Rural Healthcare Facilities Had Modest Job Growth, but No Measurable Employment Impact on Other Sectors

Rural inpatient healthcare facilities—including hospitals, nursing care facilities, and other residential care facilities—may improve the health and economic well-being of local communities. Healthcare facilities may attract people and businesses to a rural community, causing the local population and level of economic activity to grow. This potential increase in the demand for local goods and services may lead to a rise in local employment and wages.

ERS researchers examined employment trends in rural healthcare between 2001 and 2015 to estimate how changes in the industry’s employment affect total county employment. The findings indicate that, despite the Great Recession and employment declines in other industries, inpatient healthcare facilities in rural counties had modest employment gains. Between 2007 and 2010, rural inpatient healthcare jobs increased by 26,000 (or 2.3 percent). Rural inpatient healthcare accounted for 7.6 percent of total rural wage and salary employment in 2001 (or over 1.1 million jobs) and grew to 8.1 percent by 2015.

ERS researchers also estimated the multiplier effect of inpatient healthcare employment on total county employment in rural communities. A multiplier reflects the total number of jobs in the county that result from the addition of one inpatient healthcare job. In rural counties, the estimated employment multiplier was nearly one job (0.99) per inpatient healthcare facility job. In other words, on average, inpatient healthcare employment did not generate additional net employment in rural counties beyond the people directly employed in the healthcare facilities. A multiplier less than one could occur if any additional positive employment effects are offset by displacement or competition effects—such as jobs lost in other industries from workers opting for employment in healthcare facilities.

The multiplier effect appears larger, on average, for the more populated and more economically integrated rural counties. In these “micropolitan” rural counties, about 1.24 total jobs were created per inpatient healthcare facility job. By comparison, 0.89 jobs were created in the least populated “rural noncore” counties. However, these multiplier estimates are subject to margins of error, as shown in the figure below. This suggests that changes in inpatient healthcare employment, on average, have not had large impacts on other sectors of the rural economy.