November 29, 2022

It is difficult to overstate how much Pittsburgh, Pennsylvania, has changed over the past 50 years.

In 1972, the steel industry was thriving with mills dotting the length of the Monongahela River. Homestead Works was one of the largest and best-known mills in the world. At its peak during World War II, Homestead Works employed 20,000 workers. In 1892, the mill was also the location of the Homestead Strike, one of the most violent labor disputes in US history. Fast forward to 2022, Homestead is far less exciting. The only things remaining of the Homestead Works are 12 smokestacks and a rusty gantry crane. Replacing the Works is a large shopping mall.

The epicenter of Pittsburgh industry has moved a few miles upriver to Oakland, the location of the flagship hospital of the University of Pittsburgh Medical Center (UPMC). The UPMC has annual revenues of more than $24 billion and employs 92,000 workers including many of the children and grandchildren of the steelworkers whose jobs are long gone. The ultimate passing of the proverbial torch happened in 2008 when the UPMC secured the naming rights for the US Steel Tower, the largest building in Pittsburgh. Where once steel hovered over the city, health care is now king.

The story of the UPMC’s rise and US Steel’s concomitant fall is not unique to Pittsburgh. Similar trends are playing out across the United States. In 1970, health care constituted 7 percent of gross domestic product, but now represents nearly 20 percent. Conversely, in 1970, manufacturing accounted for 24 percent of the economy and now represents 11 percent. Health care recently passed manufacturing as the largest sector in the United States’ economy.

US Labor Makes Health Care Industry Possible

The health care industry and employment have long been closely connected in the United States. Unlike other high-income countries, Americans predominately receive health insurance through an employer-sponsored plan. In 1942, Congress authorized President Franklin D. Roosevelt to freeze wages for US workers during World War II. Employers, however, continued to demand employees, so many of those employers chose to offer health insurance as added compensation to retain workers and attract new hires. When the war ended, US manufacturing was booming, and health insurance was cheap and untaxed. So, businesses opted to keep it as a benefit for their workers.

This arrangement contributed to an explosion of health care use. The post-war years were arguably the heyday of US labor. Unions were strong and able to negotiate generous health insurance benefits for their members. At around the same time, Congress passed the Hill-Burton Act that provided major funding for hospital construction, and the Medicare and Medicaid programs were established.

These conditions together allowed for health systems to heavily invest in capital and technology, leading to significant cost increases. Annual per capita health care costs increased from approximately $146 per person in 1960 to more than $1,800 by 1985 (in 2022 dollars, this equates to $1,313 and $4,452 respectively). Over the past 40 years, rising health care costs contributed to significant cost pressures faced by the US manufacturing industry.

Trade liberalization increasingly allowed US firms to move their manufacturing facilities offshore to lower-wage countries where there also were not any additional health insurance costs. These and other factors led the manufacturing industry to lose approximately 10 million jobs between 1980 and 2022, decreasing from 22 percent of all employment to around 9 percent.

Reduction In Manufacturing Employment And Condition Of The Working Class

As the US manufacturing sector has declined, the financial prospects of the US working class have deteriorated greatly. Unemployment rates remain persistently higher for those who have not finished college (a common measure of “working class”), and real wages among non-college graduates have declined since 1970.

The slumping economic prospects of the US working class are occurring simultaneously with declines in social life. Family life within working-class communities is fragile and fraying: Those without college degrees are less likely to marry, much more likely to divorce once married, and are more likely to live in single-parent homes. Participation in religious communities has fallen among all Americans but especially among those who have not finished college. Those without college degrees are more likely to go to prison. This litany can go on. These shifts are significant and have been growing over time.

The economic and social challenges facing working-class America have contributed to relatively poorer life outcomes. Overall subjective quality of life is consistently rated lower by those considered to be working class. Recent high-profile studies have drawn attention to the fact that, between 1990 and 2013, life expectancy declined among working-class Whites due to “deaths of despair” from drug overdose, suicide, and alcohol abuse.

Vigorous debate has ensued about the relative importance of these economic and social factors, and about which of them is leading or lagging. For example, underemployed people, especially men, have a hard time getting married, but marriage and family are also a tremendous spur to productive work. Regardless, the life prospects of many working-class individuals are dim, and the labor market bears substantial blame.

