This morning’s jobs report was the second month in a row of good news on the employment front. However, like last month’s report, jobs in health services grew much faster than non-health jobs. Health services added 43,000 jobs in July comprising 17 percent of the 255,000 civilian non-health, non-farm jobs added (Table I). The monthly rate of growth in health services jobs was 75 percent more than for other jobs. The shifting of jobs towards the government-controlled health sector continues.
Health services jobs grew by 0.28 percent over the month. Forty four percent of that growth was in ambulatory settings, especially offices of physicians. Hospitals accounted for 40 percent of new health services jobs. Community care facilities for the elderly added jobs at a faster rate than any other health service.
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 is moving out of nursing homes and into community care, reflected in very significant growth in home health and community care facilities. 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. Job growth in medical and diagnostic labs is at a standstill. Perhaps labs have become more efficient and productive, but I do not know the industry well enough to say.
The report also contains significant revisions from previous reports for May and June (Table III). The estimates of overall employment growth in those months have been revised down in May and up in June, for close to a wash. However, May health services jobs were revised upwards significantly last month, and that was countered by a small downward revision to June’s estimate. While the total upward revision for those two months is four thousand, that comprises an upward revision of 28,000 jobs in health services versus a downward revision of 24 thousand in other jobs.
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.