More and more, health care employment is replacing manufacturing as a mainstay of communities, as the Wall Street Journal reported (subscriber link) earlier this month. It focused on Bangor, Maine, but the lessons apply to many places throughout the U.S.

Is the exchange of manufacturing for medical care good or bad?

Yes.

Unlike some people, I'm not going to lament the relative decline of manufacturing. Economic change is inevitable in a relatively free society, and there's no God-given requirement that various sectors (mining and agriculture; services; manufacturing, etc.) remain in a specific proportion to each other. Indeed, changes in the relative importance of sectors can be a sign of increased productivity. (Consider this: the share of workers employed in agriculture is a tiny fraction of what it was. Is that a bad thing?)

The increasing importance of health care to the economy can be a good thing. After all, health is a good thing to have, and if health care contributes towards increased well-being, so much the better for increased spending.

But then again, the rise of health care is distorted by this fact: so much of it is driven by government regulation and government spending.

The Journal article gives a snapshot of the extent of these changes.

- Nationally, 310,000 jobs in manufacturing disappeared during the last 12 months. The number of health care jobs rose even more, by 363,000.

- In Duluth, Minn., 14% of the local workforce was in health care a decade ago. Today health care employs 20% of the workforce--an increase of nearly 50%.

- In Bangor, Maine, a community college has 261 applicants for 32 slots in its nursing program. In seven years health care has gone from 12% of the workforce to 20%, while manufacturing employment has been halved (going from 12% to 6%).

But it also notes some downsides:

- Higher-paying jobs in health care tend to be more concentrated than high-paying jobs in manufacturing.

- To a large extent the fortunes of health care depend on the whims of politics. (In Maine, 59% of all gross patient revenues were paid for by Medicaid and Medicare.)

Indeed, too much of health care spending is driven by politics, which means that the kind and amount of care purchased does not reflect true consumer sentiment, but the machinations of politics as well as the fact that "someone else" is paying for care.