The U.S. labor force participation rate in June fell to its lowest level in 50 years, outside of the pandemic. What does that mean for the healthcare workforce?
The labor force participation rate — the share of people 16 and older who are working or looking for work — was 61.5% in June. Outside of 2020 and 2021, it has not been that low since June 1976, according to data from the Bureau of Labor Statistics.
About 1 million U.S. workers have left the labor force over the past year, including 720,000 in June, but experts are split on why, USA Today reported July 9. Some older workers may feel comfortable retiring now that their 401(k)s have benefited from a strong stock market, for example, but that does not explain why the participation rate has also dropped among workers ages 25 to 55, according to the report.
The unemployment rate declined slightly in June, from 4.3% to 4.2%, but Glassdoor chief economist Daniel Zhao said that is happening for the wrong reasons: it is dropping because fewer people are looking for jobs, not because more people are getting hired. ZipRecruiter economist Nicole Bechaud told USA Today that workers who have been unemployed for a long stretch may be leaving the job market altogether out of discouragement, and that employers may prefer candidates who are already working or only recently left a job.
Healthcare has remained one of the country’s main drivers of job growth, but even that growth slowed in June. The industry added 21,500 jobs, down from its average monthly gain of 38,000 over the past year. The broader economy added 57,000 jobs in June.
That slowdown lands on top of workforce problems the industry was already navigating. The registered nurse shortage is projected to ease over the next decade, but the licensed practical nurse and licensed vocational nurse workforce is expected to shrink 36% by 2037, according to HHS’ Health Resources and Services Administration — a trend that mirrors the broader labor force pattern of losses concentrated in specific segments rather than spread evenly across the workforce.
A shrinking labor force also raises the stakes for healthcare’s international talent pipeline. A federal judge in June vacated the Trump administration’s $100,000 H-1B visa fee, ruling it exceeded the president’s taxing authority. California and 19 other states had sued over the fee, arguing it would deepen hospital staffing shortages, while the U.S. is projected to face a shortage of 86,000 physicians by 2036. If fewer domestic workers are entering or staying in the labor force, foreign-trained physicians and nurses could become a larger share of the healthcare workforce.
But it is possible a weaker job market could also work in healthcare’s favor. Workers discouraged by a weak job search in other industries may find an opening in a sector that has kept hiring while others cut back. Healthcare has also remained largely insulated from AI-driven job losses, and some leaders see it as a potential landing spot for workers displaced elsewhere by AI.
Some hospital and health system leaders say they are already seeing more applicants with non-healthcare backgrounds, and are working to make clear how many roles do not require a degree. Northwell Health, based in New Hyde Park, N.Y., is among the systems offering career guidance, workshops and educational sessions to raise awareness of the nonclinical careers in healthcare, such as maintenance mechanics, security staff, engineers and accountants.
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