Why health care keeps adding jobs—and what it would take to stop

Charting sector's growth, even through a recession

Dan DiamondDan Diamond, Managing Editor

July 2003.

That was the last month when the health care sector lost jobs—a mere 9,000 of them—according to the Bureau of Labor Statistics.

Since that one-month blip, the health sector has added nearly 2.5 million jobs.

The rest of the economy? A net gain of just 151,000, after the Great Recession wiped out nearly 9 million jobs outside of health care.

Health care as engine of the economy
It's no secret that health care is a growth industry.

"It's a pretty inelastic good," Jared Bernstein of the Center on Budget and Policy Priorities told the Briefing. Even amid a downturn, "you can't really put off [health care] the way you can put off an addition to your house."

Still, few realize the extent that the sector has bulwarked the economy—well before the Affordable Care Act was passed.

Chas Roades, the Advisory Board's Chief Research Officer, notes that strong hospital employment growth has lagged even stronger outpatient job growth.

"We're in the midst of an ongoing shift of care into outpatient settings," Roades stressed, "and most of the growth in health care activity this past few years has been in the ambulatory environment."

BLS data back this up. Since January 2009, the ambulatory care sector has grown by 9.3%, adding nearly 530,000 jobs, compared to a 2.6% growth rate and 120,000 new jobs in the hospital sector.

"As the population ages, we'd expect to see growth in the hospital sector pick up as well," Roades said.

"That said, accountable care strategies that look to emphasize caring for chronic disease patients in clinic settings will fuel continued rising demand on the ambulatory side," he added.

What to expect this week
Friday's jobs report will likely mark the 103rd consecutive month of job growth for the health sector. And the overall BLS report is expected to be strong again, if not stratospheric.

Economists' consensus estimate is that the U.S. added 210,000 new jobs in February, down from about 243,000 new jobs in January.

"I expect we're going to see a very strong jobs report on Friday," the Manhattan Institute's Josh Barro told the Briefing. And based on several indicators, such as new car sales figures hitting their best mark in four years, "the recovery [may] really be starting in earnest," he added.

A stronger economy may actually bolster health care less than other sectors, however. Health jobs were largely insulated through the recession; the industry may have less room to grow amid a recovery.

Health care "is very clearly much less cyclically responsive on the downside [but also] on the upside," Bernstein concurred.

Government reforms may have little impact 
So what, if anything, could slow down health jobs growth?

A government deficit-reduction plan might be a start. Ongoing efforts to bend the health cost curve could trickle down too.

For decades, "we've seen faster inflation in the health care sector than in the economy as a whole," according to the Manhattan Institute's Barro.

"If you can stop [or slow] that trend"—possibly through a plan to institute new Medicare cost controls—"you’d expect less job growth in health care than you might otherwise have, and more job growth elsewhere," he said.

However, the sector's underlying demographic and disease drivers will continue to drive hiring. And the Advisory Board's Roades notes that if government funding is cut too dramatically, "providers would not be able to afford hiring to keep pace with demand, which would result in queuing in the system," from increased wait times to ever-worsening appointment delays.

"That's probably politically untenable for the government to live with," he concluded.

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