What explains last month’s surprisingly strong employment report? “Nearly all of the 130,000 new jobs added in January were healthcare jobs,” the Wall Street Journal observed.
This continues the more-than-a-century-long trend of steadily growing employment in the sector. An aging population, the spread of effective treatment options, and the labor-intensive nature of health-care services have contributed to this consistent growth.
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Health-care jobs deliver essential services and support millions of households across the United States. But they impose costs, too, on anyone who purchases insurance, pays taxes, or seeks affordable access to care. These rising costs may diminish employment in other sectors.
Health care continues to add jobs even as other industries shrink. Over the past year, the health and social-assistance sector gained about 760,000 jobs, while the rest of the economy lost about 400,000. Medical care alone now makes up 12 percent of non-farm jobs, compared with just 2 percent in 1960.
The growth of health-care jobs reflects the expansion of insurance and entitlement programs. Underlying these trends is the steady improvement of medical capabilities. The more that medical services can do for the sick, the more people want these services. The more health care extends life into old age and despite disease, the more people will spend on it.
As countries become more affluent, their demand for many goods is satiated—but not so for health care. The share of America’s GDP dedicated to agriculture collapsed from 15.5 percent to under 1 percent between 1900 and 2023; by contrast, GDP dedicated to health care surged from about 3 percent to 18 percent over that same period.
This growing demand translates directly into job growth. Medical care is labor-intensive, requiring additional workers as it becomes more sophisticated. Health-care jobs on average pay 55 percent more than the average occupation, and—because 90 percent of funding comes from insurance or entitlements—these jobs are less vulnerable to the business cycle. Medical care generally must be delivered in-person, meaning that most jobs won’t be outsourced to cheaper workers abroad or disrupted by international trade. (Foreign-born workers play a large role, however, and fill about 40 percent of home-health jobs.)
Artificial intelligence will probably displace some health-care jobs. Many hope that the technology will reduce costs associated with billing and processing insurance claims. Automated medical scribes already help physicians document encounters with patients for clinical or regulatory purposes. Improved software and robotics will likely automate more diagnostics and surgeries, and if these technologies allow clinicians to treat more patients per day, fewer medical staff may be needed.
But technological improvements are also likely to spawn new forms of treatment, which will create new healthcare jobs. Safety concerns, patient preferences, and regulatory mandates will also likely combine to keep health care relatively labor-intensive. Innovations may facilitate the localized delivery of specialty services, for which today’s patients must travel to major medical centers.
And with health care so dependent on revenue from federal entitlements and highly regulated private insurers, the political pressure to maintain jobs is also likely to keep employment in the sector buoyant, regardless of technological developments.
Long-term care, which inherently requires a personal touch, is particularly likely to continue generating additional jobs. The aging of the population and the growing proportion of seniors without children nearby will further fuel demand for care. From 2019 to 2023, Medicaid home-based support-services spending surged from $97 billion to $146 billion. Though social services for the elderly and disabled employ just 12 percent of all health-care and social-assistance workers, that field accounted for 41 percent of the broader sector’s job growth in 2025. But these jobs are often poorly paid, with yearly wages averaging just $34,990 in 2024.
Health care cannot be the economy’s sole engine of job growth. From the perspective of those paying, labor is a cost, and it accounts for 84 percent of medical-practice and 56 percent of hospital expenses. Though health and social care employs 12 percent of U.S. workers, the costs generated by this employment can make accessing medical care more expensive, while increasing the burden of taxes and insurance premiums on other employment.
Health-care jobs can provide a solid income, source of purpose, and community engagement for millions of Americans. But their justification ultimately depends on the value they provide to patients. To the extent that health-care costs are unduly inflated by public policy, it means that households and the government have less money to purchase other goods and services. In turn, that reduces employment in other industries—hurting Americans both as employees and consumers.
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