Recession fears are waning for 2023, but the Federal Reserve Bank of New York projects a 71% chance of recession by May 2024

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.

A recession could bring benefits to struggling healthcare providers, but the silver lining may not extend to everyone. 

In the past year or so, dozens of healthcare organizations have laid off employees as they restructure operations, cut costs and adjust to new care delivery models. Minneapolis-based Allina Health said this week it will lay off fewer than 350 employees, mostly in leadership and non-direct caregiving roles, due to “unprecedented financial challenges.” Prisma Health in Greenville, South Carolina, will lay off nearly 700 employees in August, following an announced partnership with Compass One Healthcare to provide environmental services.