Health Care And Prosperity Of US Labor

Over the past 50 years, as manufacturing jobs ebbed, health care jobs flowed, contributing to significant changes in the profile of working-class employment in the United States. In the 1980s, many union members were aging and retiring. These union members were retiring with Medicare, employer-sponsored Medicare supplementary insurance, Social Security, and generous pensions, which gave them resources to pay for professional elder care. At the same time, adult daughters who would historically have been responsible for caring for aging parents entered the workforce—and for many women this was a response to their husbands lost manufacturing employment. Many of these women took jobs in health care. Those daughters who would once have been family caregivers were now wage-earning professional caregivers.

This social dynamic lead to rapid increases in health care employment starting in the 1980s and continuing to the present day. Health care employment is projected to continue to grow, accounting for an ever-greater percentage of all jobs in the United States. Health care (and social assistance) is expected to add 3.3 million jobs between 2020 and 2030, the most of any industry. Health care jobs are tremendously diverse and offer many opportunities for those who do not hold college degrees. Entry-level jobs, requiring only a high school diploma or GED, include an array of responsibilities such as direct patient care, care navigation and coordination, and custodial services. Future growth in health care employment will largely comprise these types of working-class jobs.

Health care systems will surely be central to the future prosperity of working-class families who continue to suffer economically and socially. However, the US health care industry has never primarily seen itself as an “industry” in the manner of steel manufacturing. Unionization movements in health care have historically lagged other industries. In fact, in 1941 the Supreme Court of Pennsylvania deemed hospitals a public service and not “an industry” and precluded health care workers from collective bargaining. Although laws have changed and now allow health care workers similar protections as other industries, the health care system remains stubbornly allergic to viewing itself as essential to the prosperity of US labor.

Near-term, the prospects for reviving US manufacturing are grim; for the foreseeable future, the health care industry will remain the major employer of US working-class labor.

In some ways, this is a promising prospect, as new jobs will increasingly be open to workers without college degrees. However, many of these jobs are unappealing to many workers. Among the largest and most rapidly growing occupations are home health and personal care aides. Such jobs are historically linked to “domestic service,” which was once one of the only sources of employment for poor and minority women. These occupations continue to be saddled with low wages, low status, and the perception that their workers have low levels of skill, despite their now-essential role in meeting America’s health care and eldercare needs.

Such jobs have been especially unappealing to men, who currently are experiencing historically low rates of labor force participation. At present, women account for more than three-quarters of total US health care employment and are particularly concentrated among entry-level jobs.

Health care jobs are arguably safer and less physically grueling than mill jobs. But they often involve exceptional health risks and mental stress—recently exacerbated by the COVID-19 pandemic. There is also little standardization in terms of job expectations and training, making it difficult for entry-level workers to document their skills.

Moreover, entry-level health care jobs typically provide very little help for workers without college degrees to advance to better, higher-paying jobs. Some employers offer on-the-job training, internships, or further education, but advancement often requires returning to school and taking on debt. The financial burden of education excludes many from career advancement.

Furthermore, entry-level health care jobs are extraordinarily poorly paid. Health care is a high-employment, low-margin industry that requires employers to apply constant downward pressure on wages. The average salary for a medical assistant is approximately $37,000, which is barely above poverty for a family of four. On average, entry-level health care jobs offer relatively poor benefits packages, and workers in these occupations often are enrolled in Medicaid and other social service programs.

The net effect of these factors makes many of these health care jobs “dead ends,” relegating workers to low pay, minimal or no benefits, and no paths to advance. It is thus not surprising that there is significant turnover among entry-level workers. Many leave health care entirely and enter fields such as hospitality.

Despite great expectations that the rapidly growing health care sector would provide quality jobs to working-class individuals, the reality has been disappointing: There is much work to be done to ensure that those without college degrees have steady, well-paying jobs that can support their families and provide meaningful and satisfying work.

Intertwined Fortunes

The past 50 years have been difficult for working-class Americans who have been displaced from manufacturing jobs that were a core source of household and community wealth. The economic outlook has degraded significantly, leading to profound changes in family and social life. Nearly every social indicator is worse for those without a college degree, and the disparities are widening.

The fortunes of working-class Americans and health systems have always been intertwined. Widespread access to union-won and employer-sponsored health insurance greatly contributed to the rapid expansion of capital investments in the health systems.

Now, even as those once sturdy pillars of financial security and upward mobility have crumbled, health care has become the employer du jour for working-class people. Thus, health care organizations now have a central role in their communities to ensure that families are financially solvent, and community social structures are robust—whether these employers like it or not.

It is incumbent on health care systems to make entry-level health care jobs rewarding, high, paying, and open to advancement. Such investment is essential to supporting the working-class communities in which the systems operate and upon which they depend for their workforce.

https://www.healthaffairs.org/do/10.1377/forefront.20220524.905288