Healthcare Job Growth Slows in October

Healthcare created 11,600 jobs in October—a significant drop from the 45,000 jobs created by the sector in September.

However, even with the decline, healthcare remains a leading source of job creation in the overall economy, and was responsible for 15% of the 80,000 new jobs across all sectors in October, new data from the Bureau of Labor Statistics show.

Through the first 10 months of 2011, healthcare created 266,000 jobs—more than the 263,400 healthcare jobs created in all of 2010. Healthcare is on a pace to create 319,000 new jobs by year's end. So far this year, the 266,000 new healthcare jobs represent 22% of the more than 1.2 million non-farm jobs created in 2011.

While the job growth is heartening within the healthcare sector, and it is providing some short-term good news for an otherwise dire job market, some observers say it's not necessary a healthy trend.

"It's probably a bad thing. It's definitely not sustainable for the long term," says healthcare economist Jason Shafrin. "Let's say that healthcare worked perfectly and you could cure someone with one pill that cost $1. That would be a very efficient use of healthcare and people would spend all their money and effort on things that would be more useful."

Healthcare in America is highly inefficient and expensive, however. "It's providing a service that is needed, but it is not so clear that an increase in spending is good," Shafrin says. "It does employ people. But in bad neighborhoods they employ a lot of police, and you would prefer not to have that."
Labor represents about 60% of healthcare costs, and the salaries paid to healthcare workers take money from other areas of the economy. At some point, the demand for new healthcare workers will collide with consumers' inability to pay for care, Shafrin says. "Something will have to happen. The cost pressures are too strong. It's like the housing sector. You can see it growing and growing and growing and eventually there has to be a self-correction."

The 70,100 new hospital jobs so far in 2011 are nearly three times more than the 23,400 new hospital jobs reported in the first 10 months of 2010. However, this year's explosive growth tapered somewhat in October with hospitals reporting 3,300 new jobs, a significant drop from the 13,300 new hospital jobs in September, BLS data show.

Ambulatory services—which in recent years have been the biggest job-growth source in the overall economy—also saw a significant slowdown in October. This sector, which includes physicians' offices, created 4,800 new jobs in October after reporting 26,000 new jobs in September and 18,100 new jobs in August. Ambulatory services have been responsible for 58% (155,200) of new jobs in healthcare so far in 2011. In the first 10 months of 2010, ambulatory services created 148,200 new jobs.

Physicians' offices alone have created 62,000 new jobs in the first 10 months of 2011, compared with 25,300 jobs created in that subsector for all of 2010. Physicians' offices created 8,200 jobs in October, after posting 12,200 new jobs in September. Physicians' offices created 23,100 new jobs in the first 10 months of 2010.

BLS data from September and October are preliminary and may be revised considerably in the coming months.

More than 14.1 million people worked in the healthcare sector in October, with more than 4.7 million of those jobs at hospitals, and more than 6.2 million jobs in ambulatory services, which includes more than 2.3 million jobs in physicians' offices.

In the larger economy, nonfarm job growth was up slightly in October, with 80,000 payroll additions reported. Overall, the nation's unemployment rate remained unchanged at 9%—its level since April—with 14 million people unemployed. The number of long-term unemployed, defined as people jobless for 27 weeks or longer, was 5.9 million in October, down from 6.3 million in September, and represented 42.4% of the unemployed.