Massive Health Services Job Growth Since Great Recession

Although not necessarily attributable to the Affordable Care Act, an aging population, or any single factor, it is remarkable how much job growth has occurred in health services since the Great Recession. It is especially remarkable relative to other jobs. Also, changes in employment in health services are not cyclical: They are recession-proof, but they still kept climbing when the economy started to recover. A job in health services seems to have one-sided risk: You don’t go down when other jobs do, but you go up even faster when other jobs increase, too.

Nonfarm civilian employment peaked in January 2008 (at 138.4 million jobs), just before the Great Recession, and bottomed out in February 2010 (at 129.7 million jobs). Jobs were lost in 24 of those 25 months. Nonfarm civilian employment did not cross the January 2008 threshold again until May 2014.

However, more than half a million jobs in health services were added between January 2008 and February 2010. In other words, health services added jobs while the Great Recession destroyed 9.25 million other nonfarm civilian jobs before the Affordable Care Act was passed in March 2010.

By December 2016, the United States had added 6.87 million jobs to the previous peak in January 2008. However, 2.59 million jobs—38 percent of the total—were in health services, which grew by 20 percent. By comparison, all other nonfarm jobs—in manufacturing, transportation, mining, retail and services—grew only 3.42 percent, adding 4.29 million jobs.

The effect is even more pronounced in our largest state. The high-water mark of nonfarm civilian employment in California before the great recession was July 2007, when over 15.5 million were employed. Obamacare was signed in March 2010. By the end of that month, 1.3 million Californian workers had lost their jobs from the July 2007 peak. Not in sites like hospitals, clinics, and nursing homes, however. They added 133,000 jobs during those 32 months – 2.9 percent annual growth versus a drop of 4.1 percent annually in non-health jobs.

During Obamacare’s “incubation” until December 2013 (before Covered California’s insurance policies became effective and the state’s Medicaid program expanded), health services jobs increased by 2.5 percent annually while non-health jobs increased 2.0 percent annually. From the start of Obamacare coverage through last December, health services jobs grew 3.4 percent annually while non-health jobs grew 2.6 percent annually. Over the entire period from peak to present, just short of a decade, the change in composition of employment in California is astonishing.

At the end of July 2007, health and social services employed 1,692,000 and added 517,000 by the end of last year, never having suffered a recession. From a baseline of 13,811,000 jobs, nonfarm civilian jobs outside health and social services added only 587,000 jobs. Health and social services jobs grew over 30 percent and other jobs grew less than five percent over the whole 113 months! Although comprising just 11 percent of jobs in July 2017, health and social services accounted for almost half the job growth since then.

Although this sounds like good news for those who work in health services, there is a dark side. Last July, Dr. Bob Kocher, a venture capitalist who served as a special assistant to President Obama when the Affordable Care Act was created, noted that more than half of all health care workers today are administrators, up from just over a third before the Affordable Care Act became law.

These are paper pushers, not doctors and nurses—not the kind of jobs we should be bragging about. And the headcounts reported hear include only private health services, not insurers and other middlemen or government employees.

The Affordable Care Act surely played a part in this employment growth. Hospitals are certainly making that case. Across the country hospital associations are producing research making the case the Affordable Care Act drove significant hiring in hospitals. Because hospitals are usually among the largest employers in any district, expect politicians to listen to these arguments with great respect.

President Trump and the Republican-majority Congress appear to be maintaining momentum in their drive to repeal and replace the Affordable Care Act with something else. The health reform bills produced on March 6 by the Energy & Commerce Committee and Ways & Means Committee of the U.S. House of Representatives have already been labelled “Obamacare-Lite” by conservative critics of their leadership.

An understanding of how important growth in health services jobs has been to the recovery in employment helps explain why the new Congress and Administration are wary of causing too great a disturbance among hospitals and other providers which would rather see the Affordable Care Act fixed than repealed and replaced.
Based near Washington, DC, John R. Graham is a well established financial, economic, and policy analyst in the health sector. Graham is often called upon to advise government and business leaders. In January 2017, he was invited to testify before the U.S. House of Representatives' Ways & Means Committee on the effectiveness of the Affordable Care Act's individual mandate to buy health insurance. Since the 2016 election, he has engaged with many stakeholders on options for health reform after repealing and replacing the Affordable Care Act.

Graham received his M.B.A. from the London Business School (England) and his B.A. (with Honours) in Economics & Commerce from the Royal Military College of Canada.

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