Oregon Office of Economic Analysis

Our office’s latest economic and revenue forecast is coming out next Wednesday morning at 8 am (Feb 9th). One item that’s getting left on the cutting room floor of the document is a bit of a deeper dive into health care employment in the state. This is a sector that has both been overwhelmed during the pandemic, and one where the employment recovery has stalled out in the past year. Today the overall health care and social assistance industry employs about 12,000 fewer workers than before the pandemic hit, for a decline of about 4 percent. Total statewide employment is down about 3 percent, so the health care sector overall trails the economy more broadly, at least in terms of employment trends. One reason for that is there are a few different forces operating under the surface, at the subsector level. Let’s take a look.

Here are a few brief thoughts on each subsector:

• Ambulatory Care: This subsector is predominantly doctor offices, outpatient care facilities, dentists, mental health experts and the like. Many of these shut down initially at the start of the pandemic but have seen essentially a full recovery since. Oregon’s pattern are nearly identical to the nations here. The outlook is strong with a growing, and aging population. This is especially the case to the extent we continue to shift our medical services more to preventive care and outpatient facilities and away from emergency room visits and the like.
• Hospitals: A few near-term losses at the start of the pandemic, but relatively steady employment since. Presumably some of these losses are due to reductions in elective surgeries and the like as the COVID wards require more attention. Overall Oregon’s employment trends match the national ones, except in the latest few months where Oregon’s numbers trail off while the nation’s hold more steady. We will need to wait for revisions to see if the state and nation truly differ, but I’d lean more towards no at this point.
• Social Assistance: Included in here are some nonmedical home care, senior centers, but also daycares, which we know have been hit hard during the pandemic. This subsector continues to recover after seeing very large initial losses and less of an initial rebound. The strength in the past few months is a bit stronger in Oregon than in the nation, so, again we probably need to wait for some revisions, but the overall outlook is for more growth given the demand for both home care, senior services, and daycares.
• Residential Care Facilities: This sector was only about 20% of the overall industry pre-pandemic, but today it accounts for a bit more than half of the job losses and has yet to show any real signs of turning around in terms of employment. The overall outlook is strong here given the demographics, even as our health programs work to keep Oregonians in their homes longer with more and better home care. In terms of the residential care facility dynamics today, we know the number of patients/residents is down. This is due to both the unfortunate loss of life due to the pandemic itself, and also as families keep their loved ones at home as long as possible during a pandemic. Browsing some of the larger, publicly traded nursing home companies shows that occupancy rates are still down about 10 percentage points nationally. However, those occupancy rates have been increasing over the past year, and inflation-adjusted consumer spending at nursing homes is also rising throughout 2021. To me that means the industry is likely to begin adding jobs again. Key issues here is the combination of available labor and wages. Pre-pandemic the industry average wage was 42% below the state average ($32k vs $55k), with many of the most common occupations paying more like $14 per hour. Adding workers in today’s tight labor market is hard, especially in a pay range like that. Another industry challenge is likely that a large segment of their customers (residents) are on fixed incomes, meaning paying higher prices in this inflationary boom is likewise challenging.

Overall our office expects the health care industry to add jobs and fully recover. Longer-term expectations for growth are more closely tied to demographics. That said, after accounting for some revisions to the data in recent years, our longer-term forecast is a bit lower today than it was a couple years ago. Some of that can be tied to the slowdown in population growth during the pandemic, but also some of these broader trends.