Government health policy and hospital labor costs: the effects of wage and price controls on hospital wage rates and employment

This study examines the rapid growth of hospital wage rates and employment levels over the past decade, with particular attention to the period 1971-73, when wage and price controls were in effect throughout the economy. The analysis shows that the hospital regulations under the Economic Stabilization Program reduced real hospital wages below what they would have been in the absence of controls; a similar but smaller effect of the controls on hospital employment levels is also shown. This suggests that if the current HEW proposal for hospital cost containment is enacted, its impact would be a significant decrease in the rate of growth of hospital wages and employment.