Even though it accounts for almost 20% of the U.S. economy and acts as a crucial support, the newest health care employment figures underscore just how unstable the labor market remains.
The health care sector shed over 28,000 jobs in February, per Friday’s Bureau of Labor Statistics employment report—nearly a third of the month’s total 92,000 job losses. This drop marks the industry’s first decline in more than four years.
For years, the sector was seen as protected from the forces driving job contraction in most other industries—like tariffs, AI, and economic instability. Last year, nearly all job growth came from health care and social services. In 2025, the U.S. economy added just 116,000 jobs overall, but health care alone contributed 693,000. Without that, the total U.S. economy would have lost about 577,000 jobs.
“Clearly, health care and social assistance have been propping up the labor market,” Laura Ullrich, director of economic research at hiring platform Indeed’s Hiring Lab, told .
Economists aren’t panicking yet, though: The drop isn’t an immediate worry because the industry faced some of the biggest nursing strikes in decades earlier this year. Still, this blip has exposed how fragile the labor market is if this key sector runs into trouble down the line.
“We’ve discussed extensively over the last seven or eight months that the labor market depended heavily on health care—and social assistance—for job growth, and that poses risks,” Ullrich said.
“If an economy—or labor market—has lopsided job growth, concentrated in one or a few sectors, you risk job losses if that sector weakens,” she added. “That’s exactly what we saw on Friday.”
The silver lining of a silvering population
The health care sector’s ongoing growth during a slowing labor market is mostly due to the aging baby boomer population—with the oldest now 80 and the youngest approaching retirement. Per Centers for Medicare & Medicaid Services data, personal health care spending for older adults jumped to $1.2 trillion in 2020, or over $22,000 per person. What’s more, this generation holds far more wealth than Gen Z or millennials, and they’re choosing to spend not just on necessary care but also on elective procedures and wellness activities to boost their quality of life.
Health care jobs also benefit from some resistance to AI-driven job displacement. Anthropic’s recent research on AI’s labor market effects found that AI could handle 58% of health care practitioners’ tasks, but only 5% are currently automated. For health care support roles, 38% of tasks could be AI-covered, with just 4% currently. In contrast, 94% of office and admin tasks are AI-capable, with 42% already using the technology.
“They’re definitely using AI, and that will grow as the tech advances,” Ullrich said. “But a lot of health care jobs are in roles that need significant in-person interaction, so those positions are less likely to be affected by AI.”
Even though the aging population’s rising demand will keep health care growing, a projected 8% nurse shortage by 2028 (per the National Center for Health Workforce Analysis) could hinder that growth rate. Licensing rules for many health care jobs make it harder for people to enter the field. Additionally, fewer non-medical institution job openings for health care roles might also slow the industry’s employment growth.
“I expect to see a continuation of increased demand, but also limited labor supply,” Ullrich said.