While the decline in manufacturing employment has received ample attention, the healthcare industry has rather quietly become the nation’s dominant employer. Indeed, the increase in healthcare employment since 2009 (and before) has inspired hope among cities that they can revive their economic base by turning their focus from manufacturing to healthcare. This paper documents key facts about the rise of healthcare employment and, in doing so, addresses healthcare’s potential as an antidote to economic decline.
As Figure 1 shows, employment in the healthcare industry grew from 9.3 million in 1990 to 18.1 million in 2022, overtaking manufacturing employment in 2006 and retail trade in 2009, making it the largest employer in the United States. The authors document key facts about the rise of healthcare jobs over this time, based on the Census Bureau’s internal versions of the Decennial Census and American Community Survey (ACS) from 1980 to 2022.
The authors first document trends in U.S. healthcare employment and earnings through an occupational lens, focusing on familiar clinical occupations such as physicians, nurses, and aides. They show the following:
- Healthcare employment grew uniformly across most clinical occupations, apart from a growing category known as midlevels, which includes physician assistants and nurse practitioners. This category, which was too small to be consistently measured prior to 2010, has more than doubled since 2010, growing from 227,000 to 505,000 workers. As of 2022, there were more midlevels than primary care physicians, and midlevels provided more than half of primary care.
- This healthcare employment growth was accompanied by strong earnings growth, especially for nurses and midlevels in the middle and upper-middle parts of the clinical occupational distribution. Specifically, earnings grew nearly twice as fast for healthcare workers as for non-healthcare workers from 1980 to 2022; during this window, average healthcare earnings rose from 4% below to over 14% above the average for non-healthcare workers.
- While the top percentile of the wage distribution has fared better outside of healthcare, health care wages have grown faster for the rest of the distribution and are particularly strong between the middle and the 95th percentiles. Indeed, with strong employment growth and earnings growth that outpaced the rest of the economy outside the very top, it is reasonable to conclude that healthcare has been a modern middle-class “jobs engine.”
The authors next examine the types of people and places most involved in healthcare employment growth, focusing their demographic analysis on female and foreign-born workers, two groups whose share of the overall labor force has swelled over this time. They find the following:
- The female share of the healthcare workforce remained nearly constant at 76% between 1980 and 2022, but there was considerable convergence between men and women within occupations. Although physicians remain majority male, the female share increased substantially. Nurses and aides remain overwhelmingly female, but the male share increased.
- While the foreign-born share of healthcare workers has on average risen in line with that of the broader economy, this differs by occupation: foreign-born shares are well above the economy-wide average for physicians and aides, but below average for nurses and midlevels.
Finally, the authors investigate the idea that cities and regions, especially those in the Rust Belt experiencing steep declines in manufacturing employment, can reinvent themselves as healthcare hubs that are, according to some, immune from recessions. Cities such as Pittsburgh, PA, Cleveland, OH, and Rochester, NY, are often cited as examples of this “manufacturing to meds” phenomenon. However, while a manufacturing-to-meds pivot is possible, it could arise from city characteristics that jointly influence manufacturing and healthcare, such as size or location. That is, healthcare is not necessarily the driver. The authors find the following:
- Industries absorb manufacturing workers in proportion to their sizes. Healthcare growth counteracted roughly 11% of manufacturing job losses, not much more than would be expected given its 9.8% population share. Healthcare acts as a larger counteracting force for women and college-educated workers.
- Nevertheless, in the aggregate, the few high-profile examples of the manufacturing-to-meds pivot are outliers that do not represent a systematic trend.
One explanation for the lack of a systemic trend is that efforts to pivot were largely superficial. Despite policy white papers and political speeches, limited resources were invested in building up the healthcare industry in declining manufacturing regions. Another possibility is that any resources that were dedicated to these efforts had lackluster effects, reflecting the difficulty of breaking into a new industry, especially one where scale effects and reputation are key.
Bottom line: The rise of healthcare jobs is one of the largest trends in the US labor market in a generation. Given the size of the healthcare industry, analysis of the US labor force requires understanding the trends in this industry. This paper provides an initial descriptive analysis of these patterns and raises questions for future work. Understanding why healthcare has bucked broader trends toward wage polarization, and whether it will maintain this pattern of broad-based growth, is crucial as the industry expands and technology evolves.