Healthcare jobs are a rare bright spot in the stalling labor market

The Wall Street Journal – Monday, September 8, 2025
By Justin Lahart

America’s labor market has slowed markedly in recent months. If it weren’t for job gains in the health-services sector, it would barely be growing at all.

Health services, which include healthcare and social assistance, have long been an engine of U.S. job growth, bolstering the labor market through thick and thin. But amid a general weakening in the labor market, the danger is that the sector doesn’t have enough gasoline in the tank to keep driving employment forward. Impending Medicaid cuts, for example, could severely slow it down. What is more, the sector might turn out to not be providing as much oomph to job growth as the official data now show.

Friday’s jobs report reinforced the trend, painting a picture of a sharply slowing labor market, with health services one of the few relatively bright spots. Indeed, absent gains in health-services employment in August, the private sector would have shed jobs last month.

So far in 2025, the economy has added an average of about 74,000 private-sector jobs a month, according to the Labor Department, a step down from last year’s average gain of about 130,000 jobs. Take away the roughly 64,000 jobs that health services have been adding each month, though, and the remainder of the private sector has been contributing only about 9,400 jobs a month.

Both healthcare and social assistance tend to add jobs steadily, even in economic downturns. Healthcare is something people spend money on even when they are cutting back elsewhere, and the healthcare needs of an aging population have contributed to the sector’s underlying growth. The same goes for the closely related social-assistance sector: A bit more than half of its 5.2 million jobs are in services such as home care for the elderly and disabled.

All told, there are now 23.5 million health-services jobs in the U.S., or about one in six private-sector jobs. That compares with 12.7 million manufacturing jobs, and 15.6 million jobs at retailers. Only the professional and business-services sector, a catchall category that includes everything from lawyers to security guards to telemarketers, comes close, with 22.5 million employees.

Health-services workers earn about $36 an hour, on average, putting them in the middle of the pack when it comes to U.S. wages. But there is a huge amount of variance, with the sector including everyone from six-figure surgeons to home health aides just getting by.

The steadiness of employment in health services is part of its attraction for many workers. This was especially the case in the years after the 2008-09 financial crisis, when the sector kept adding jobs even as employment elsewhere faltered.

The pandemic was different. From February 2020 to April 2020, health services shed nearly 2.3 million jobs. And then, as lockdowns began to lift, recovery was achingly slow—a reflection of a variety of factors. Many Americans deferred nonessential care. Burned-out nurses quit the field. And low-wage health-services workers decamped for rising wages in retail stores or restaurants. Outside health services, private employment returned to its prepandemic level by March 2022, but employment in health services didn’t recover until that October.

Even then, it was well below the level one would expect based on the sector’s growth trend over the two decades before the pandemic. As a result, demand for health-services workers was still high, and the sector kept powering the labor market even as growth elsewhere cooled. But over the past year the number of health jobs has risen above its prepandemic trend, raising the question of how many jobs it can keep adding.

Indeed, there is some concern that Labor Department data might be overstating strength in the two sectors and will be revised lower. Goldman Sachs economists note that data from payroll processor ADP shows that the private health-services and education sectors have actually been shedding jobs this year, even though the Labor Department figures show continued growth. (ADP doesn’t break out health services separately from education.)

Still, the Goldman economists suspect that the ADP data might itself be overstating any weakness. “Employment counts from large healthcare companies and views from our healthcare sector analysts suggest that the truth might be somewhere in the middle,” they wrote.

Cuts to government health spending could also weigh on hiring. As a result of President Trump’s “one big, beautiful bill,” Medicaid spending will be reduced by $911 billion over the 10 fiscal years ending in 2034, according to an analysis of Congressional Budget Office estimates conducted by health-research nonprofit KFF. Those cuts are heavily backloaded—in fiscal 2026, which starts on Oct. 1, they amount to $17 billion, versus $165 billion in 2034.

Businesses that are heavily reliant on Medicaid spending, including hospitals and nursing homes, might be leery of increasing their payrolls.

In the Federal Reserve’s latest Beige Book, which compiles economic anecdotes from the 12 regional Fed banks, the New York Fed noted on Wednesday that community leaders “anticipated that upcoming changes to Medicaid may cause reductions in health care services more broadly, including hospital closures.” The Cleveland Fed reported that healthcare providers in a recent survey “indicated that potential Medicaid cuts would significantly impact their budgets.”

The cuts could hurt those who serve the elderly and disabled. An August report from the Congressional Research Service found that as of 2023, Medicaid paid 46% of total bills for “long-term services and supports,” a category that includes nursing homes and residential care facilities.

And the ranks of the uninsured could swell in relatively short order: The CBO estimates that by fiscal 2027 there will be five million fewer people with health insurance relative to its estimates before Trump’s new mega law.

Immigration restrictions could also reduce the supply of available workers. In 2023, about 18% of people in healthcare occupations were foreign-born, according to the Census Bureau, slightly higher than the 17% for other occupations. For some jobs, though, dependence on immigrants is much higher: 40% of home health aides are foreign-born.

Still, even if the growth in health-services jobs starts to slow down, the sector is unlikely to start shedding workers. America is aging, and as people age, their health needs will only grow. There are now about 64 million people age 65 or older living in the U.S. In just five years, the CBO estimates, there will be eight million more.

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