Health Care Industries and the New York City Labor Market

By Kohli, Martin | Monthly Labor Review, September 2009 | Go to article overview

Health Care Industries and the New York City Labor Market


Kohli, Martin, Monthly Labor Review


From 1990 to 1995, New York City's health care employment rose faster than the national average, but growth then slowed until 2002, when the pace quickened again; the 1995-2002 slowdown reflected slower growth in hospital care expenditures, while accelerated job growth after 2002 reflected strong growth in the elderly population and in home health care

In the United States, employment in the health care industries has grown more rapidly than total nonfarm employment. (1) From 1990 through 2008, for instance, annual average total employment increased by 25.2 percent, while in health care the percent change was an even more robust 58.3 percent.

In New York City, the same pattern has held: total employment rose by 6.4 percent over the same 18-year period, while health care employment expanded by 41.5 percent. Moreover, because industries other than health care have grown much more slowly in New York City than in the rest of the country, health care industries accounted for 52.1 percent of the 226,600 jobs gained during those years. As chart 1 shows, total employment in all industries combined, other than health care, declined relative to 1990 in 14 of the next 18 years. (For the purposes of this article, health care consists of three private-sector industries--ambulatory care (NAICS 621), hospitals (622), and nursing and residential care facilities (623)--and State government hospitals. (2) This breakdown includes all private-sector employment in health care industries. Current employment data for Federal and local government hospitals in New York City are not available. An appendix discusses the sources and concepts of the labor market information used in this article.)

Health care employment growth

Although health care employment has grown at a robust rate in New York City and the Nation, the pace has varied over time. From 1990 through 1995, employment in New York City's health care industries increased by at least 2.0 percent per year. Over the next 6 years, however, health care employment growth crossed that threshold only once. In 2002 employment growth rebounded, and in 4 of the years of the 2002-08 period growth again reached 2.0 percent. As chart 2 illustrates, employment growth in the national industry group followed the same pattern of decelerating in the later 1990s and then accelerating during the first half of the next decade. (3) As table 1 shows, over the entire 18-year period the average annual rate of employment change in the health care industries in New York City, 1.8 percent, although impressive, was lower than the national rate of 2.4 percent. But over the 1990-95 subperiod, the figures were closer: 3.0 percent in New York City and 3.3 percent in the Nation. Over the next 7 years, the gap widened, with health care employment in New York City increasing by an average of 1.4 percent per year while the national increases were 2.0 percent.

This article explores how health care industries in New York City first came close to matching the national pace of employment growth and then lagged behind. The starting point of the analysis is the fact that the aggregate of health care industries includes detailed industries that face different patterns of demand growth and different constraints in the labor market. The primary analytical question is whether New York City's slower growth in health care employment in the years after 1995 was a result of the mix of health care industries in the City, slower growth within detailed industries, or a combination of the two. Other studies of regional economies have used similar decompositions of employment growth. (4)

[GRAPHIC 1 OMITTED]

[GRAPHIC 2 OMITTED]

To be more specific about the issue of industry composition, consider that in 1990 private hospitals accounted for the largest share of industry employment nationally, 40.7 percent, followed by ambulatory care. (See chart 3.) Private hospitals also were the largest health care employer in New York City, but the employment share in the City was 9. …

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