Friday, June 3, 2016

Eight Thousand Non-Health Jobs Lost in May

The true scope of this morning’s miserable jobs report is disguised by the headline figure of 38,000 jobs gained. In fact, health services added 46,000 jobs while civilian non-health, non-farm employment dropped eight thousand (Table I). The warping of our economy towards the government-controlled health sector has reached the tipping point I have suggested for months.

Health services jobs grew by 0.3 percent over the month. Half of that growth was in ambulatory settings, especially offices of physicians. Hospitals accounted for over one third of health jobs growth. Laboratories, outpatient care centers, residential mental health facilities, elderly community care, and other residential care showed no or very low job growth.

Over the last twelve months, health services jobs grew almost twice as fast as other jobs, comprising one fifth of all job growth. (Table II). Care for the elderly is moving out of nursing homes and into community care, reflected in very significant growth in home health. Nevertheless, the pace of job growth for ambulatory and hospital jobs has been about the same over the last twelve months. It is not clear there has been a secular evolution in favor of ambulatory care.

The report also contains discouraging revisions from previous reports for March and April (Table III). The estimates of overall employment growth in those months have been revised down significantly. However, almost all the downward revision has been outside health services. While the total downward revision for those two months is one hundred thousand jobs fewer than originally estimated, only eight thousand are in health care.

The disproportionately high growth in health services jobs versus other jobs is very concerning because there is little evidence yet of improved productivity in health care. These added jobs are adding costs that will prevent reductions in the rate of health spending growth.

We need more job growth in sectors of the economy not dominated by government.

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