five years ago. 

Since there was no competitive primary, Harris has the opportunity to outline a healthcare policy program with a somewhat freer hand. So far, she has largely avoided it. But there are a few notable policy proposals. One is to extend Medicare to cover in-home care, which is quite consequential and significant. She’s also made some noise around medical debt. Democrats are potentially flirting with the federal government funding states more generously in return for cancellation of medical debt. 

But there is no proposal to structurally re-engineer the industry. Healthcare has been an issue that Democrats owned for a long time. But they’ve always tried to serve conflicting constituencies: the hospital industry, the insurance industry, organized labor, the medical lobby, the different forms of patient organization, of which AARP is probably the most significant. The Democrats’ general strategy is to play these constituencies off against each other, to give with one hand and take with the other, to try to keep the most powerful sectors of the industry relatively pleased. Today, those most powerful in healthcare are the hospitals and the insurers. Doctors have lost a significant amount of power. In the 1940s, the AMA was the most important factor in the defeat of Harry Truman’s national health insurance plan. That’s changed as doctors have been subordinated to hospitals, private finance, and, to some extent, insurance companies. So the Democrats hash out this unstable working compromise among these groups, hemming them in a little bit on the antitrust side but then subsidizing them on the welfare state side. That’s why they don’t want to talk about it too much.

ae: This pattern also seems to lay beneath the secular cost increases in the industry. Before the pandemic, policy agendas within the Democratic Party seemed open to some kind of structural reform to arrest this creeping inflation. In 2018, for example, the Center for American Progress published a report on hospital price controls. In 2020 and 2021, some structural reform seemed possible—whether through expanding Medicare over hearing, vision, and dental; or direct government-owned pharmaceutical production. There was an agenda, at least. 

gw: I think there is a logic which has restricted the social democratic-reformist impulses within the Democratic Party. Defeating Trump and Trumpism was initially understood to involve some amount of significant reform to labor policy and social policy. Gradually, this devolved into a kind of Cold War-liberal view of intensifying geopolitical confrontation with China, requiring internal political repression within the Democratic Party coalition. Under the continuous banner of defeating Trump, there was a move from a cautious detente with the left to a rejection of the left. That same political logic is probably at work with the care economy too. 

The care coalition is big, but fragile. So you can’t contemplate a big divisive structural change to anything. Everyone remembers how Obamacare consumed the entirety of Obama’s first term. Although it succeeded legislatively, it spawned the Tea Party and prevented any other major legislative initiative for the rest of his presidency. And Obamacare was engineered to balance the coalition—it was a huge giveaway to insurance companies. So the lesson looms large. As a consequence of this internally repressive political orientation to stopping Trump, and thereby also maintaining US primacy globally, the appetite among Democratic elites for structural reform in healthcare has disappeared. 

Defining the “care economy”

ae: Industries usually lumped into the “care economy” along with hospitals include nursing homes, childcare, and K-12 education. These four sectors share certain economic characteristics: they are labor-intensive, facing growing labor costs; they have some access to government subsidies, whether municipal, state, or federal. What else do they have in common? 

gw: The care economy is basically healthcare, childcare, education. In the US, the fundamental division in healthcare structurally is the division between payer and payee. The payer is the insurance company, although obviously behind the insurance company—or next to it, or in the absence of an insurance plan—is the actual patient. Providers are hospitals, doctors offices, and other kinds of health-service institutions, such as home health agencies and nursing home companies. We’ve organized the healthcare system structurally around an antagonism between payer and payee, insurer and provider, and there’s been many decades of efforts to manage its consequences. There exist now many merged payer-payee entities: that’s an HMO (health management organization), where either an insurance company started owning hospitals or a hospital wanted an insurance plan. There are public payers—Medicare and Medicaid—that account for about a third of the whole market. 

Medicare is a federal entitlement that you qualify for at age sixty-five. The prices that it pays to hospitals and doctors and drug companies—its reimbursement rates—are set by the federal government. Now, Medicare has been burrowed through by private interests—pharmacy benefit managers, “Medicare Advantage” plans, etc.—which represent partial privatizations of different aspects of the Medicare insurance process. But it still remains, nominally, a universal federal program. 

