97 years of economic insights for Indiana

The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business

Trends in the elder care workforce in Indiana: Evidence for a shift to home-based elder care?

Workforce and Education Analyst, Indiana Business Research Center, Indiana University Kelley School of Business

Introduction

As we soldier on through the COVID-19 pandemic, there are a few economic trends nationally and in Indiana worthy of keeping an eye on. Inflation is likely the most salient one, as rising prices at the grocery store and the gas pump cause stress on Hoosiers’ pocketbooks and threaten the tenuous economic recovery. Another trend is so-called labor shortages, as businesses continue to sound alarm bells about the lack of qualified applicants to fill jobs.

The phrase “labor shortage” is somewhat of an over-simplification, as the issues firms face are more multifaceted than simply a shortage of workers. Educational disruptions, child care needs, worker empowerment and remote work are just a few of the factors that contribute to labor force challenges reported by firms. Industries that have been hit particularly hard by labor force challenges include health care, particularly for the elderly (which this article will refer to generally as elder care).

This article analyzes the elder care workforce in Indiana and reveals some important trends about the changing dynamics of the workforce. Employment data on five elder care industries in Indiana—assisted living facilities for the elderly, continuing care retirement facilities, nursing care facilities, home health care services and services for the elderly and persons with disabilities—present evidence suggesting a shift in the workforce from predominantly facility-based care toward home-based and outpatient care.

Elder care workforce analysis

In the wake of the pandemic lockdown of 2020, there is evidence for a restructuring of the elder care workforce in Indiana. The left panel of Figure 1 shows quarterly employment in the five primary elder care industries in Indiana since 2017. The industry with the starkest decrease over this time frame is nursing care facilities (skilled nursing facilities), more commonly known as nursing homes. Though a slow decline began prior to the pandemic, the lockdown (which lasted the entirety of 2020’s second quarter) quickened the decline.

Whereas other industries began recovering once the lockdown ended, employment in nursing homes continued to drop through the third quarter of 2021, the latest quarter available. Declines in other facility-based elder care industries, like continuing care retirement facilities and assisted living facilities for the elderly, mirror the decline in nursing homes, though they’re lesser in magnitude and their employment constitutes a smaller share of the workforce.

These patterns are similar to the United States as a whole, shown in the right panel. The main difference between Indiana and the nation is that the growth in services for the elderly and persons with disabilities has far outpaced that of Indiana’s. Interestingly, nationwide employment of home health care services has surpassed nursing care facilities, suggesting the shift away from nursing homes toward home-based care may be more than a pandemic-induced blip and not confined to Indiana. Indeed, the other two facility-based industries, assisted living for the elderly and continuing care retirement facilities, have also experienced a shrinking workforce in recent quarters.

Figure 1: Employment in elder care industries since 2017, Indiana and the United States

Line charts for Indiana and U.S. from 2017 Q1 to 2021 Q3, showing employment head count for the 5 elder care industries.

Source: U.S. Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages (QCEW)

Figure 2 considers the year-over-year changes in employment in two key industries, home health care and skilled nursing facilities, as well as the health care and social assistance sector as a whole. Though the decline in skilled nursing facilities in Indiana and the nation appears to be slowing, it still outpaces the increase in home health care services. Though only time will tell, this dynamic suggests the state may eventually lack the workforce capacity to fulfill the health care needs of its aging population.

Figure 2: Percent change in employment from the previous year, Indiana and the United States

Line charts for Indiana and U.S. from 2018 Q1 to 2021 Q3, showing percent change from the previous year for health care and social assistance (total), home health care services and nursing care facilities.

Source: BLS QCEW

Notwithstanding the potential for unmet elder care needs in the future, it seems that a significant aspect of the workforce restructure is a shift from facility-based care (e.g., nursing homes, retirement facilities, etc.) to non-facility-based care (e.g., home health care services). Figure 3 aggregates the facility- and non-facility-based elder care industries, which makes it abundantly clear that facility-based elder care is in the midst of a steep decline. Particularly since the pandemic lockdown (second quarter 2020), employment in these facility-based industries has plummeted and shows no signs of recovering.

Figure 3: Employment in elder care industries by mode of service delivery, Indiana and the United States

Line charts for Indiana and U.S. from 2017 Q1 to 2021 Q3, showing head count for facility-based and non-facility employment.

Note: Facility includes nursing care facilities (skilled nursing facilities) (NAICS 623110); continuing care retirement facilities (623311); and assisted living facilities for the elderly (623312). Non-facility includes home health care services (621610) and services for the elderly and persons with disabilities (624120).
Source: BLS QCEW

Since the beginning of 2020, Indiana has lost 14.5% of its employment in nursing care facilities, 15.9% in continuing care retirement facilities and 9.2% in assisted living facilities for the elderly. On the other hand, though non-facility-based care is trending upward, it’s not nearly enough to make up for the losses in facilities: Employment in home health care services has increased by a modest 1.3%, and services for the elderly and persons with disabilities has actually decreased by 2.3%.

