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November 1992, Vol. 115, No. 11
Health services: the real jobs machine
David R. H. Hiles
More than 8 million U.S. workers have jobs in the health services industry, which indicates the great economic importance of the industry, in addition to the fundamental life-and-death nature of the services it delivers. Its employment growth rate has been little affected by changes in the growth of the overall economy, with the result that the industry has become a primary source of new jobs during economic downturns. (See chart 1.) The industry's share of total nonfarm jobs rose from 5.8 percent in 1980 to 7.6 percent in 1991, an increase of 2.9 million jobs.1 This increase was widespread across the industry, and was fairly evenly distributed among the major occupational groups.
The independent growth trend of health care employment is due largely to the fact that health services faces supply and demand conditions far different from those driving other industries. The indispensable nature of its services, the steady pressure of demographic change, and the means by which health care is purchased, account for this industry's unusually strong employment growth. The health care market is composed of a mix of mostly private service providers who generally are compensated by public or private third-party organizations; this means that the customer rarely pays directly for services rendered. Third-party payment greatly reduces cost as a consideration limiting the patient's demand for health care, while lessening pressure on suppliers to hold prices of services down. And, while the health services industry is considered a part of the private sector, few industries are influenced by government policy and funding to such an extent. For instance, fundamental changes in Medicare payments for hospital inpatient services significantly reduced the relative growth rate of employment in hospitals during the 1980's, and may have sped up the employment increase in the health insurance industry.
This excerpt is from an article published in the November 1992 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 Employment data cited in this article are taken from the Current Employment Statistics survey and appear in Employment, Hours, and Earnings, United States, 1909-90, vols. I and II, Bulletin 2370 (Bureau of Labor Statistics, March 1991); and the Supplement to Employment and Earnings (Bureau of Labor Statistics, August 1992). This article uses annual averages for year-to-year comparisons. the number of health services component segment for which data are published increased during the 1980's.
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