Medicaid, by contrast, is a state-federal cooperation, as many “welfare” programs are. It was conceived of as a program for the poor, akin to what was then called Aid for Families with Dependent Children (AFDC), which is the thing that we call “welfare,” which is today Temporary Assistance for Needy Families (TANF). (In fact, it was common in the early days of Medicaid that the way you got enrolled was at the “welfare office.”) As a means-tested poverty program at the state level, Medicaid has parameters in place. The states receive federal funds, they contribute their own funds in different amounts, they set various rules about eligibility for the resulting program, and about reimbursement rates and any kind of regulatory strings attached to reimbursement. If a hospital or a nursing home wants to be paid by Medicaid—as the vast majority do—they are complying with federal and state rules. 

Because it was a poverty program, and because it has a budget-constrained state administration, Medicaid reimburses at lower rates. A hospital would rather have a Medicare patient than a Medicaid patient, if it has the option. (Eds: a nursing home doesn’t have the choice, as Medicare pays only limited long-term care benefits.) This division also drives reorganization among owners, both public and private, as services are divided across the provider into Medicaid and private insurance-serving establishments—the services become partially segregated. States are more budget constrained than the federal government, and for both political and fiscal reasons they’re likely to try to restrain the program. Nonetheless, Medicaid has grown enormously over the last generation. It has shed its character as welfare healthcare and is now the biggest insurer in America (Medicaid covers approximately 72 million people, compared to Medicare’s 67 million).

It’s important to remember the state-level struggles following Obamacare—the Supreme Court gave the states the right to opt out from Medicaid expansion; many conservative states did. They wouldn’t have had to pay for the expanded coverage, they just didn’t want expansion of the welfare state in their jurisdiction.² Then in many states like Idaho, Kentucky, Maine, and Virginia, you saw campaigns, sometimes very-grassroots struggles, which built state politics around opposition to regional Republican Party opposition and surfaced Democratic Party leaders. 

Payers and payees

ae: You mentioned the shotgun marriage, so to speak, the dueling interests over the growth and regulation of the care economy within the Democrats’ political coalition. 

gw: With the public programs, the government—whether federal or state—sets the prices. With the private insurers, which account for about 40 percent of the hospital market, the rates are negotiated. That negotiation has led to a generational struggle for market power between hospitals and insurers. This has sometimes appeared as a form of vertical integration, but I think more recently it’s led to horizontal integration, where hospital chains have grown as the wealthier among them buy up the more financially vulnerable to try to dominate market share, which gives them leverage on insurers. The insurers have merged and consolidated for the same reason.

This particular set of coalitions between providers and payers, of gradually expanding coverage delayed by continuously rising prices, begins in the 1980s. From its passage in 1965 until 1983, Medicare reimbursed on a “cost-plus” basis. A hospital admitted a patient, the hospital’s accounting and billing departments sent the estimated cost of all the procedures to the federal government, and the federal government basically paid them 102 percent of the costs. This created an enormous incentive for hospitals to expand. The federal government underwrote demand, but without real planning, leading to prices basically dictated by the providers. The fiscal structure thus helped enable a massive hospital capital expansion from the late 1960s to the early 1980s.

In 1982, Congress and the President pursued a Medicare reimbursement reform, which passed in 1983. This remains the most significant change to Medicare since its passage: the reimbursement structure shifted from a retroactive cost-plus formula to what’s called “prospective payment,” under which the federal administration, the Center for Medicare and Medicaid Services, breaks down all hospital procedures into hundreds of “diagnostic related groups,” and fixes a price to them, with regional adjustments and so on. From then on, hospitals know what they’ll be paid for any given Medicare patient, and they must manage their costs and operations as they see fit.

Private insurers, which are still, to a significant degree, dominated by nonprofits up to this period, followed Medicare’s lead and also switched over to a negotiated prospective-payment system following the 1983 reform. But private insurers can’t force their prices on hospitals. Unlike the federal government, they have to negotiate their prices. This begins to cause a shakeout in the industry. The hospitals have part of their income controlled; the other part they negotiate and for that they need power. 

