Beware the Jobs Recovery

Niraj Chokshi
National Journal

Say what you will about the health care industry, but it has been one of the bright spots of the economic recovery.

Over the past decade, health care employment grew by nearly 23 percent nationwide, dwarfing the 2 percent rate for all other industries, according to a new Brookings Institution report. Among the nation's top 100 metropolitan areas, the industry accounted for 13 percent of growth during the jobs recovery. And, in 11 of them, health care has been behind more than a fourth of jobs growth.



But while health care employment has been a major part of the recovery, it may be a reflection of an unwelcome trend: what until very recently has been the exploding rise in health care spending. Take McAllen, Texas, where one in five jobs is in the health care industry. That fact may sound like good news to an economy on the mend, but it may be tied to a related distinction. McAllen is also one of the nation's most expensive health care markets, a fact New Yorker writer and doctor Atul Gawande famously explored in a 2009 piece. Why? Excessive and sometimes unnecessary health care was driving up costs. 


Brookings didn't explicitly look at the link between the growth in health care jobs and costs, but it's not a major leap, says Mark Pauly, a professor specializing in health policy at the University of Pennsylvania's Wharton school.

"Because health care is a labor-intensive industry, when health care spending grows, jobs in health care grow," Pauly says. And the converse is likely true, too, he says. Pressure to rein in future health care spending, then, could slow down the growth in health-related employment.

The problem, however, is that the nation can't afford to let spending grow as it has. Even with a recent downshift in cost growth, long-term entitlement spending needs to be reined in, many economists argue. The jobs are good, but they reflect the unsustainable health care cost trend, National Journal's Margot Sanger-Katz reported earlier this year:

A health system this pricey won't be able to keep adding good jobs.... "It's a good thing for now, but as the economy begins to recover and we don't need those health care jobs, we're going to be desperate to reduce the growth rate in health spending," [Charles Roehrig, director of Altarum's Center for Sustainable Health Spending] said. "Because we just can't afford it." The health care boom that is propping up the American economy could eventually come back to haunt us.