Health Services Jobs Still Dominate Employment Growth

Last Friday’s thrilling jobs report, which drove the stock market to new highs, continued to be dominated by growth in health services jobs. Indeed, breathless media coverage disguised that monthly job growth followed a miserable May report (which was actually revised downward last Friday).

Health services added just 39,000 jobs in June, significantly fewer than July. Nevertheless, those comprised 13 percent of 287 thousand civilian non-health, non-farm jobs added (Table I). The warping of our economy towards the government-controlled health sector continues.

Health services jobs grew by 0.25 percent over the month. Half of that growth was in ambulatory settings, especially offices of physicians. Hospitals accounted for almost two in five new health services jobs. Dentists’ offices, laboratories, other ambulatory services, outpatient care centers, residential mental health facilities, elderly community care, and other residential care facilities showed no or very low job growth.

Over the last twelve months, health services jobs grew a little more than twice as fast as other jobs, comprising one fifth of all job growth. (Table II). Care foris moving out of nursing homes and into community care, reflected in very significant growth in home health. Nevertheless, the pace of job growth for hospital jobs  slightly exceeded the rate of growth for jobs in ambulatory settings. 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 April and May (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 44 thousand fewer than originally estimated, only 12 thousand are from 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.