"Actual" data from Bureau of Labor Statistics; "Trend" from the author's calculations Dr. Bill Conerly
 

Healthcare employment has boomed in the past few years. But contrary to some recent opinions, it’s not all about increased government spending. The pandemic caused worker shortages in healthcare which are just now being resolved.

Healthcare employment has grown faster than total employment in the American economy in past decades. Since 1990, healthcare has increased from seven percent of total employment to 11%. Contributing factors are more consumption of healthcare services per person in general, and the increased number of older people as the baby boomers have aged.

People over 65 years account for 18 percent of the population but consume 36 percent of healthcare services, according to a study by the Peterson-KFF Health System Tracker. And the number of 65+ people has soared, up 39% in the last decade compared to growth of the under-65 population of just three percent over the same period.

The pandemic caused some labor problems in all of the economy, with especially pronounced issues in healthcare. During the lockdown phase, many non-urgent offices and clinics were closed. Some people did not come back to work when their facilities re-opened. As with much of the economy, the pandemic triggered more retirements in healthcare. People who had been on the fence about working decided this was a good time to retire, often getting pressure from their families to avoid unsafe places—such as hospitals and clinics.

A second factor was childcare. The large majority of healthcare employees are women—79% in 2019. With schools closed, many employees stayed home with their children.

Stress added to the problem. When healthcare managers tried to return to normal operations, they didn’t have enough employees. Those who did show up to short-staffed workplaces were stressed and exhausted—leading to more voluntary quits. The quit rate in healthcare had been stable in 2018 and 2019, then jumped 25% in 2021 through 2023. In this era, one nursing supervisor told me that registered nurses were not showing up for shifts and not even calling in. In a lengthy career, she had never seen that from RNs, a group that she had previously thought were at the top of the curve for reliability.

The recent rebound in healthcare employment is, so far, a recovery. A simple trend line is shown in the chart above. The trend is based on historical gains in healthcare employment relative to population growth, with extra weight to the 65-and-over population.

Younger workers have replaced those who retired early. The schools are now reliably open so that mothers feel more comfortable returning to work. As staffing has increased, workplace stress has dropped and the voluntary quit rate has retreated.

Now, however, healthcare managers will have to deal with the longer-term challenges of very low growth of the working-age population alongside continued increases in the 65+ population. (I have written a number of articles on the labor challenge and solutions and also one how artificial intelligence can boost productivity in healthcare.)

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