Western Pennsylvania is a case I know best: Blue Cross and Blue Shield merge to form Highmark, allowing them to negotiate hospital prices more forcefully. At the same time, the academic hospitals affiliated with Pitt consolidate and form the University of Pittsburgh Medical Center (UPMC) to buy up hospitals in the surrounding region. Now, UPMC can negotiate more favorable rates with insurers. You see how this arms race takes place. The UPMC-Highmark example is a relatively notorious case: it reached a point in the last decade that one of the biggest hospital chains in the country refused to accept payment from its region’s biggest insurer. Each was trying to squeeze the other out of the market. 

ae: It’s also important to remember the reason premiums had grown so persistently: the spread of collective bargaining before the Reagan years meant that workers could re-negotiate the large group policies employers took out on their behalf. Union contracts covering millions of workers meant that employer contributions could be renegotiated upward, particularly as the hospital sector took on debt to grow in the 1970s and 1980s. The shift to prospective payment in the early eighties showed a political limit to this process, at least from the insurers and the federal Treasury. 

gw: One putative solution to this problem of healthcare inflation is what’s called “managed care,” which is to say HMOs where you have vertical integration, the hospital and the insurer are the same corporation. The idea is that whatever rationing has to happen can happen internally on a kind of sound medical rationale rather than happening through an external market process. That’s the nice version of the story. The less nice version is that HMOs are incentivized to deny you care because they’re going to pay for the care by providing it themselves. The 1993–1994 Hillary program was very complicated, but managed care was central to it. HMOs explode across the 1990s.

By the end of the century, there were also about 40 million uninsured people. The linking of insurance to employment, which has its origins in collectively bargained health benefits, meant that the destabilization of the American labor market—de-industrialization and de-unionization—caused greater uninsurance by the early twentieth century. Obamacare was in part addressing that problem. In a system where healthcare is linked to employment, how do you provide health security in the absence of employment security? And the answer is, it can’t be done. And that’s why it continually arises as a kind of contradiction.

One consequence of this payer-provider conflict was that hospitals began trying to offload less acute cases, which didn’t reimburse at high rates. Those had been profitable in earlier decades under retrospective cost-plus plans, but this changed beginning in the 1980s. And thus is born the long-term care industry, to absorb forms of care that basically once happened in hospitals. Nursing homes grew very rapidly in the ‘80s and ‘90s, and by the end of the century, home health was introduced. For many years, home health aide has been the fastest growing job in America. It will continue to be for the foreseeable future. 

ae: In terms of payment structures, the public education example departs here in a useful way. In public education, uniquely for middle-class and lower-income working people across most of the country, payment for the service was collectivized a century ago or more. Its survival was underwritten at various points by the federal government, though in the 1990s and 2000s politics in many states revolved around questions of state takeover to enforce budget and staffing reductions. The extent of the tax districts and their subsidies from general taxation vary. But there’s a longer history of socialized payment and government ownership. 

The politics of cost are different in K-12 for that historical reason. There are still elitist and racist campaigns to limit school district revenues, but they proceed indirectly as campaigns to protect services from immigrants or as attacks on the particular service provider—rather than on the idea of it being a government-provided service.³ There’s a kind of tractable politics there that accepts as terms of debate total costs and distribution of the tax burden. But in the broader conversation around the “care economy,” even getting to the question of how much we should pay for things like mass-market health insurance, childcare, or home health services is obstructed by the prior questions about existing payment structures—the role of insurance, what existing organizations can be folded in, or whether these things should be provided by right at all. 

gw: Typically the way payment manifests as a political issue is in terms of whether a political coalition can find a way to attach a subsidy to demand somewhere. On the left, we often think what we would like to do would be to take more direct control over supply, like in the public education example—and directly politicize the conditions of supply. In the absence of the political power to accomplish that, the kind of partial measure that winds up coming on the table is a subsidy—a subsidization of demand for a service supplied by some market or quasi-market institution. That’s a very politically convenient mechanism because it brings some suppliers, service providers, and clients onto the same side. 

