As we watch what is happening in the economy, there are a couple of signs that the healthcare job market might be taking a turn. I have personally been through two recessions, and depending who you listen to these days, all signs are that we are either in a recession, or one is on the doorstep. Either way, we are seeing a shift in the economy as it relates to inflation, the stock market, and real estate. So, how does that affect our job market?
Let’s look at the stock market first. Although volatility remains high, markets demonstrated glimmers of optimism last week as we stagger through the fourth quarter. Notably the S&P 500 is up now over 4% since the beginning of October, but many of us have 401k’s that remain shellshocked. Nonetheless, for markets to mount a sustainable rebound, we would need to see certain conditions in place, including moderating inflation and Treasury yields peaking, neither of which are fully confirmed yet. So, a volatile market can mean that people who might have been thinking about retiring will need to stay in the workforce longer to recoup losses that have changed retirement dates.
Regarding real estate, last week we also saw housing data that showed considerable weakening. The impact from higher interest rates has been acutely felt by many of us. Mortgage rates in the U.S. have moved rapidly higher for a 30-year mortgage causing hesitation to buy and sell, and has sent markets tumbling. Meanwhile, last week the National Association of Home Builders (NAHB) index fell to 46, its lowest since 2020, and mortgage purchase applications also continued to decline, now at the lowest levels since 2015. So, what does this mean for our industry? Well, from my experience over the past 28 years, when real estate weakens, people tend to stay put. And when people do not relocate, recruitment becomes more difficult. Take less for my home? Pay a 7.5% interest rate on a new home when I am currently at 2.9%? No thanks.
Real estate and interest rates alone will take many healthcare providers out of the job market. Not all, but many. Afterall, you have a younger population of healthcare workers who are eager to start their careers and who do not own a home or have retirement accounts that look like Swiss cheese. From a recruiting perspective, I see this “economic downturn” as a positive for many employers who are struggling to keep full-time staff. It just makes things a bit more difficult for some people to make a move, especially if they own a home.
As we move into 2023, I believe economic conditions will slow the mass exodus we have seen over the past two-years. However, trying to backfill positions will still be very difficult. It might even become more challenging for those organizations who refuse to increase pay and offer incentives to help providers become part of your team. As a healthcare provider, I believe you will still be in a good bargaining position should you decide to make a change in 2023.
