The most recent U.S. jobs report showed that the health services sector remained a key source of strength for the labor market. Even during a difficult year for overall job growth, health care helped stabilize employment. However, economists warn that mounting pressures and policy uncertainty could threaten the sector’s momentum.
Why Health Care Employment Continues to Expand
Health care job growth is largely fueled by demographic changes, particularly the aging U.S. population. Jed Kolko, senior fellow at the Peterson Institute for International Economics, noted that as Americans grow older, demand for medical and long-term care services remains consistently high.
This demographic shift ensures ongoing demand for workers across hospitals, clinics, nursing homes, and home health care services, making health care one of the most resilient sectors of the economy.
Recent Trends and Industry Performance
In 2025, the health care sector added more than 404,000 jobs, averaging roughly 34,000 new positions per month. While this represents solid growth, it is slower than the pace seen in the previous year, when monthly gains averaged about 56,000 jobs.
Hospitals led employment growth with a 2.9% increase, followed by nursing homes and residential care facilities, which grew by 2.5%. Despite this expansion, experts caution that the workforce pipeline may not be sufficient to meet future demand.
Richard Frank, senior fellow at the Brookings Institution, emphasized the shortage of younger workers entering long-term care roles. He warned that as the population grows older and sicker, higher wages and better incentives may be necessary to attract and retain workers in these physically and emotionally demanding jobs.
Emerging Policy Challenges
Despite positive employment numbers, two major policy issues threaten to slow health care job growth:
- Immigration Restrictions: Tighter immigration policies have made it more difficult for health care providers to recruit workers. Immigrants account for approximately 28% of the long-term care workforce and 32% of home care workers. Reduced immigration could worsen staffing shortages in an already strained system.
- Potential Medicaid Funding Cuts: A recently passed tax and domestic policy law could reduce Medicaid funding by nearly $1 trillion over time. These cuts may strain hospital finances, potentially leading to layoffs or closures, especially as patient volumes rise without sufficient reimbursement.
While these funding reductions may not take effect immediately, their long-term impact could significantly affect employment levels and access to care.
Additional Factors and Broader Impacts
Other policy proposals, including potential cuts to the National Institutes of Health and changes to Medicare reimbursement models, could further influence workforce trends. A shift toward primary and outpatient care may alter job roles, though it may not drastically reduce overall employment.
Some states are pushing back against federal policy changes, creating uneven implementation across the country. This resistance could complicate employment data and make it harder to assess the short-term effects of these policies.
Growth in Social Assistance Jobs
Alongside health care, social assistance jobs saw strong growth in 2025. Employment in individual and family services—including personal care aides, social workers, and substance abuse counselors—rose by more than 289,000 jobs, an increase of nearly 9% year over year.
These roles are critical to supporting vulnerable populations and are expected to remain a major source of job growth as demand for social and behavioral health services continues to rise.
Outlook for 2026 and Beyond
Health care remains a cornerstone of the U.S. economy, but political and policy uncertainties are clouding its future. While demand for services remains strong, workforce shortages, immigration constraints, and Medicaid funding concerns could slow growth and strain the system.
Careful monitoring of policy developments will be essential to understanding how the health care labor market evolves in 2026 and beyond.