For example, home health agencies love the Harris proposal of a Medicare benefit for in-home health care. The private equity firms that have entered into the home health care space also are very happy about that idea, because Medicare reimburses at a higher rate than Medicaid. This solves the political problem in the near term by expanding the patient market, raising the reimbursement rate, and thereby presumably flushing more money into home health care—which will in fact enable more people to get the care they need and presumably raise the quality because it will raise wages, and thus draw labor into the sector where there is a systematic shortage, all while further enriching a set of for-profit actors. This is that logic of the structurally divided Democratic Party coalition that I was alluding to earlier. It’s true across lots of these industries. This is how the Democrats work—they try to strike deals to subsidize demand and thereby bridge the two class parts of their coalition. 

Labor intensity

ae: In addition to “low margin” services such as long-term care, aren’t there also “high margin” services that can be performed outside a hospital setting? This would be the incentive for the growth of low-cost “urgent care” centers, which seems like primarily a way to get around union labor.  

gw: Urgent care isn’t so much about getting around union labor—hospitals themselves are a largely non-union sector, still. But the basic insight is right that it’s about absorbing payment in a lower-cost setting, where deskilled labor serves a higher volume of patients with lower fixed costs. 

As for long-term care: it can be paid out of pocket, which is very expensive, but many wealthy people do that. Alternatively, Medicaid pays for it. Medicare will only pay for a sort of small amount of long-term care, so for middle class people, it’s more common to pauperize yourself to qualify for Medicaid. That’s a real serious social policy dysfunction on the eligibility side. The Medicaid programs don’t currently pay that well to the providers—to the home health company or the nursing home company. The firms that operate in this layer of the market are often quite predatory and provide a lower quality of care, because they make a profit by absorbing Medicaid payments, which are not enormous, and then limiting their main cost—staff. Adding long-term care to Medicare is a good idea. 

This gets to a pervasive feature of the care economy—its labor intensity. This idea is often attributed to the economist William Baumol: in “Baumolian” industries, there’s no real way of increasing productivity, at least not consistently. This is even true to a significant extent in hospitals, but it’s especially true in less capital-intensive sectors: home health care, long-term care, childcare, even education. These are sectors characterized by huge labor costs, low wages, and poor working conditions. This manifests in unreliable and low-quality service, despite the enormous costs generating massive unhappiness, obviously, on all sides.

ae: There seem to be two different economic logics in tension here. The way we usually think about the relationship of cost to quality is competition: an excess of competition drives down prices and so costs and lowers industry standards. Increasing productivity, replacing labor with capital, was a way around this—driven by the profit motive. But in these labor-intensive care industries, competition is limited (in the case of hospitals) or where it does exist prices still appear to be prohibitively expensive for households—even though the labor is cheap (long-term care, childcare). Given the structure of demand, the profit motive hasn’t seemed to bring down prices but rather the opposite. 

gw: The high costs come from their labor intensive, non-productivity-increasing quality. The economies of scale that allow you to reconcile low prices with high labor costs don’t seem to exist in these industries. There’s periodically noise made that automation, or now AI or whatever, will finally crack this. I guess we’ll see. It seems implausible to me, for the time being. 

What unites long-term care, childcare, even hospital care, and public education is this inability to increase productivity per person-hour—their Baumolian character. This is also part of the source of their kind of intense connection to the household. The sense that they absorb functions out of the household, because the care economy, like family economies, is attention intensive. That makes them ill-suited to so-called ordinary market institutions. The absence of ordinary market processes—like the increase of productivity, the achievement of economies of scale, the lowering of price simultaneous to the increase of volume or quality or both—makes the family and these kinds of enterprises have something in common. This is also the reason that both supply and demand flow back and forth between households and these sectors. Neither the family economy nor the care economy as it is currently organized have adequate income to provide what people continue to need, and so labor moves back and forth between them continuously looking for a better deal. 

There aren’t good structures for paying for these services. Either it’s devolved onto households to pay exorbitant costs—that’s largely the story in childcare. Or Medicaid has to do it—which is the story in long-term care. Hospitals, we could tell a related, but distinct story. The pressures of economization that all three of these kinds of firms are subject to mean that they can’t pay high enough wages or hire enough staff, and because they can’t pay high enough wages to hire enough staff in their mass market versions—there are high end versions of all these things, but in their mass market versions— they deliver a poor service, or an inadequately staffed service. That’s not the fault of the people who work there. It’s because of the structure of these industries and the ways that they’re paid for.

