One of the most closely watched economic indicators is the number of new jobs created each month. In our divisive political world, this volatile figure creates the opportunity for politicians to either boast about the success of their economic policies or criticize the other side. A good bit of the monthly fluctuation is simply noise, but there are actually interesting underlying trends in the intermediate term data.
As shown below, total private sector job growth has been quite modest, particularly in the past one and one half years. Over the three-year period shown, it was only .75% per annum!
The Bureau of Labor Statistics provides employment data on various sectors, one of which is Health and Private Education. In contrast to the overall employment trend, this sector experienced an 11% increase (3.5% annual growth rate) which represents all of the increase in total employment over this three-year period. Yes, that means employment in other sectors actually decreased slightly!
The next graph depicts growth in the Health and Education sector over the past twenty years. Note that growth was very steady prior to the onset of the pandemic which led to a temporary decline. However, it snapped back very quickly and has since been on a steep upward trajectory. It should be noted that healthcare represents about 80% of the jobs in this sector and has accounted for most of the growth.
Why the strength in this sector?
- The aging of the population is creating tremendous demand for health care services which are inherently labor-intensive.
- The economy is shifting from goods-producing sectors to service-oriented areas including healthcare and education.
- The pandemic created labor shortages, particularly in health care where employees experienced significant burnout.
When discussing the potential impact of AI on employment, most experts agree that the least impacted jobs will be those requiring face-to-face contact, empathy, emotional intelligence, trust, relationship building, and physical dexterity. Even though we are in the early innings of AI, it appears the job market is already proving their predictions correct.