A booming job market for some
The sectors rapidly growing include health care, suggesting all the hand wringing over burnout hasn't stopped people from joining the sector.
Wall Street seems to be enjoying the booming job market. Stocks are up today after the Bureau of Labor Statistics reported the economy added 353,000 new jobs in January.
With inflation down, unemployment at 3.7% and the Federal Reserve Board poised to lower interest rates, the economy seems to be in one of those rare goldilocks moments when everything is going along just right.
All this good news could be knocked off course in the months ahead, of course. War abroad, domestic disturbances or another supply shock could send the economy tumbling. From my totally biased election-year perspective, here’s hoping that doesn’t happen.
But even a steady supply of good news won’t necessarily translate into electoral success for the president’s reelection campaign or the Democratic Party’s hopes of recapturing the House and maintaining control of the Senate. Why? Not everyone is benefiting from the boom.
Manufacturing added just 23,000 jobs last month. Layoffs continue to plague warehousing and transportation firms, which overexpanded during the pandemic. Those sectors are key to the Biden campaign’s hopes of attracting working class voters, especially the growing group of white males (and some minority males as well) that have abandoned the Democratic Party in recent years.
Despite the ballyhooed return of industrial policy, the current job market still looks like the job market of the past 40 years. It favors those with higher education and certification-based skills. Professional and business services (finance, insurance, real estate, lawyers, accountants) added 74,000 new jobs — the most of any sector.
Robust hiring in health
Health care was not far behind with 70,000 new jobs, which was 21% more than the monthly average in 2023. One is tempted to call that a miracle given all the articles that have appeared in recent months about how hard it is to find qualified people and how burnout is forcing people to leave doctoring and nursing behind.
Not every sector in health care is booming, of course. The leader last month, as it has been throughout the past decade, was the broad category called ambulatory health services. These include physician and dental offices, standalone dialysis and behavioral health clinics, imaging centers and outpatient surgery facilities.
Most of those sub-sectors have seen a rush of investment in recent decades as private equity firms sought to cash in on the move within hospitals to outsource services and move procedures that once required days of in-patient care to outpatient facilities. Hospitals and traditional physician offices also face new competition from walk-in clinics in pharmacies and big box stores.
Still, that didn’t stop the hospital sector from adding over 20,000 jobs last month, continuing its recovery from the minor downturn that took place during the first year of the pandemic.
If one takes a longer view (see chart above), the job gains last month almost perfectly replicated trends that have been under way within health care for decades. Since 2014, ambulatory services other than physician offices grew 36% to 5.7 million jobs — the largest sector within health care.
Physician offices grew 26% over the decade to 3 million jobs. Hospitals, which lost its employment leadership roll within health care in 2021, saw total employment grow just 15% in the past decade.
Health care’s losers
The big loser was the category I’ve labeled “other,” which is dominated by skilled nursing facilities, assisted living facilities, and various forms of social assistance within health care. More families are doing whatever they can to keep loved ones out of nursing homes, which is contributing to shrinkage in the sector.
There is also systematic underfunding of those facilities and professions by government agencies and a complete failure by Congress to address the long-term care crisis in America. Despite the aging of the Baby Boom, employment in those areas is no different today than it was ten years ago.
Still, the overall gains in the health care job market reflect the fact that the sector continues to grow at about the same rate as the rest of the economy, which it has done for most of the past decade. A flash report from the Altarum Institute, released earlier this week, showed health care grew (as of last November) by 5.9% year over year (these are in nominal, not inflation-adjusted, dollars), which was only nine-tenths of a percentage point higher than the entire economy. Health care spending as a share of the total economy was unchanged and stood at 17.4%, no different than where it was in 2014.
More than half of that increased spending came from higher utilization, not rising prices, which grew by just 2.9% in December. That was below the growth in the consumer price index of 3.4%. Physician and clinical prices showed nearly zero growth year over year, which means in inflation-adjusted terms, they fell.
Is this a victory for cost control in health care, whether by eliminating waste, lowering prices or better coordination of care?
Whenever I ask myself that question, I always use as my measuring stick one of the “triple aims” for health care identified by Institute for Healthcare Improvement when it was run by Dr. Donald Berwick, who ran the Centers for Medicare and Medicaid Services during the final years of the Obama administration.
IHI’s three measures are lowering per capita costs; achieving better outcomes; and improving the experience of care. Does a sector that has grown at the same rate as the rest of the economy for over a decade mean we’ve finally succeeded in lowering per capita costs?
No it does not. We will not achieve that lofty goal until total health care spending grows at about the rate of inflation. When that occurs, its share of the total economy will begin to shrink and move closer to international norms.
Steady state is not good enough. In a country that spends far too much on curing the sick, the goal should be creating healthier people and spending less on their care.