Look at childcare. The economics of childcare are linked to the emergence of dual-earner households, especially though not only at higher points of the income distribution. There is obviously a general increase of women’s labor-force participation in the US over the whole twentieth century, but for working-class women in the post-war period, participation is significantly suppressed by the wages and benefits of collectively bargained industrial jobs for their husbands. There are many criticisms of this arrangement, but for a period of a few decades, autoworkers, steelworkers, people in the building trades, etc., earned something near family wages. This was a longstanding labor movement demand going back to the nineteenth century. So the emergence of the dual-earner household coincides exactly with the last quarter of the twentieth century, when the family wage eroded under the pressures of deindustrialization and deunionization and so on, accelerating in the 1970s. 

Women were compelled to bring in some money. On the one hand, there was an enormous increase in demand for childcare as women entered the workforce under declining family wages. On the other hand, childcare was also a form of employment for women entering the labor market. When the 1996 welfare reform bill began to force women off the welfare rolls and into the labor market, child care, low-wage health care, and other personal services were the most significant destinations. It’s a very skilled job in a certain way, but the barriers to entry are relatively low. So the growth of the care economy in recent decades has been part of the turn towards the market. As women had to generate more cash for their households, they became more likely to need to pay someone to watch their kids. There’s an enormous amount of social science about how families calculate the dozens of complex trade offs—who should work and who should stay home, on what cycle, and so on. It’s a complicated development that has a kind of unequal side and a kind of progressive side also at the same time. But the jobs into which working-class women could enter were at the bottom end of the service sector. 

ae: And those low-wage jobs are still apparently too expensive for companies to provide service for all the families that need it. Let’s talk about the politics of a solution here. SEIU seems to play a big part in the politics of organizing the business end of these markets. Because of this political role, I was interested to see no mention of the union in Rachel Cohen’s great debrief of the childcare campaign in congress in 2021.

The rise of the issue in many ways coincides with SEIU’s rise to political power. California Governor Gavin Newsom appointed Laphonza Butler, president of the SEIU local 2015, to Senator Diane Feinstein’s seat after her death. President Biden appointed two top SEIU attorneys to the National Labor Relations Board. But while they can win victories like gubernatorial and presidential appointments, those alliances also seem limiting to some: Butler’s appointment, for example, was a compromise to a conflict that eventually saw Adam Schiff win the Democratic primary for California’s Senate seat—over Barabara Lee and Katie Porter. How does that advance labor’s cause? 

gw: It’s notable that the main union in a lot of the care economy is SEIU, which Kamala has been close to since she was a Senator, if not attorney general. To its credit, SEIU has done enormous work to put the idea of the “care infrastructure” on the table and raise the demand for new subsidies. Federal expenditure on the care economy was the Built Back Better idea. This discourse comes from SEIU and its affiliate institutions. SEIU has wrapped up the unionization of hundreds of thousands of childcare and home health care workers over the last few decades.

On the other hand, the SEIU has an organizational structure that uses workers more or less as votes in November. Of course, there are certainly many individual home health care and childcare workers who are working-class leaders, and they deserve every bit of credit. But the union seeks to leverage relationships with Democratic policymakers in state capitals and ultimately in Washington to achieve unionization through governors and state legislatures. A few weeks ago, Michigan unionized—and you can really almost call it the state unionizing the workers—its in-home health industry. The workers had to sign off in a nominal ballot. While the majority had to vote yes, the participation levels are typically very low. The workers aren’t congregated anywhere and it’s difficult to establish a real collective experience. 

I don’t want to gainsay the actual economic and material improvements that are accomplished that way. But SEIU is an organization very adapted to the idea of being the mediator within this Democratic Party cross-class coalition, where it delivers for workers and with their limited participation, but not exactly through bottom-up pressure. That cross-class coalition puts limits on labor’s political program. Its internal power structure—an international convention held every four years of elected delegates who themselves elect international officers— is also quite undemocratic. Participation in its local unions is often limited, more or less depending on the region and industry, to votes in November, and open-ended strikes are rarely part of the power strategy. 

