Healthcare loses 1.4 million jobs in April as unemployment rate hits 14.7%

Healthcare employment held remarkably steady during the Great Recession of 2008 and 2009. Not so with the COVID-19 pandemic.

The healthcare industry lost 1.4 million jobs in April, preliminary data from the Bureau of Labor Statistics show. The numbers lay bare COVID-19's economic damage, as businesses shuttered amid stay-at-home orders implemented in mid- to late-March.
The healthcare economy tends to be largely immune to reductions in consumer demand from income drops, said Neale Mahoney, a health economist at the University of Chicago Booth School of Business.

"Here, I don't think the drop is driven by the fact that people have less money in their wallets," he said. "Yes, they have less money in their wallets, but the drop is driven by the fact that you can't go to a dentist in Chicago except for emergency procedures. It's really driven by the fear of COVID, not the income shock."

The U.S. unemployment rate spiked to 14.7% in April, the highest rate since the Great Depression. Total nonfarm employment fell by 20.5 million jobs in April, much steeper than the 701,000 estimated job losses reported in March. Last month also saw the biggest unemployment rate spike since at least January 1948, when the BLS started tracking unemployment numbers. April's unemployment rate exceeded the Great Recession's unemployment peak of 10%.

One point that should provide some relief: 18.1 million of April's unemployed workers—about 78%—reported being on temporary layoff, which the BLS said includes people who are furloughed. That holds open the likelihood that many will return to work once businesses reopen in their states.

Countless hospitals, clinics and other providers have reported furloughing workers while they hold off on elective procedures in lieu of permanent layoffs. For-profit Tenet Healthcare, for example, announced it had furloughed 500 full-time equivalent positions in early April, none involved in patient care.

Healthcare's 1.4 million jobs lost in April follows an estimated 42,500 jobs lost in March. The ambulatory sector comprised 82% of April's job losses.

March marked a steep departure from what had been years of steady healthcare job growth, including an eye-popping 50,200 new hires in December 2019.

It wasn't just healthcare—the economy had added an average of 196,000 jobs per month in the 12 months prior to March.

Dentists' and physicians' offices were the hardest hit healthcare sectors in both March and April. Dentists' offices shed 503,000 jobs last month, while physicians' offices lost 243,000 jobs.

In March, all but 3% of dental offices in the country closed to routine care, heeding a recommendation from the American Dental Association and the Centers for Disease Control and Prevention designed to preserve personal protective equipment for frontline healthcare workers and prevent further spread of COVID-19, said Marko Vujicic, the ADA's chief economist and vice president of its Health Policy Institute. By April, 45% of dental offices stopped paying all of their staff, and another 42% had rolled out partial layoffs or reduced work time, he said.

"Hopefully it has contributed to reducing transmissions and flattening the curve and conserving personal protective equipment," Vujicic said, "but it has come at a cost financially."

The good news, though, is that in the 28 states where dentists' offices were allowed to reopen this week, patient volume was at 28% of its pre-pandemic levels, he said.

Dr. Craig Ratner, who runs a dental practice in Staten Island, New York, had to furlough all seven of his employees, six of whom were full-time. He's not sure when he'll be able to bring them back.

Ratner expects many dental practices will have to close permanently, either because they can't afford to stay open or older dentists simply choose to retire.

"I do know this is going to hit our profession very hard," said Ratner, president-elect of the New York State Dental Association.

With respect to demand returning, Ratner said his practice has lots of patients who are in "desperate need" of cavity fillings and crown replacements. Other than that, he thinks it'll take 6 to 12 months for demand for routine and cosmetic care to return to normal.

Offices of other health practitioners lost 205,000 jobs in April. Last month was also tough on the home health sector, which shed 93,600 jobs.

Hospital employment shrunk by an estimated 135,000 jobs in April, even after hospitals came out of March largely unscathed.

Palomar Health, for example, a two-hospital system based in Escondido, Calif., eliminated 317 positions last week, or 5.5% of its workforce, CEO Diane Hansen said on Thursday.

Nursing care facilities lost 47,200 jobs in April, while residential care facilities shed 26,900 jobs. Community care facilities for the elderly lost 33,400 jobs.

Healthcare employment hasn't been hit as hard as other sectors. Leisure and hospitality shed 7.7 million jobs in April, mostly in food services and drinking places. Healthcare job losses also trailed education, professional and business services and retail trade.

April's job losses were more concentrated among low wage jobs, as evidenced by the fact that average hourly earnings increased by $1.34 in April to $30, according to the BLS.

April's 14.7% unemployment rate also underestimates the actual number of unemployed workers because it likely doesn't count a large share of workers who have lost their jobs and aren't actively looking for work because of stay-at-home orders, according to an Economic Policy Institute analysis. Had those been counted, the unemployment rate would have been 19% in April.

John Fanburg, managing partner at the law firm Brach Eichler and chairman of its healthcare practice, said he thinks healthcare will rebound faster than other sectors because people still need to get their knees replaced and seek treatment for cancer and heart attacks. The pace of recovery depends on whether there is a resurgence of COVID-19 cases once states reopen.

"If it can stay contained, I believe healthcare job losses will bottom out and they'll begin to rebound in June and July," he said.