Healthcare Sector Is Growing, But Workers Aren’t Sharing In Gains

The US  healthcare sector is one of the most important sources of jobs in the economy. Healthcare spending reached $3.2 trillion in 2015, or 17.8 percent of GDP, and accounted for 12.8 percent of private sector jobs. It was also the only industry that consistently added jobs during the Great Recession, and grew 20 percent between 2005 and 2015. Despite this growth, wages have either declined or been stagnant over the past decade for healthcare workers in hospitals and outpatient centers.

A new report from the Center for Economic and Policy Research (CEPR), funded by the W.K. Kellogg Foundation with additional funding provided by the Nathan Cummings Foundation, describes the changing patterns of jobs and wages for healthcare workers, specifically in hospitals and outpatient clinics over the decade from 2005 to 2015. The healthcare sector has become more demographically diverse over the decade, but as jobs shift from hospitals to outpatient centers, wages are declining or stagnating, and inequality is increasing.

The report, “Organizational Restructuring in U.S. Healthcare Systems: Implications for Jobs, Wages, and Inequality,” provides a detailed breakdown of which groups of workers are experiencing stagnant or declining wages. For instance, the report finds that employment in outpatient centers has grown six times the rate of hospitals, but the only demographic group in these facilities to see wage gains is white men ― and these are modest.

According to the report, job growth in outpatient facilities was disproportionately high for black workers (65 percent growth rate), Hispanic workers (103 percent), and Asian/others (82 percent), and within these groups, women’s job growth outpaced that of men.

Overall median real hourly wages rose very modestly in hospitals, increasing by 75 cents over the decade from $23.79 to $24.54. This was an increase of 3.2 percent over the decade, or less than a third of a percent a year on average.

The findings in this report show that the unraveling of hospital-based employment systems is associated with greater wage inequality. Wages have declined over the decade in outpatient care facilities, with notable declines in the pay of black men employed as medical technicians or as health aides and assistants. In hospitals, the rise in real wages among healthcare professionals and the modest fall in wages for non-professional groups suggest that inequality has increased within hospital settings.

According to Eileen Appelbaum, co-author of the report and Senior Economist at CEPR,  “Declining real wages in outpatient services cannot be explained by factors that often influence wage determination: educational level, age, or the share of workers who are part-time or foreign-born. Educational attainment rose for virtually every occupational group ― in some cases, substantially ― and is higher in outpatient care centers than in hospitals.”

Rosemary Batt, co-author and Cornell University professor, pointed to institutional explanations such as changes in union density. “While union density increased among professional employees between 2005 and 2015, union density has fallen among non-professional employees, particularly in outpatient settings. This may have contributed to the decline in median real wages for these workers.”