A Closer Look at Health Care Jobs and Recessions
By Joseph Benitez, PhD
October 15, 2021
Joseph Benitez is a health economist and health services researcher at the University of Kentucky and a member of the 2021 Tradeoffs Research Council. His research focuses on Medicaid policy and Medicaid program design.
Health care jobs have often been called “recession proof” — the idea that while other industries struggle mightily in an economic downturn, health care is able to continue on more or less unscathed. But 1.4 million people lost their jobs in health care in the first months of the pandemic, and the industry is still down more than 500,000 jobs compared to February 2020. So how much of an outlier has this recession been when it comes to the health care labor market?
A new NBER working paper by Marcus Dillender, Andrew Friedson, Cong Gian and Kosali Simon tries to establish a baseline for how the health care workforce usually responds to economic downturns, including during the 2007-2009 Great Recession. Using county-level data from 2005-2017, the authors analyzed the relationship between spikes in a community’s overall unemployment rate and the share of people in that community employed in health care.
They found a 10 percentage point increase in the local unemployment rate was associated with a 1.27 percentage point increase in health care’s share of local employment. In other words, as overall unemployment grew, so did the percent of people working in health care jobs. And interestingly, health care’s slice of the local employment pie grew most when the national economy was doing the worst — during the Great Recession. This aligns with previous research showing health care jobs nationally have grown steadily throughout the 21st century.
In this study, the authors found physicians’ offices had the largest employment growth, followed by hospitals and nursing facilities. Interestingly (and worryingly), nursing and residential care settings account for almost 4 out of 5 every health care jobs lost during the COVID crisis, a particularly stark contrast from the sector’s steady growth during the Great Recession. The researchers also found an increase in the share of a community’s post-secondary graduates coming from health care degree programs (i.e. registered nurses, health care administration, public health and nursing assistants) during times of increased local unemployment.
The authors note their analysis could not determine which specific jobs in these health care settings accounted for the growth — for instance, whether they skewed more toward higher or lower paying jobs. And while the COVID crisis is clearly different from earlier recessions, this study can still yield important insights in moving towards recovery.
The findings underscore the historic stability of health care jobs even in times of economic distress. Combined with the fact that many of the current health care job losses are people leaving their jobs and that many insurers and large health systems are still reporting strong profits, this suggests policies targeted toward improving health care wages, working conditions and even helping workers displaced from other industries enter health care could be effective ways to help our health workforce and economy recover.