Featured Monthly Discussion: Health Care Employment, Job Creation, and Income Inequality

Every Month a CPEG member will be posting a brief issue analysis for discussion and comments. This month, CPEG member Sharon Post has chosen to discuss the impact of health care employment on job creation and income inequality.

In 2009 CPEG released a paper calling for a massive public jobs program aimed at both relieving immediate suffering and redressing long-standing structural problems in the U.S. economy. We raised two often overlooked problems: (1) the inability of the private sector to create sufficient jobs at adequate wages and (2) the existing labor market’s reproduction of inequalities that have left the lower 40% income strata desperate and miserable. In light of those points, this discussion paper attempts to add to that earlier analysis some questions about employment in the health care sector. Given the importance of health care sector employment, especially in low-income communities where the hospital is the largest employer, this paper looks specifically at hospital employment and asks:

  • What does it mean for job creation and income inequality that so many hospital jobs are low-wage jobs?
  • What will changes in the health care delivery system, stimulated by the ACA and other reforms, mean specifically for the low-wage hospital workforce?
  • Can a jobs program such as the one CPEG has proposed take on both the need for good jobs and the need for better health access in low-income communities?

While employment in other sectors of the U.S. economy is below pre-recession levels, health care employment has risen 10.5% since 2007. CPEG has called for greater investment in health care as part of a public jobs program and criticized the private economy for failing to create enough jobs or meet basic needs. If health care employment is expanding in the absence of a public jobs program, what do we have to say to that?

One obvious response is that the health care resources represented by the growth of the health care sector are maldistributed, as demonstrated by the persistence of medically underserved areas and health professional shortage areas. That is a serious problem and a public jobs program could help direct investment to where it is needed most. The National Journal notes with concern that in areas like Pittsburgh that are oversaturated with health care facilities, the hospital-fuelled economic growth is unsustainable.1 But a more familiar problem is found simply by looking at the outrageously low wages paid to many hospital workers. As health care replaces manufacturing as the lead employer in some major cities, led by vast expansions of hospital systems, and as hospital executives take home multi-million dollar salaries, many of their workers are trapped in poverty. In some low-income and rural communities, the local hospital is the largest employer, and typically a third of the workers are in low paid service and maintenance or nursing assistant positions.

These are the kinds of jobs that are still accessible to workers with limited education. The only job that pays a median wage equal to or higher than the $18/hour CPEG called for in our jobs program proposal is LPN/LVN. Notably, that is a classification that is being phased out in hospitals. In fact the Wall Street Journal noted that many ‘mid-level’ health care jobs like LPNs are disappearing. Increasingly, low-wage, low skill jobs proliferate, routine tasks once performed by LPNs are shifted to those workers, while other ‘entry level’ positions in hospitals increasingly require a bachelor’s degree.2

The disappearance of hospital LPNs is an example of the loss of a decent job opportunity once available to workers with less access to higher education. Without LPN-level jobs and the career ladders that sometimes came with them, the jobs in hospitals left to those workers are very low wage and offer little chance for advancement. Yet they were at least jobs, and in some communities those service jobs at hospitals were the largest source of employment. A humane economic system would take poverty seriously and find ways to raise the wages of hospital service workers and create opportunities to train for other jobs that can serve unmet needs.

We haven’t done that, and we have paid little attention to a likely unintended consequence of health care reform—the loss of low-skill hospital jobs. The delivery and payment system reforms in the ACA and state-level care coordination initiatives seek to ‘bend the cost curve.’ Hospital care is a major cost-driver, and some inpatient care could be avoided. Technological advancements allow more health care procedures to be performed in outpatient settings instead of admitting patients into a hospital. This is undoubtedly an improvement for patients and their families. The shift from inpatient to outpatient care has some potential to save costs as well. Thus the shift to outpatient care achieves the so-called ‘triple aim’ to improve how patients receive health care, reduce the costs of care, and improve health outcomes. The average length of stay in a hospital and the total number of hospital beds are both already in decline. The supply of hospital beds fell 13% between 1990 and 2010. During the same period outpatient visits rose 116%.3

1. Sanger-Katz, Margot, “Health Care: Great for the Economy Today, Terrible Later.” National Journal, January 31, 2013, updated February 8, 2013.
2. “Midlevel Health Jobs Shrink: Cost Cuts, Technology Hurt Semiskilled Hospital Fields; ‘B.A. Is Now Entry Level.
Wall Street Journal, April 25, 2013.

3. Evans, Melanie, “Empty threat: Hospitals could see more vacancies as demand for outpatient care grows and financial pressure builds to curb inpatient admissions.” Modern Healthcare, March 24, 2012.

Image: FreeDigitalPhotos.net

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