The U.S. economy has quietly undergone a historic transformation: Healthcare is now its dominant jobs engine. As manufacturing has shrunk, hospitals, clinics and health services have stepped in to fill the void, driving about one-third of the country’s total employment growth over the past year, according to The New York Times.
Despite healthcare being the top employer in 38 states, the industry faces an uncomfortable paradox: It may lead the labor market, but it does not have enough workers.
Six things to know about the healthcare labor market and the questions surrounding its growth:
1. Healthcare is the nation’s largest employer — and still growing. Healthcare jobs comprise about 13% of the overall workforce, up from 9% in 2000. The sector has expanded through recessions and consistently outpacing industries such as manufacturing and retail, according to the report. The growth is fueled by several factors, including an aging population, rising chronic disease prevalence and expanded access to care through Medicaid and the ACA.
2. In 38 states, healthcare is the largest single employment sector. Hospitals and health systems have become economic anchors — not only in major metropolitan areas such as Cleveland and Pittsburgh, which have transitioned from manufacturing hubs to healthcare economies, but also in small towns where the local hospital is often the largest employer, according to the report.
3. Workforce shortages persist. Despite the healthcare sector’s scale, demand continues to outpace supply. A nationwide shortage of 100,000 healthcare workers is anticipated by 2028. Nursing schools are graduating as many students as they can, and the number of students enrolling in nursing undergraduate and graduate programs increased in 2025, reversing a several-year-long downward trend. Behavioral health remains a particular pain point, with providers unable to meet surging demand for therapists and counselors.
4. Hospitals can be a state’s largest employer — but still not have enough people. It is a structural irony within the healthcare labor market. Hospitals and health systems may lead local economies, yet they can still be unable to fully staff critical departments. Persistent vacancies, particularly in nursing and behavioral health, continue to challenge both clinical quality and financial sustainability.
5. Federal policy could disrupt healthcare’s growth trajectory. The Trump administration’s proposed Medicaid cuts — about $1 trillion — would significantly strain health systems, particularly those serving low-income and rural communities. Medicaid accounts for about one-sixth of total healthcare spending. Almost 20 million Americans could lose their health insurance should the “One Big Beautiful Bill Act” be signed into law, according to June 30 data from the Joint Economic Committee-Minority. The legislation would likely also significantly affect healthcare job growth, according to the Times.
6. Efficiency and technology are beginning to reshape healthcare employment. Advances in AI, automation and machine learning are beginning to reduce the need for some clinical and administrative positions. Automation of back-office functions and potential productivity gains for clinicians may slow future hiring even as demand for care rises, according to the report.
Click here to read the Times report in full.
