FRED blog recklessly wrong on education employment

The Federal Reserve Bank of St. Louis collects and publishes a lot of useful data and tools to analyze the data. They recently started a blog highlighting interesting pieces of economic data and trends. This week, they talk about education and health care employment and present a nonsensical conclusion with absolutely no evidence. Head. Desk. Whack. Whack. Whack.

There’s little doubt that the prices of education and health care have risen considerably over the past decades. One reason for this is that more and more people work in these fields.

With no other evidence, simple supply and demand suggests that more available labor would drive costs down as more people compete for the jobs. The growth in the number of jobs means something is driving employment up. For health care, it is clearly the aging of the baby boomers, who require more care. For education, I think it is the massive, unprecedented increase in student loans available. That easy credit increased demand, just like easy mortgage credit increased housing demand and drove prices to an insane bubble. Back to health care, an argument can also be made for monopoly pricing practices in both hospitals and doctors, plus the massive federal subsidies of Medicare and Medicaid. Presenting the data is a FRED strong suit, making sense of it sometimes isn't.