In blue states, SEIU will go with the Hospital Association or the Nursing Homes Association to the state capital and lobby together for higher reimbursement rates from the Medicaid program. While there is a significant history of not-for-profit and even public nursing homes, about 70 percent are for-profit. They are increasingly amalgamated into larger chains, often owned by private equity or Real Estate Investment Trusts. The basic way nursing homes generate cashflow—two out of every three dollars it earns—is through Medicaid. That subsidy to demand can attract what are actually parasitic financial elements into the industry through the providers. 

The company Manor Care, for example, had 25,000 beds and was the second-largest nursing home chain in the country by 2017. In 2011, it was bought by the private equity firm the Carlyle Group, which sold the land on which the nursing homes sat to a company that specializes in being a landlord to healthcare providers. Previously to this, the nursing homes typically owned land. Carlyle could basically pocket the proceeds from that land sale, paying off the debt that it had incurred to acquire Manor Care in the first place. This has become relatively more common in this sector. Manor Care now has to pay rent using its Medicaid revenues, and Carlyle extracts profit. 

With a new rent burden, Manor Care’s margins contracted. To protect them, the Carlyle-owned operator found cost savings elsewhere in its business, which for a nursing home without real estate is basically labor. The quality of care in the homes went into a downward spiral. Carlyle claimed that this was the fault of a reimbursement change policy in Medicare, which is basically not true. Past a certain point with management, there is a pattern of death spiral for nursing homes. You can really measure this: regional lawsuit clusters over neglect and abuse. Manor Care is one of them and it eventually goes bankrupt by 2018.

In this case, the private finance attracted by this subsidy of demand actually is parasitic. Because the core issue in long-term care is staffing, the quality of the service depends on whether the operator can profit at existing wages and staff-patient ratios, or whether it has to reduce these costs to protect its margins. A badly run nursing home might have dozens of patients to one Certified Nursing Assistant—a state license that can be earned in four to twelve weeks or less. 

The low wages and poor conditions have led to a staff shortage, and state intervention has thus far been regulations on staffing ratios. It’s hard for nursing homes to comply with regulatory standards of patient-staff ratios without increasing their wages to the point that they’re not yielding the profits that are demanded. Now, the federal government has tried to enforce a regulation with more fines and penalties if facilities don’t comply. Several lawsuits have emerged to get this regulation thrown out under the new post Chevron-deference rule.

ae: The same coalition that labor and employer associations form to win the subsidy to demand breaks apart over regulatory issues, and then labor and the employer associations end up on conflicting sides of the very thing that they’ve helped to grow together.

gw: There’s another version of this with hospital market regulation, which has been a kind of intense site of antitrust activity at both state and federal levels since the post-Obamacare wave of mergers. As California attorney general, Harris had a relatively active record of antitrust regulation of hospitals’ merger and acquisition activity. As governor, Tim Walz stuck his neck out against a hospital merger and got slapped on the wrist for it by the Mayo Clinic, which threatened to pull out of Minnesota. He retreated—you do get capital strike in this industry, potentially.

Care and the national economy

ae: Commercial interests shape the fiscal policy that subsidizes demand in these care services. But while the issue seems to be often reported about flatly in newsmedia as the politics of “social policy” or “social spending,” this can, I think, obscure what’s happening. We’ve talked about how commercial interests work inside the care economy, but what about the wider world of employer interests in the American economy—the owner associations in retail, leisure, hospitality, “business services,” real estate, finance, and even manufacturing. How do these shape the care economy in the United States? 

gw: Historically, the rest of the economy had an interest in a functional care economy without an inbuilt inflationary dynamic. Employers in other sectors often historically have wound up footing the bill for at least a significant part of the cost of the care economy through health insurance and wage demands related to childcare, etc. In theory, there’s supposed to be a mechanism by which the labor market transfers the costs of the care economy back across the rest of the economy. 

That seems not to happen anymore. On the one hand, workers and unions aren’t strong enough to enforce this mechanism. On the other hand, historically, industrial employers sometimes played a somewhat constructive role in relation to health policy, because they were interested in lower costs. I don’t think there’s a clear version of that anymore. You might think that the bosses of America would support Medicare for All to offload this cost from them, but the truth is that they’ve already transferred more and more of the cost of care to their employees, by increasing employee contributions in group plans. Or they have grown to rely on low-wage labor markets where employer-sponsored group insurance is not the norm, such as was true in the retail industry before the Affordable Care Act, or in many small businesses.    

ae: Much of the workforce can’t afford those costs. So while there used to be a politics of cost shifting, it seems that as demand for care has grown the question has become not who should pay but whether it should be provided at all on any but individual terms. 

