National industry leaders are warily eyeing the horizon for a potential recession, but for healthcare organizations, an economic downturn could bring some benefits.
Hospitals, health systems and other provider organizations have struggled to recover from the COVID-19 pandemic, battling the financial impacts of rising prices and historically high labor costs. The organizations have pledged to reduce reliance on contract labor and normalize pay increases for workers, but an ongoing staffing shortage is forcing providers to keep hiking wages and bonuses and/or look outside the industry to fill gaps.
Recession fears are waning for 2023, but the Federal Reserve Bank of New York projects a 71% chance of recession by May 2024. Economists and industry experts say a recession could be the cooldown healthcare needs to slow wage growth and tap into a larger talent pool, but others warn it could still mean disaster for many workers.
Wages and workers
A recession could slow exorbitant wage increases in healthcare, particularly as demand wanes for expensive contract labor and lower-skilled employees turn to other industries for work. Entry-level workers in food service or housekeeping, for example, could look to healthcare for work as the hotel, hospitality and restaurant industries falter, said David Cutler, an applied economics professor at Harvard University.
In a more skilled position like nursing, higher national unemployment rates often coincide with more nurses joining the workforce, said Doug Staiger, a healthcare eco