The Healthcare Industry’s Ongoing Great Reshuffle

The declaration of a public health emergency on March 13th 2020 due to the fast-spreading COVID-19 pandemic reverberated across the United States. The economy received a jolt with the Dow Jones Index witnessing one of the largest one-day drops.

Employment across the US economy was no different. Here we plot the percentage change in the total employment against time.

A major employer, the Health Care and Social Assistance industry felt the shock too. Here we add healthcare employment data to our plot showing percentage change in employment against time.

But as COVID-19 progressed, the overall economy and employment in the Health Care and Social Assistance industry recovered.

Disaggregating the sector reveals more details. This line is for Ambulatory Care which includes doctor's offices, dentists, and optometrists. It still mirrors the general trend seen in the total US labor market.

In contrast, Hospital employment did not drop as dramatically between March and April 2020, but has decreased overall compared to January 2020.

Employment in one part of the healthcare industry, however, has failed to recover since the March 2020 drop. This is the Nursing and Residential Care Facilities industry.

This is one of the legacies of COVID-19–a "Great Reshuffle" away from low-paid, high-stress work. In fact, for the Health Care and Social Assistance industry, the ratio of openings over hires is among the highest in the economy–a proxy for employers having trouble filling openings due to rapidly rising demand and falling labor supply. Why is this the case?

COVID-19 led to a spike in demands made of healthcare workers: extended hours, uncomfortable protective gear, and a fatal risk of catching the virus. While facing these risks, healthcare workers have earned below-average pay. On average, since January 2020, wages in the Nursing and Residential Care Facilities industry have been $335 lower than the economy’s average.

In a recent survey, 34% of nurses said they were likely to quit their job by the end of 2022.

Of these, 44% cited burnout and high stress and 27% chose benefits and pay as reasons for the change.

Causes of burnout included not being appreciated by the community, mental and physical abuse, and workplace discrimination and racism.
Those citing pay and benefits mentioned the prospects of better pay, improved schedule, and career advancement.

The healthcare industry is counting on a few measures to attract labor: handsome pay and seeking freelance "traveling" nurses. For example, the New York Times reports:
"In New York, travelers could make $10,000 or more. The average salary of a staff nurse in Texas is about $75,000; a traveler could make that in months."

Despite momentary high earnings for some travelling nurses, the future is not bright because this freelance model is unsustainable—it places additional burdens on nursing staff and does not fix the underlying labor shortage in the industry.

The Biden administration recently announced a set of reforms to mitigate some of the challenges faced by nurses.

These measures hone in on nurses’ working conditions, pay scales, training opportunities, and career pathways.

The Centers for Medicare & Medicaid Services is currently working on operationalizing these recommendations and on making these actionable.

With the next pandemic invariably on the horizon, only time will tell if the lessons COVID-19 is offering stakeholders were learnt to produce a more sustainable healthcare workforce–or ignored. The stakes are high: not just for healthcare workers but also because they save lives as a natural outcome of their work.