New Research from Professor Joshua Gottlieb Highlights Dramatic Job Growth and Wage Increases in Healthcare

A recently published BFI working paper, "The Rise of Healthcare Jobs," analyzes a significant transformation in the U.S. labor market over the past few decades. The study, authored by Joshua Gottlieb, a professor at Harris Public Policy, alongside Neale Mahoney, Kevin Rinz, and Victoria Udalova, delves into the rapid expansion of the healthcare sector, which is now the largest industry by employment in the United States. The paper highlights that healthcare employment has increased at over twice the rate of the overall labor force since 1980, overtaking industries such as retail trade and fundamentally reshaping the national workforce with notable salary increases across the field.

The research paper reveals three major sub-findings concerning the remarkable growth of healthcare jobs:

• Earnings for middle and upper-middle wage earners, including nurses, have seen significant growth.
• Gender ratios in clinical occupations have become more balanced, with more women becoming doctors and slightly more men entering nursing.
• There is scant evidence of a systematic shift from manufacturing to healthcare jobs in the US economy, despite some high-profile examples.

To conduct their analysis, the researchers examined employment and earnings using microdata from the long-form Decennial Census and the American Community Survey (ACS) spanning the years 1980 to 2022. Their study period covers a substantial portion of healthcare’s expansion, during which it grew from 8.9% to 17.3% of GDP.

“One of the central findings of the paper is the substantial increase in healthcare workers' earnings,” stated Professor Gottlieb. “Healthcare professionals have experienced wage growth at nearly double the rate of those in other industries, particularly in the middle and upper-middle segments of the income distribution. This increase reflects both the rising demand for healthcare services and the growing complexity of jobs within the sector.”

In 1980, the healthcare industry employed 7.3 million workers, representing 6.8% of the labor force, with healthcare workers earning an average inflation-adjusted salary of $44,000—slightly less than the $46,000 average for non-healthcare workers at the time. There were 430,000 physicians, 1.7 million nurses, and 1.6 million aides. Average annual earnings ranged from $187,000 for physicians to $38,000 for nurses and $23,000 for aides.

By 2022, the number of healthcare workers had significantly increased, with 981,000 physicians (a 127% increase), 4.1 million nurses (a 143% increase), and 4.8 million aides (a 206% increase). Nurses’ average earnings had also increased to $70,000 (an 81% increase), and aides’ to $30,000 (a 33% increase).

The paper also highlights notable shifts in gender dynamics within the healthcare workforce. While the sector has consistently remained female-dominated at around 76% over the study period, there has been notable convergence within occupations. More women are now doctors, and slight more men work as nurses and aides.

The paper suggests that, contrary to widespread belief, regions losing manufacturing jobs have not systematically transitioned to healthcare jobs as an economic replacement. Healthcare is growing in nearly all regions,  but it absorbs workers who no longer have manufacturing jobs only in proportion to healthcare’s national proportion. In other words, there is not enough extra growth in healthcare employment in declining regions for healthcare to stabilize these regional economies.

The paper argues that understanding why healthcare has bucked broader trends toward wage polarization and assessing whether this growth pattern will continue is crucial as the industry evolves. As healthcare continues to be a significant driver of employment, understanding the drivers behind economic and demographic shifts within the sector will be essential for policymakers and workforce planners.