Squeaking in just before the elections, and right on schedule (despite superstorm Sandy-related delay rumors), the Bureau of Labor Statistics released its October jobs report Friday.
With an additional 171,000 jobs and unemployment at 7.9%, this month's numbers offer a reassuring nudge for the U.S. economy's slow recovery.
For the record, last week's hurricane did not have any effect on the statistics gathered. The household survey data collection was completed before the storm, within normal ranges nationally and in the areas affected by the hurricane.
"People were worried we were hitting a slump in our growth. I think this is a continuation of the improvement in employment and modest increases in total employment as well. We would always like to be better, but this should undermine the claims that we have stalled or are not improving," says Randal P. Ellis, professor of economics at Boston University and past president of the American Society of Healthcare Economists.
Last month, the U.S. unemployment rate made the surprising drop from 8.1 to 7.8 percent. This month unemployment increased slightly to 7.9 percent—a figure economists attribute to rounding statistics, and the BLS says is "essentially unchanged" over last month.
According to Ellis, the overall unemployment rate should maintain at 7.9 percent over the next few months. Even though he expects jobs to continue to increase, unemployment is a lagging economic indicator, so it will take longer to rebound from the Great Recession than output, sales, or consumer confidence, says Ellis.
October's job creation (171,000) surpassed September's (114,000), as well as the 2012 average monthly job growth (157,000) and even 2011's average (153,000).
Like a reliable "closer," healthcare made another notch in its job creation record, adding 31,000 jobs in October. That is a reduction from the 43,500 jobs created in September, but it still represented a significant portion (18.1 percent) of total job growth in the entire economy last month.
Despite healthcare's Herculean track record—surviving recession, natural disasters, multiple presidential administrations—it's apparently only a matter of time before the industry's job growth will start to slow and possibly decline. Two economists I spoke with on Friday independently suggested that healthcare's positive job growth streak could end.
The difference is at what time, what pace, and why?
While healthcare reform has not "killed jobs," as I wrote recently the uncertainty around whether the Patient Protection and Affordable Care Act will be repealed has caused hiring managers to pause.
A "repeal of the Affordable Care Act, in terms of jobs, would create chaos and uncertainty in the insurance industry, and will absolutely have a negative impact on job growth," says Ellis.
"There have been two things that have been said in the presidential debates leading up to the election: 1) that it kills jobs and 2) that it is a government takeover of the industry. And if you look at Massachusetts, we have a robust private healthcare delivery system, we have several insurance companies making profits, rapidly growing number of workers in the hospital and medical services industries. So, I don't see the argument. I don't see why those statements have any merit."
If healthcare reform does continue to its full implementation in 2014, though, another view holds that job growth will eventually slow.
Jonathan Skinner, PhD, economist and senior author at The Dartmouth Atlas Project, warns that although there has been steady job growth in healthcare, we cannot expect that with such a focus on reducing cost in the industry, that job creation will not start to decline in the next few years.
"It's hard to reduce overall costs while keeping hiring levels and labor expenses high as well," says Skinner. "Even with improved process efficiencies, if we do not see a reduction in the rate of job growth in healthcare, it means we haven't yet gotten serious about cutting costs. The biggest component of cost is payroll."
Labor is one of the only variable costs healthcare has to flatten, says Skinner. In a year or two, when healthcare reform is fully implemented and CEOs are confronted with whether they can afford to grow, that's when an impact on the rate of hiring might occur, he says.
"But I'm not that type of economist—I don't like to make predictions," says Skinner.
The largest area of job growth within healthcare this month, mirroring September, was in ambulatory care, comprising of physician offices, outpatient care centers, and home healthcare services. Ambulatory care as a whole added 25,000 jobs, approximately 81% of total job growth in healthcare.
Physician offices added 11,200 jobs, outpatient care centers added 1,700 jobs, and home healthcare services added 7,900 jobs. Ambulatory care as a whole, like healthcare as a whole, did not create as many jobs in October as it did in September, but within ambulatory care, physicians offices saw almost double the growth they did last month, and outpatient care, when compared to 9,400 increase in jobs created last month, has also seen a reduction in its job growth to 1,700.
Nursing and residential care saw a minor drop in job creation this month by 600 fewer positions. Hospitals created 6,200 more jobs in October, approximately 19% of total healthcare job growth, but a slight reduction from last month's 8,000 new jobs, which mirrored the slowdown in healthcare job growth as a whole this month. Compared to this time last year, healthcare has created 296,300 more jobs overall.
Chelsea Rice is an associate editor for HealthLeaders Media.
