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Health Care is the #1 Source of New Jobs...

Posted by: Michael Mandel on February 02

…for now and, likely, for the foreseeable future.

With this morning’s jobs report, the BLS also released revised employment data for 2006…and guess what? Two things turn out to be true: First, health care is the biggest source of new jobs. Second, health care’s share of the labor market is rising (see table and chart below)

Both of these facts will be consistent features of the labor market from now on. This is a big change, and reflects the combination of government funding (and borrowing!) for health care and the continued slow growth of other types of jobs.

In effect, we are borrowing from abroad to create healthcare jobs.

In the past, healthcare job growth would lag the rest of the economy when times turned good. For example, in the last expansion, healthcare’s share of private employment actually peaked in 1993. This will not happen again.

I will be talking at the National Economists Club next Thursday in DC on the topic: “Will Our Children All Work In Hospitals and Doctors’ Offices?” I believe that my presentation will be available on their site afterwards.

Health Care is the Biggest Source of New Jobs
Change, thousands
Jan.2006-Jan. 2007
Health care and social assistance 388
Accommodations and food services 380
Professional and technical services 280
Local government 227
Administrative and waste services 191
Financial activities 167
Transportation and warehousing 116
Wholesale trade 107
Construction 100
Educational services 90
State government 66
Arts, entertainment, and recreation 60
Natural resources and mining 50
Management of companies and enterprises 38
Information 22
Other services 17
Utilities -1
Federal -11
Retail trade -28
Manufacturing -110
Total nonfarm 2,148


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Reader Comments


February 2, 2007 03:50 PM

Well, the number of Healthcare jobs is only a tiny bit more than Hotel/food jobs, and still only 18% of the total, so I am not sure we should say "In effect, we are borrowing from abroad to create healthcare jobs."

As a share of the labor market, it seems that we have been at a relative plateau for 4 years.

The real interesting datapoint would be whether theHC percentage share of total labor market in the US matches that of Japan or Western Europe. That would be interesting to see.

I'm more worried about the 4th highest item being local government.

Brandon W

February 2, 2007 04:15 PM

The top two are likely booming because of the Baby Boomers who are 1) reaching the age of increasing health problems, and 2) traveling a lot and going to resorts. In the next 10-15 years, those jobs will likely continue to boom with the retirees. My concern is what happens to all those jobs when the Baby Boom dies off (not to be crass, but...). I have the same concerns about retirement havens like Florida and Arizona which have been growing rapidly and creating a great deal of infrastructure which may, in the course of a decade (2015-2025), leave them heavily overbuilt.

Kartik, I'm not worried about local government growth; I believe the more services provided locally the better. Note that "local" is broken out from "state", so we're talking about city governments. In the meantime, federal employment dropped. That's a good thing; the more power we can take back from Washington the better. It is very interesting that local governments greatly outpaced state governments. Might Garreau's "Nine Nations" be prophetic? Personally, I hope so - though I hope for 100 "Nations".


February 3, 2007 01:20 AM

Fat chance. I'm going to have to echo Kartik about the plateauing over the last four years and add that there are going to be huge changes in the health market. Right now, there's a lot of money there and they've been adding labor as a result. However, the health market is probably the most inefficient market in the economy and that will inevitably change and soon. There are two reasons why it's so inefficient, more than 90% of payments are made by a third party and it is highly regulated. However, the twin wrecking balls of the PC and the internet will come bashing through this house of cards, just as they have or will for every information industry. No doubt you are experiencing this first hand at businessweek, Mike (though I must say businessweek has probably been the most savvy magazine about the current internet situation).

N Chung

February 8, 2007 09:20 AM

What time is the luncheon you're speaking at?

Nelson Chung

February 8, 2007 03:53 PM

Dr. Mandel:
I just heard your speech and I have one point of contention. You said that most of the IT that has been implemented in health is in the back room, and has done little to increase life expectancy, the aim of health care. You do allow that the back room IT and the aim is related.

I heard a different story. The IT revolution has yet to take hold in Health Care. See

Tom Coss

August 3, 2007 12:44 AM


You've done an outstanding piece of work here. This along with your earlier article in October of last year is so incredibly interesting and useful.

There is no reason that health care should be treated any different than any other good in the economy. If there is an industry upon which economics can add incredible value, health care is the one, particularly in regard to improvements in labor efficiency.

Health care providers and administrators have exceptional difficulty assessing marginal improvements in labor efficiency against the capital costs that might make it possible. This is where the intellectual heavy lifting begins.

We need analytic tools and models which can provide some evidence that capital expenditures are making a difference. We need to be smart enough to make it simple. I'm asking for some help here.

Thomas A. Coss, RN

Brandon W

February 11, 2008 07:34 PM

Follow up to my comment from Feb 2, 2007 (above):
From the BW Hot Property blog:

I should have a nice-paying job as a forecaster.

Thank you for your interest. This blog is no longer active.



Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.

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