Could we think about the emergence of the care economy in the twentieth century—the invention of social insurance schemes, these subsidies to demand that later came to grow, these various phases of social reproduction that demand different services—how can we think about these in relation to the way that national governments conceive of economic development? 

The discourse around growth strategies, “varieties of capitalism” or the “product cycle” concept, give some vocabulary to talk about this. The idea is that, to be a prestigious nation in the world of nations, you need to foster your high-technology industries, your entrepreneurs, your research and development capabilities, and your high value-added businesses, to stay ahead in the global race. Otherwise, developing countries will catch up. The focus of economic growth is in these high-tech sectors, which in the North Atlantic and in parts of East Asia have a strong identity as “private sector” industries: this is the CHIPS and Science Act and the energy stuff in the Bipartisan Infrastructure Law and the Inflation Reduction Act—the political campaign of “green capital.” 

Though it seems to be almost completely absent from the international politics of growth and development, the fact of the tremendous and unceasing growth of the care economy arguably contradicts a lot of the economic-development logic we read about guiding our national political systems.

gw: The care sector is not as relevant to things like balance of payments or geopolitics. The geopolitical, the geoeconomic—these are the factors that endow the high-value-add sectors with the prestige that you alluded to.

There’s a historic connection in the mid-twentieth century between productivity growth and manufacturing and the possibility of a more egalitarian labor market and social structure. Bidenomics was meant to revive that linkage, in combination with these geoeconomic-geopolitical questions.

In practice, however, manufacturing doesn’t employ enough people to link productivity to a more egalitarian social structure. It is not scalable. Its productivity development has outpaced the possibility of making good on the link between productivity and employment. The result is that manufacturing has these geoeconomic and geopolitical valances, but it can’t do the domestic social work that’s wanted from it. In its place instead stands the care economy, which rather than promoting productivity would in fact demand a cross subsidy from the more economically dynamic parts of the economy. Now, the overwhelming majority of the domestic labor market—which is outside of the shrinking manufacturing sector—must figure out how to pay for and organize its own reproduction.

Now developing payment structures that, in effect, subsidize low-productivity public care from the high-productivity sectors’ profits is a perfectly fine thing, and that’s what we should try to achieve. But we need to rationalize the care economy so that it’s not a site of all these dysfunctions and pathologies we’ve been talking about, and actually a site of human well-being and good employment. The success of this project depends on the degree of redistribution. And that would be socialism, there’s just that there’s no other way to describe it. 

ae: Meaning public ownership in addition to public subsidy, as with public school districts, rather than the public subsidies to private providers that characterizes how our care sector has grown over the last generation?

gw: Yes. Not just ownership but democratic control of providers.

ae: You could say that ensuring the expiration of the Trump Tax Cuts and Jobs Act and the accompanying increase in corporate taxes would fund a downpayment on expanding public ownership and increasing reimbursement rates to private providers in care industries. That could have been a way for Kamala Harris to campaign on the care economy issue—although she’s not saying that and hardly seems to want to engage on questions about K-12 education and healthcare economics.

gw: What Kamala Harris wants to do is not socialism, obviously. It’s a gesture in this direction of recognizing the increasing social and economic importance of care mediated by the subsidy of demand. But I think it’s likely to encounter a new set of limits, which arise ultimately from the fact that the supply is still private and predominantly, effectively for-profit. 

Demand then becomes a kind of bottomless pit, because we have no means of collectivizing supply as we would need to do to plan to meet people’s needs. Supply needs to be coordinated publicly and democratically. But instead, we rely on public subsidy of demand and coordination of supply through market mechanisms. And that’s in a positive case, with Democratic Party policy victories; in other words, we wind up kicking the can down the road. In this event, the problem will continue to reappear in the form of classic questions of taxation, immigration, and labor, as the dissatisfactions and inadequacies of market coordination get politicized. Public control of supply might not solve it all, but it becomes at least a site of a more constructive politics.