Health Jobs Dominate Terrible Jobs Report

No good words were used to describe last week’s Employment Situation Summary: “Every aspect of the September jobs report was disappointing,” wrote Michelle Girard, chief U.S. economist at RBS (quoted in Forbes). This is largely a repeat of the August jobs report, although those and previous months’ figures were also revised downwards.

One-quarter of September’s new jobs were in health services: 34,000 of 142,000 added to nonfarm payrolls. Of those 34,000 health jobs, 37 percent were in ambulatory facilities, and 45 percent in hospitals. This is a change from the past few months. Because of a long-term shift in the location of care, there are now almost seven million people working in ambulatory settings, versus just under five million working in hospitals.

We should hope September’s disproportionately high hospital jobs growth is idiosyncratic, and the trend to faster growth in ambulatory facilities is restored. Hospitals are very expensive facilities and have very concentrated lobbying power that they bring to bear to keep their payments higher than they would be otherwise. One of their most successful talking points is that hospitals are the largest employers in a community, which obviously attracts the support of politicians. As the health services workforce shifts to ambulatory settings, this talking point will lose its power.

Significant revisions to previous months’ reports are reflected in the longer term change (See Table II). Over the past twelve months, employment in ambulatory settings has somewhat faster (4.06 percent) than hospital employment (3.04 percent). The health services workforce overall has grown faster (3.17 percent) than the non-health workforce (1.83 percent).

Labor costs comprise a large share of health spending, which is less productive than spending in other parts of the economy. Unfortunately, continuing high growth in health jobs likely contributes to slow economic growth today and Obamacare’s failure to slow the rate of health spending.

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For the pivotal alternative to Obamacare, please see the Independent Institute’s new book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.