A healthcare hiring boom is helping offset weaker job growth in other areas of the softening U.S. economy, boosting its chances of skirting a recession.
The industry could serve as a strong job generator for years to come as an aging population and COVID-19 fuel widespread worker shortages and greater needs for healthcare services.
Healthcare providers—including hospitals, clinics, pharmacies, and doctors’ offices—accounted for 30% of U.S. job gains in the six months through October, though less than 11% of the country’s total employment, Labor Department figures show.
“As behavior returns to normal—as kids go back to germ-factory indoor play spaces and daycare centers, and as people schedule elective procedures and catch up on routine scans delayed during the height of the pandemic—providers are having to staff up to keep up with demand,” said Julia Pollak, chief economist at
ZipRecruiter
. Job growth has accelerated this year in healthcare while slowing in other fields as consumer spending weakens, home sales slump, and other economic activity ebbs amid high-interest rates.
Healthcare payrolls rose at a 4.2% annualized rate in the three months through October, up from a 3.1% pace in the first quarter. Employment outside of healthcare grew at a 1.3% rate in the three months through October, down from 2.4% in the first quarter.
In October alone, the nation’s total number of jobs rose by 150,000, the smallest monthly increase since June. Just three sectors—healthcare, government, and leisure and hospitality—accounted for nearly all of those gains, leaving the rest of the overall economy with no net job growth. That contrasted with the more broad-based hiring seen earlier this year.
Many economists expect U.S. economic growth to slow further in the coming months, leading to hiring freezes and possibly more layoffs. But healthcare hiring might be strong enough to prevent a sharper downturn, said Sung Won Sohn, finance and economics professor at Loyola Marymount University.
“The lion’s share of [healthcare] jobs are providing essential services that can’t be postponed, regardless of how well the economy is doing,” said Sohn. “The bottom line is the strength in healthcare hiring is one of the reasons why we may not fall into a recession.”
Healthcare payrolls have grown briskly for years, even increasing by 3.5% through the 2007-09 recession while other employers cut 6.2% of their jobs.
The aging of the U.S. population means the industry could continue its hiring spree for years to come as older Americans seek more healthcare. The 2020 census found that 17% of the country was age 65 or older, a share projected to grow to 21% by 2030.
Many older Americans are also retiring—including healthcare providers. This is worsening the labor shortages that emerged during the pandemic as the need for such workers surged and many quit because of burnout and other factors.
Unionized nurses at Robert Wood Johnson University Hospital in New Brunswick, N.J., for example, have been on strike since August—primarily over staffing. The nurses say the hospital has kept staffing too thin, leaving them unable to provide patients with the best care.
“I can pick up overtime,” said Brenda Acquah, a mother and baby nurse at the hospital, as she stood on the picket line in mid-November. “But after a while, I need a break, I need to stay home, I cannot keep on picking up overtime because you’re short—you’re stretching me thin at this point.”
RWJBarnabas Health, the group that runs University Hospital, declined to comment, citing continuing contract negotiations. In written testimony submitted for a U.S. Senate hearing last month, Chief Executive Mark Manigan said that RWJBarnabas and the nurses’ union continued to bargain in good faith.
In October, more than 75,000 nurses, pharmacists, and other employees of the Kaiser Permanente health system walked off the job in the largest U.S. healthcare strike on record. Like the University Hospital nurses, one of their primary demands was more staffing.
The country’s deficit of healthcare workers will continue to be a big part of what supports overall employment growth for quarters to come, said Rick Rieder,
BlackRock
’s chief investment officer of global fixed income. ZipRecruiter’s Pollak noted that while employee turnover has largely normalized in other industries, it remains elevated in healthcare. The number of employees in healthcare and social assistance who quit their jobs in September was 9% higher than before the pandemic, and 22% higher than the 2019 average.
These dynamics are unlikely to change significantly in the long term, said Noah Yosif, lead labor economist at UKG, the payroll software provider.
The biggest challenge for healthcare continues to be the shortage of workers able and willing to fill the jobs, he said. “Demand is expected to be strong over the coming decade, however, the real driver of [job growth] will be the number of people choosing to make healthcare roles their career.”