One way to assess how a region’s employment has changed relative to the United States is a shift-share analysis. This compares the rate of change of an industry’s employment to that of the United States during a defined period. The shift-share analysis below looks at employment changes in the five elder care industries of interest (on a 6-digit NAICS basis), as well as the health care and social assistance sector, before the pandemic, during the one-quarter lockdown period and in the five quarters since lockdown measures were lifted. Figure 4 shows the results of the shift-share, with the blue bars representing Indiana and the red bars representing the United States.

Figure 4: Shift-share analysis for selected health care and social assistance industries

Column charts showing U.S. and Indiana employment percent change for the pre-pandemic (2017 Q1 to 2020 Q1), pandemic lockdown (2020 Q1 to 2020 Q2) and recovery (2020 Q2 to 2021 Q3) time periods.

Source: BLS QCEW

In all but two industries, Indiana was at a competitive disadvantage before the pandemic lockdown, as demonstrated by the height of the blue bars relative to the red bars. Though employment was growing in Indiana in most of the industries between the first quarters of 2017 and 2020, it was at a slower pace than the nation. The lockdown was expectedly bad for the state and the nation. More concerning, however, is how Indiana has underperformed during the recovery, with all but one industry falling short of the national mark.

Notably, all the facility-based care industries lost employment in both Indiana and the United States, but the loss was greater for the state, with continuing care retirement facilities and nursing care facilities shedding more than 10% of jobs in this five-quarter period. The only industry where the state outperformed the nation was home health care services, where it grew 6.2%, compared to 4.6% for the nation. This is a bright spot that nonetheless speaks to the shift toward non-facility-based care for the elderly, a trend that will be interesting to follow as the impacts of the lockdown continue to fade.

Indiana counties have had wildly different recoveries when it comes to employment in elder care industries. Figures 5 and 6 show percent changes in employment over the recovery period, from second quarter 2020 to third quarter 2021, in nursing care facilities (skilled nursing facilities) and home health care services, respectively. There are a couple things to note for the graphs. First, they’re divided into three panels corresponding to the size of the industry in each county in third quarter 2021 (the most recent quarter available). Second, pay close attention to the scales of the y-axis, which are different for each panel and each graph; this is so differences in bars are easier to see. Finally, some of the smaller counties had massive growth percentage-wise, but in absolute terms, the changes weren’t great relative to the larger counties.

Figure 5 shows that most counties across all size classes lost employment in nursing care facilities. Among the largest counties (in blue)—those with employment in the industry between 411 and 4,000—only Lawrence experienced any kind of growth, about 9%. Widespread losses across the counties are what we would expect given that statewide employment loss in the industry was -11% over this period.

Figure 5: Employment percent change in nursing care facilities (skilled nursing facilities) from 2020 Q2 to 2021 Q3, Indiana counties

Column charts showing nursing care facility employment percent change by county, grouped by low, medium and high employment levels.

Note: Dashed line is Indiana statewide employment percent change in industry (-11%). Parke County has been removed because its employment in this industry was 0 in 2020 Q2.
Source: BLS QCEW

Contrast this with Figure 6, which shows that most counties gained employment in home health care services over the same period. In particular, the medium- and high-employment (green and blue) counties experienced growth in this industry.

Monroe County, however, is concerning, because it lost employment in both nursing care facilities (-35%) and home health care services (-16%). Although Monroe County's median age (30.5 years) skews younger than the state (38.0 years) because of Indiana University Bloomington’s presence, the shedding of employment in these key elder care industries is a trend to watch, because Monroe County is among the most populous counties in the state (12th out of 92). Senior citizens (ages 65 and older) account for 14% of the county population. For comparison, 16.5% of Indiana’s total population are senior citizens.

Figure 6: Employment percent change in home health care services from 2020 Q2 to 2021 Q3, Indiana counties

Column charts showing home health care employment percent change by county, grouped by low, medium and high employment levels

Note: Dashed line is Indiana statewide employment percent change in industry (6.2%). Counties with no employment in the industry in 2020 Q2 have been removed, as well as some small counties that had growth exceeding 500% (since those would introduce scaling issues).
Source: BLS QCEW

Conclusion

This analysis suggests that a shift in the elder care workforce away from facility-based care is underway. What could be the reason for this shift? In the wake of the pandemic, the most obvious reason is wariness to work or live in a confined facility where risk of infection to the virus that causes COVID-19 is elevated. Not only that, but the residents of nursing homes—elderly people who often have preexisting conditions—are more susceptible to adverse outcomes from the virus than the average person.

The shrinking workforce of the facility-based elder care industries is likely both demand- and supply-driven. On the demand side, elderly people in need of round-the-clock care—prime candidates to live in nursing homes—may instead be opting for home-based care, either by professionals (which is measurable) or by unpaid family caretakers (which is not easily measurable by administrative data). On the supply side, health care professionals who may have previously elected to work in a nursing home may instead be seeking work in a less risky environment, such as home-based or outpatient care. Both potential factors are certainly intertwined. A drop in demand for facility-based elder care may be driving a drop in supply, and vice versa.

Regardless of the reasons for the changing dynamics of the elder care workforce in Indiana, it’s clear that providers and the individuals seeking care must adapt. The elderly and their families must adjust to a reality wherein nursing home spots may be harder to come by. Providers must adjust the types of services they provide and where they provide them. Finally, and perhaps most importantly, the state should consider how to shore up the elder care workforce, or else we risk leaving behind some of our most vulnerable residents.