Data source: Bureau of Labor Statistics, CES6562100001, CES6562200001, CES6562300001, Plus Sum of All Three Components
Updated on July 02, 2021, with data through June 2021
For years, the U.S. health care sector has demonstrated remarkable durability with respect to annual and monthly job growth and has weathered significant downturns, such as the Great Recession and other less impactful recessions. In fact, the resistance of this sector to job cuts during these downturns has led some to refer to it as a “recession-resistant” component of the U.S. economy.1 Unexpectedly, it appears that a global viral pandemic—a time of urgent need—has exposed vulnerabilities underlying the U.S. health care system. The ongoing challenges in the health care sector first appeared as a crack in March 2020 (–94,700 jobs), followed by the opening of a chasm in April 2020 (–1.5 million jobs).
The monthly jobs report for May 2020 brought some good news. Broadly, the U.S. economy added more than 2.8 million payroll jobs and the unemployment rate dropped significantly. Within the health care sector, more than 300,000 workers returned to jobs in May. While these increases were limited to the ambulatory health care services (AHCS) component, the pace of job losses slowed in the other two health care components, raising hopes of a rebound across all components in June’s report.
Indeed, the good employment news continued in June 2020, with the U.S. economy adding 4.8 million payroll jobs, as the unemployment rate fell to 11.1%. In health care, more than 350,000 jobs were added. By component, AHCS and hospitals both added jobs, while nursing and residential care facilities (NRCF) posted another monthly loss.
As 2020 came to a close, the employment reports showed a slowing labor market, culminating with the loss of more than 300,000 jobs in December 2020. Economists pointed to a surge of COVID-19 cases—which prompted another round of regional shutdowns—and a prolonged period without additional federal economic stimulus as two of the primary reasons for the loss of momentum.
Relief on both fronts is now available. As of early June 2021, there are three COVID-19 vaccines in use in the U.S. (see below), and the federal government has approved another $0.9 trillion and $1.9 trillion in relief through legislation passed in late 2020 and early 2021, respectively. The employment reports in 2021 through June show signs of an accelerating recovery in the labor market, with 233,000 jobs added in January, 536,000 in February, 785,000 in March, 269,000 in April, 583,000 jobs in May, and 850,000 jobs added in June, for an average monthly gain of approximately 543,000 jobs so far in 2021.
In health care, the differences among the three underlying components of employment have grown starker over the past year. Specifically, all three components saw sharp declines from their most recent highs in February 2020 through April 2020: AHCS fell by more than 17%, hospitals fell by 2.5%, and NRCF by 4.1%. However, their paths after April 2020 diverged. Both AHCS and hospitals recovered significantly, with AHCS standing at a cumulative decline of just 1.0% and hospitals at 1.9% through June 2021. In contrast, the NRCF component has eroded throughout nearly all of this entire period, falling by a cumulative 10.7% through June 2021. The sustained decline in the NRCF component reflects both the severe impact of COVID-19 on the nursing home population as well as an accelerating trend away from nursing homes as a site of care.