Doctors and Dishwashers: How the Nanny State Creates Good Jobs for Those at the Top

Dean Baker:

From 1980 to 2005 the economy grew by more than 120 percent. Productivity, the amount of goods and services produced in an average hour of work, rose by almost 70 percent. Yet the wage for a typical worker changed little over this period, after adjusting for inflation. Furthermore, workers had far less security at the end of this period than the beginning, as access to health insurance and pension coverage dwindled, and layoffs and downsizing became standard practices. In short, most workers saw few gains from a quarter century of economic growth.

¹ These data can be found in Dew-Becker and Gordon (2005, Table 8).

² Data on doctors’ salaries (net of malpractice insurance) can be found in Lowes (2005).

But the last 25 years have not been bad news for everyone. Workers with college degrees, and especially workers with advanced degrees like doctors, lawyers, and accountants, have fared quite well over this period. These workers have experienced large gains in wages and living standards since 1980. The wage for a worker at the cutoff for the top 5 percent of wage-earners rose by more than 40 percent between 1980 and 2001. Those at the cutoff for the top 1.0 percent saw their wages increase by almost 75 percent over this period.¹ The average doctor in the country now earns more than $180,000 a year.² A minimum wage earner has to put in 2 days of work to pay for an hour of his doctor’s time. (After adding in the overhead fees for operating the doctor’s office, the minimum wage earner would have to work even longer.)

While doctors, lawyers, and accountants don't pull down the same money as corporate CEOs or the Bill Gates types, their success is hugely important in sustaining the conservative nanny state. If the only people doing well in the current economy were a tiny strata of super-rich corporate heads and high-tech entrepreneurs, there would be little political support for sustaining the system. Since the list of winners also includes the most educated segment of society, it creates a much more sustainable system. In addition to being a much broader segment of the population (5-10 percent as opposed to 0.5 percent), this group of highly educated workers includes the people who write news stories and editorial columns, teach college classes, and shape much of what passes for political debate in the country. The fact that these people benefit from the conservative nanny state vastly strengthens its hold.