AMERICA - Health-Care Jobs Today

"Health-Care Jobs Are Getting Squeezed, Finally" by Peter Orszag, Bloomberg 2/19/2014

Excerpt

Evidence is spreading that health-care costs are growing much more slowly than before.  Now, it's not just a flattening in Medicare spending; the deceleration has spread to employment, too.

Last fall, in a generally skeptical analysis of the apparent slowdown in health-care costs, Harvard University economist Amitabh Chandra of Harvard University and co-authors noted that, because 57 percent of overall health-care expenditures are labor costs, "it seems unlikely that we would expect to see a permanent bending of the cost curve without a commensurate shift in employment rates.”  And at that point, they didn’t see any such shift.

Now, a few months later, the accumulating data show that we are indeed experiencing a noticeable decline in health-care employment growth.  From 1990 to 2005, according to the Bureau of Labor Statistics, employment in health care grew by an average of 2.8 percent per year.  But over the past year, it has grown by only 1.4 percent.  And in the past two months, it has barely changed at all -- and that is something that hasn't happened since data collection began.

“We have noted since first publishing on the health care spending slowdown that health labor would eventually need to follow suit," said Charles Roehrig, director of the Altarum Institute’s Center for Sustainable Health Spending.  "We have apparently finally reached that point.”

Within health care, employment is still expanding rapidly in some areas but has slowed sharply in others.  The most notable trend is that hospital jobs, which account for a third of employment in the sector, have basically stopped increasing.  On the other hand, in some outpatient care services (freestanding emergency medical centers and kidney dialysis centers, for example) the number of jobs has risen about 6 percent over the past year.  These patterns reflect the broader shift toward outpatient care.

What does this all mean both for the broader economy and for health care?  Given the weak state of the labor market, will sluggish job growth in the health-care sector be a problem?  Consider that, if the job growth rate in health care after 2010 had continued at its historical average of 2.8 percent per year, the sector would employ some 650,000 more people today than it actually does.

While that seems like a lot of jobs, however, it would represent only about one-half of 1 percent of the workforce, even assuming the additional jobs in health care did not displace jobs in other sectors.  The way to strengthen the overall labor market this year is not to perpetuate inefficiencies in health care.  (By the way, some good news for workers in the sector: The share of labor compensation in total health-care income has remained roughly constant over time.  That stands in stark contrast to the economy as a whole.)