Health Care and The Gathering Storm

Here are two very interesting and frightening charts that my good friend Warren Brennan, the CEO of SMA Informatics in Richmond, passed along recently, with this question, aimed at the CFOs of hospitals and other health care organizations:

What do these mean for hospital bad debt and for the health care sector's future financial performance?

Here's the text from Warren that accompanied the chart on wages:

This chart, from the NYT, shows annual growth in real wages. What that means is that workers today are earning significantly less, in real terms, than they were a year ago: their January 2008 earnings were down 19 cents per hour or $8.31 per week from January 2007.

The chart doesn't mention the main reason for the fall: unusually high inflation. Since inflation is running at a 4% clip right now, you'd need wages to be rising at the same rate in nominal terms just to stay at zero on this chart. If food and energy prices stop rising at some point, real wages will start looking much healthier.

On the other hand, however, it's clear that for most of the past year weekly wages have been lagging hourly wages. That's not good news at all: it shows that the workweek is shortening for most workers. Slower increases in food and energy prices aren't going to help on that front.