BLOOMINGTON, Ind. – As the COVID-19 pandemic rages on, the economy and the healthcare workforce remain in the spotlight.
A new study examining the historic relationship between local economic conditions and healthcare employment during past recessions found the healthcare sector is particularly stable with respect to economic turmoil. In fact, when counties experience more severe economic downturns, healthcare employment seems to increase. The findings provide important insight that can help leaders determine employment policy during turbulent times.
“Understanding how the healthcare sector responds to economic conditions is important for policymakers seeking to ensure an adequate supply of healthcare workers, as well as for those directing displaced workers into new jobs,” said Kosali Simon, Herman B Wells Endowed Professor in the O’Neill School of Public and Environmental Affairs at IU Bloomington and co-author on the study. “Our study provides a backdrop for studying the economic impact COVID-19 is having on this sector compared to economic downturns of the past.”
Simon and her co-authors Marcus Dillender of the University of Illinois at Chicago, Andrew Friedson of the University of Colorado Denver, and Cong Gian MPA’12, a Ph.D. candidate in the O’Neill School examined the impact of macroeconomic conditions on both the healthcare labor market and the pipeline of healthcare workers in the U.S. receiving healthcare degrees during 2005-2017, a timeframe prior to the current pandemic. The study focused on four subsets: nursing care facilities, home health care services, office of physicians, and general medical and surgical hospitals.
They found that healthcare employment as a share of total county employment is positively related to the unemployment rate. A 10-point increase in the local unemployment rate was associated with an approximately 1.27 percent increase in healthcare’s share of local employment.
However, the relationship is different depending on the overall direction of the national economy. An increase in the local unemployment rate during a national recession is associated with stronger growth in the healthcare sector than a similar-sized increase in the local unemployment rate during a period of national economic growth, according to the study.
They found the share of healthcare graduates is also positively related to the unemployment rate. An estimated 10-point increase in the unemployment rate was associated with a 1.8 percent increase in healthcare’s share of postsecondary graduates. It is also different based on the state of the national economy. However, an increase in the local unemployment rate during a recession is associated with weaker growth in the healthcare sector than a similar-sized increase in the unemployment rate during a period of growth.
Within subset categories, the study found the strongest relationship between local unemployment and healthcare’s share in employment is in physicians’ offices, and there was also a strong association when it comes to general medical and surgical hospitals. However, home healthcare services seemed largely unaffected by local unemployment.
While the state of the local economy does not seem to have a strong effect on the share of the workforce employed by hospitals and physicians’ offices, nursing care facilities grow their workforce more robustly when both the local and national economies are in a downturn, the study found.
“Even during the Great Recession, which saw employment fall in most sectors, employment in healthcare held steady and grew as a share of all employment,” Simon said. “This suggests that the healthcare workforce is systematically different than the U.S. workforce taken as a whole but experience from the Great Recession does not necessarily generalize to the most recent recession.”
Simon said much remains unknown about the adjustments and lasting impacts for the healthcare sector associated with the COVID-19 era. But these findings can help provide a backdrop as policymakers consider ways to sustain the healthcare sector during future economic and public health turbulence.
“These findings show that more research is needed on types of curriculum that build resilience in healthcare workers, so when there is a future crisis, the sectors that are crucial in dealing with the crisis have the support they need,” Simon said.
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