U.S. healthcare labor woes show signs of easing: Fitch Ratings
NEW YORK, UNITED STATES — The U.S. healthcare sector, which has faced significant labor challenges since the onset of the COVID-19 pandemic, may finally be seeing some relief.
According to a recent report by Fitch Ratings, the “worst of the labor downturn” for not-for-profit hospitals in the U.S. could be nearing its end. These hospitals, which form the majority of healthcare providers in the country, have been severely impacted by staffing shortages due to the pandemic and the subsequent “Great Resignation.”
Wage growth slows to sustainable levels
Fitch Ratings highlights a positive trend in wage dynamics within the sector. The report noted a decline in year-over-year average hourly earnings growth for hospital employees, which averaged 3% in 2024 compared to 4.2% in 2023.
This slowdown indicates that “hospital wage inflation is cooling to more sustainable levels,” according to Fitch.
The report further explains that this development follows a period of significant salary and wage increases aimed at reducing high turnover rates and reliance on external contract labor.
Consistent payroll growth despite challenges
Despite these challenges, hospital payrolls have shown resilience, increasing for 32 consecutive months as of August 2024. This marks a 6.7% rise since February 2020, just before COVID-19 began its widespread impact in the U.S.
This growth underscores the sector’s ability to adapt and maintain staffing levels despite ongoing pressures.
Job openings decline but remain elevated
While job openings in the healthcare and social assistance sector are on a downward trend, they remain elevated compared to pre-pandemic levels. As of July, job openings have decreased to 6%, down from 7.9% in January. However, this figure is still higher than the 4.2% average from 2010 to 2019.
Fitch Director Richard Park commented that “job openings, while heading down, are still high due largely to the ongoing shortage of clinical labor that will take time to address.”
