Monday, April 27, 2015

A trout in the milk

"High wage jobs create low wage jobs"...

...or so we are informed and I have no reason to challenge the source. What often gets said next sounds helpful, even hopeful, but isn't really.

It goes something like: the way to respond to the creation of the low wage jobs that result from creating high wage jobs is to create more high wage jobs and then train low wage workers to fill these new high wage jobs. 

Then the conversation moves on because this is pretty much what we've come to believe. 


  1. We've just been told high wage jobs create low wage jobs.
  2. Then we're told that the best response is to create more high wage jobs.
  3. We take comfort in the knowledge that the lives of low wage workers will be improved with training that moves them into these newly created high wage jobs.
  4. Except, this time there is no acknowledgement that by creating high wage jobs to improve the lives of low wage workers trained to fill them more low wage jobs will also be created (remember "high wage jobs create low wage jobs") to be filled by workers working for low wages.
  5. Not to mention that the low wage job from which the trained worker has moved on to a better paying one is now filled by someone else who will be working for the same low wages.

In other words, improving the lot of low wage workers by training them for high wage jobs created to improve their lot does nothing to reduce the number of low wage jobs or those working for low wages. 

If one accepts the prevailing logic of job creation ("high wage jobs create low wage jobs"), then we can expect low wage jobs with low wage workers to increase as high wage jobs with high wage workers increase.

"There is an affluence..."
But those executives and world leaders will need to be kept happy as well. That's why Destination Medical Center includes expectations that five-star hotels and fine-dining restaurants will spring up in Rochester — because Mayo patients able to afford high-end, out-of-pocket medical care will also expect high-end service at restaurants, hotels and other venues in Rochester. 7.12.13
"There is an affluence that is used to the type of restaurants that you can get in New York City," he said..... That's the kind of DMC private development Carlson thinks will cater to the niche market of affluent international patients. Those will not be the only patients attracted to a destination medical center. But their presence will help offset low reimbursement for Medicaid patients and uncompensated care. 7.13.13
Also, as Brede pointed out, not all of the 35,000 new jobs projected for Rochester over the next 20 years are high-paying positions. In fact, a large portion will be in the hotel and restaurant industry, paying lower wages, and that means more people in Rochester struggling to get by. 6.12.13
  1. The affluent patients will offset the costs of Medicaid patients.
  2. To attract affluent patients we must provide five-star hotels and fine dining.
  3. Hotels and restaurant service workers are paid low wages.
  4. Low wage service workers qualify for Medicaid.
  5. The affluent patients will offset the costs of Medicaid patients.
In other words, jobs providing the service amenities assumed to attract the affluent and offset the low reimbursement of Medicaid patients will in turn create Medicaid patients.

If one accepts the prevailing logic of job creation (service industries will pay low wages), then we can expect that the niche market strategy of catering to the affluent will contribute to the very costs it is intended to offset.

Producing that misery we strive to relieve
There are a thousand hacking at the branches of evil to one who is striking at the root, and it may be that he who bestows the largest amount of time and money on the needy is doing the most by his mode of life to produce that misery which he strives in vain to relieve.  
- Henry David Thoreau, Walden

It might be fair to observe that the vicious cycles enumerated above result from a too simple view of how things work. In defense I can only ask that you consider what I have to work with here. After all, I am not the one who said "high wage jobs create low wage jobs." Neither did I set forth the strategy to offset the cost of providing health care to the working poor by marketing health care destination amenities to the rich for whom in turn more working poor will be required to work. 

In any case, how would the outcomes differ if a more complex view were taken? Or are we missing something even more simple? 

Thoreau also observed that sometimes matters may be obvious "as when you find a trout in the milk." The trout in the milk above is low wages. 


  1. Low wages create low wage jobs.
  2. Raising wages create higher wage jobs.
  3. .....

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