Health Services Make Up One-Fourth of August’s New Jobs

Last Friday’s Employment Situation Summary, which showed slow job growth overall, contained a big jump for health services: 23 percent of the jobs created in August were in health services (see Table I).

Of the 41,000 health jobs, slightly more than half were in ambulatory settings. 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.

This is a positive development, because hospitals are very expensive facilities and possess very concentrated lobbying power that they deploy to keep their payments higher than they would be otherwise. (One of the hospital industry’s most successful talking points is that they are often the largest employer in a community, a fact that attracts the support of politicians for obvious reasons, but 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 grown much faster (4.15 percent) than hospital employment (2.81 percent). The health services workforce overall has grown faster (3.10 percent) than the non-health workforce (1.98 percent).

Labor costs make up a large share of health spending, so we should interpret the trend toward ambulatory care as another signal that the slowdown in growth of health spending that was recently celebrated is fading in the rearview mirror.

John R. Graham is a former Senior Fellow at the Independent Institute.
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