2004 News Releases

For immediate release:
December 22, 2004

Media contact:
James Hoard
Phone: (214) 922-5307
e-mail: james.hoard@dal.frb.org

Southwest Economy Examines Health Insurance Demographics, Service Sector Productivity and Mexico's Slipping Export Market

DALLAS—The latest issue of the Federal Reserve Bank of Dallas’ Southwest Economy examines the demographics of health insurance coverage in Texas, productivity gains in service industries and the reason for Mexico’s export decline.

In “Who Doesn’t Have Health Insurance and Why,” economist Anil Kumar notes that lack of health insurance is on the rise, with 45 million people nationwide going without coverage sometime during 2003. With the rate of uninsured running about 10 percent higher than the national average, Texas is especially affected.

In 2003, 27 percent of Texans were uninsured, Kumar writes, and more than half of them were Hispanic. The numbers reflect Texas’ higher Hispanic population and may also be due to Hispanics’ larger presence at the lower end of the income distribution and their probability of working for smaller firms that do not offer health coverage.

Employer-sponsored health insurance is the primary source of coverage in the United States. Ironically, Kumar says, most of the uninsured are employed but unable to get health coverage through their job. “Therefore,” he concludes, “the workplace could prove to be an important avenue through which to reduce the number of uninsured.”

“Productivity Gains Showing Up in Services” finds service providers catching up with manufacturers in taking advantage of technology and outsourcing.

The authors, Dallas Fed chief economist W. Michael Cox, senior economist John V. Duca and economics writer Richard Alm, compare productivity data from manufacturing firms with a larger pool of services-heavy nonfinancial corporations. The most recent readings show the productivity gap narrowing substantially in the current business cycle.

Investments in Information Age technologies, especially the Internet, are finally paying off for service companies, the authors say, with increasing use of online transactions, better information management and improved communications. Retailers, particularly online merchants and discount chains, are using information technology to streamline inventory, ordering and delivery.

“Surging services productivity should help quell fears that the United States will fail to keep up with other countries as it loses manufacturing jobs,” the authors conclude.

China’s surging export activity does not fully explain the slip in Mexico’s share of U.S. imports, according to Dallas Fed senior economist Erwan Quintin. In “Mexico’s Export Woes Not All China-Induced,” Quintin attributes Mexico’s downturn mainly to its dependence on U.S. manufacturing activity.

Quintin notes that Mexico is a key supplier to the U.S. manufacturing sector, while consumer goods represent a large share of China’s exports. While Mexico’s export losses in a few sectors, such as TV sets and textiles and apparel, might be blamed on Chinese competition, overall there is little correlation between China’s gains and Mexico’s losses.

“The downturn in Mexican exports results primarily from the recent manufacturing recession in the United States,” Quintin writes. “And given Mexico’s litany of truly pressing problems, China should be the least of the country’s concerns.”

Find the November/December 2004 issue of Southwest Economy online at www.dallasfed.org.