Mental health jobs boom threatened by Trump’s funding cuts

Modern Healthcare – Wednesday, July 9, 2025
By Maria Clara Cobo and Nazmul Ahasan, Bloomberg

Mental health providers, the fastest-growing industry in the U.S. since the start of the pandemic, risk a sharp reversal of fortune as President Donald Trump seeks to eliminate billions of dollars in funding that enabled their expansion.

In only a few months, the Trump administration has already sought to revoke more than $11 billion for addiction and mental healthcare and $1 billion for mental health services in schools. It also said it would no longer enforce a mental health parity law that mandates that mental health treatment should be considered by insurers as equal to physical healthcare.

Together, the moves threaten to stall or even reverse the explosive gains the industry has made over the last several years. The pace of increase in headcount so far in 2025 has moderated to the slowest since 2021, according to the latest figures from the Bureau of Labor Statistics. Though it may be too soon to tell whether this comes as an effect of the potential funding cuts, it’s clear that many organizations have already shifted into a defensive posture.

“The cuts will stop the pipeline development in its tracks,” said Kelly Vaillancourt, director of policy and advocacy at the National Association of School Psychologists. “We are hearing that school districts are already furloughing people and deciding they are not going to hire people they were planning on hiring. The domino effect of this is pretty tremendous and the harm will be felt for a very long time.”

Employment in the mental health industry has grown at a rapid pace since 2020, thanks in part to federal grants funding training programs to expand and improve the workforce. At the start of the pandemic, there were about 123,400 on payrolls in offices of mental health practitioners, according to the BLS. That number has since more than doubled to approximately 273,000.

Those investments during the pandemic enabled providers to expand care networks, launch virtual services, and raise wages for long-overworked psychologists. By 2023, the number of people receiving mental health treatment had more than doubled versus 2019, according to data from the Substance Abuse and Mental Health Services Administration — one of the agencies Trump seeks to dismantle.

Many of the Biden administration’s grant programs — focused on expanding access in underserved areas, boosting the provider pipeline, and integrating behavioral services into primary care — are also being reined in.

A spokesperson for the Department of Health and Human Services said programs on the chopping block were specific to a pandemic that’s now over, adding that HHS remains committed to investing in critical mental health services grounded in evidence-based practices.

Higher Wages

In addition to expanding employment, the funds also allowed providers to expand service offerings and raise wages, which has been critical for an industry that has itself been plagued by stressful working conditions and employee burnout amid breakneck expansion. In a 2024 survey conducted by the American Psychological Association, about one-third of psychologists reported feeling burned out, with early-career psychologists disproportionately affected.

Employees in offices of mental health practitioners made more on average than those in other industries in the 2000s, when headcount was much smaller. But in the decade between the Great Recession and the pandemic, pay trends didn’t keep up with the broader economy: By February 2020, average hourly earnings in the field had slipped to just 88% of the national average.

Since then, hourly earnings have regained some ground, and as of May stood at $34.22, or 94% of the national average. But loss of federal support could amount to removing a key puzzle piece that has enabled ongoing expansion.

“Our ability to pay a living wage will go down, our ability to support workforce retention will go down, as well as our ability to serve the community if we can’t get paid to do the work,” said Katherine Mague, senior vice president of quality, development, communications and social justice at the Behavioral Health Network, an organization that provides mental health services in Massachusetts.

“In times of uncertainty, we try to see if there are efficiency efforts that we can embark on because there isn’t a bottomless drawer of money,” she said. “But there is a bottomless pit of need.”

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