How surprising is the role of healthcare employment growth in today’s labor market?

This Friday we will get new information about employment for May 2025, but one trend that stands a good chance of continuing is the high share of healthcare in monthly net employment gains. During the post-pandemic recovery, growth in healthcare employment has been an increasingly large share of total growth, as shown in Figure 1. 2025 saw an intensification of that trend, as industries other than healthcare tended to experience negative net growth.

However, the labor market may not be quite as unbalanced as this view makes it appear. Healthcare employment growth has actually been cooling in recent years: average monthly gains were above 80,000 during 2023, 70,000 during 2024, and below 60,000 during 2025 and early 2026. However, this is still above the roughly 40,000 per month pace of 2017–2019.  

Turning to a different BLS survey, we see that healthcare hires are a relatively small share of total hires. Every month, there are millions of hires in industries other than healthcare. In other words, the levels of gross hires—whether in healthcare specifically or in total—are far above the net employment. In healthcare, about 700,000 workers were hired in any given recent month. This amounted to 12.6% of total hires in March 2026, as shown in Figure 2. A slightly smaller number—roughly 650,000 workers—were fired or quit the industry in a given month. As shown in Figure 3, this constituted 12.0% of total separations in March 2026. Subtracting separations from hires leaves a relatively small difference that corresponds to net employment growth.1

The flows into and out of healthcare employment paint a different and more stable picture than one might expect, given the recent dominance of healthcare in the monthly payroll growth estimates. But it is true that—over the longer run—healthcare hiring has gradually grown as a share of total hires, rising from about 10% in early 2016 to nearly 13% in early 2026, as shown in Figure 4. It has also become a moderately larger share of the total nonfarm employment level, rising from 13.2% in April 2016 to 15.0% in April 2026. 

The direction of that change was entirely predictable, given the aging of the U.S. population and our rising need for healthcare. In fact, the Bureau of Labor Statistics predicted almost all of the increase from 2016 to 2026, as shown in Figure 5. (BLS employment projections extend ten years in the future, which is why we chose 2016.) Healthcare and social assistance employment growth only exceeded its BLS-predicted level by about a tenth of a percentage point. Interestingly, the biggest forecast misses (on the upside) were in transportation and utilities, manufacturing, and construction. The latter two industries were devastated by the Great Recession, and the 2016 predictions informed by that recent experience were somewhat lower than actual 2026 levels.

Having concluded that the trajectory of healthcare employment—viewed in isolation—is not particularly extraordinary or unexpected, it is worth thinking about the rest of the labor market. Why has payroll employment growth, outside of healthcare, trended so sharply downwards in 2025 and 2026? 

The most important answer is very likely the policy-induced downturn in labor force growth. With fewer immigrants arriving, and some previous immigrants leaving the country, the labor force is now growing very slowly. This matters for industry-specific labor supply and labor demand in ways that are largely outside the scope of this short article. On the supply side, industries have differing employment shares of foreign-born non-citizens, and (especially in the short run) this could matter for the sectoral pattern of employment growth after an immigration policy change. On the demand side, immigrants are less likely to have insurance coverage and have lower healthcare expenditures, which could make the healthcare labor market less sensitive to immigration policy changes.

The pace of labor force growth isn’t all that matters for employment: a booming economy could temporarily raise employment growth and a crashing economy could reduce it. But over the last year and a half, payroll employment growth has fallen to near its so-called breakeven level, roughly consistent with the pace of underlying labor force growth. With the labor market neither in a boom nor depressed, it may not be so surprising that our aging population necessitates a steady investment in healthcare. More broadly, labor market analysts will need to adjust their expectations for employment growth in the current demographic and policy environment, thinking carefully about the implications that environment has for assessing the state of the economy. 

The authors are grateful to Matthew Fiedler and David Ratner for insightful feedback on an earlier draft.