Here’s a graph for an upcoming presentation that’s worth a look (hat tip: SC).
We’ve just been through the worst job loss period of most of our lifetimes, and yet, every month, health care added jobs. What’s that about and how should it inform our thinking?
The figure below plots employment by major sector, with health care broken out separately. Each series is indexed to 100 in Dec 07, the month the great recession officially began. All the other sectors do some version of a cliff dive, but the health sector is just a straight line up. Total employment is still down 6.5 million since the recession started; health care employment is up 1.4 million.
- government has a deep footprint in health care, accounting for about half of the sector’s expenditures, so that’s obviously made a difference in its immunity to recession (and another e.g. of why the conservative meme “government doesn’t create jobs” is so foolish and wrong);
- our aging demographics certainly generate increasing demand for health services;
- demand for health care tends to be pretty inelastic…I’m sure there’s a falloff in cosmetic surgery in recessions, but you get sick enough, you’ll go to the doctor, regardless of the unemployment rate (at least, you will if you have coverage);
- health services tend to be non-tradable; also, jobs there are less susceptible to replacement by labor saving technology—a home-health aide isn’t likely to be replaced by a robot anytime soon…at least I hope not.
I’m not saying this is an efficient result, btw. Conventional wisdom is that we waste a lot of health care expenditures on tests and procedures with dubious effectiveness. But even if we squeeze some fat out of the system—a laudable goal given the relentless rise in health care spending—we will continue to create a lot of jobs in the sector. And that’s a good thing.