Healthcare sees positive growth amid weak jobs data

Over the last few months, the U.S. labor market has slowed significantly. According to new data from the Labor Department, the economy has added an average of roughly 74,000 private-sector jobs a month so far this year, far below last year's average increase of roughly 130,000 jobs.

The bulk of these job increases have been in healthcare and social services, which have added around 64,000 jobs each month. The healthcare sector alone added an average of 42,000 jobs each month over the last year.

In August, the healthcare sector added 30,600 new jobs, including roughly 9,000 in hospitals, 13,000 in ambulatory care services, and 9,000 in nursing and residential care facilities. Although this increase was smaller than the monthly average, job growth in the healthcare sector helped offset losses in other industries.

Despite positive job growth in the healthcare sector, the overall numbers have been weaker than expected. The Labor Department last Friday released revised data, decreasing the number of healthcare jobs added by 5,200 for June and 9,300 for July. For hospitals, this means there were 800 fewer jobs added in June and 4,600 fewer jobs in July than previously reported.

However, even with expected job growth, recent policy changes could significantly impact the healthcare industry, including hiring.

For example, President Donald Trump's new tax law, the One Big Beautiful Bill Act, includes over $900 billion in Medicaid funding cuts over the next 10 years. In fiscal year 2026, which begins Oct. 1, $17 billion in cuts will go into effect, and these cuts will further increase over time, reaching $165 billion in 2034.

According to the Wall Street Journal, businesses that rely on Medicaid, including hospitals and nursing homes, might be wary of increasing their payrolls due to the upcoming funding cuts.

In the Federal Reserve's latest Beige Book, the New York Fed said that community leaders "anticipated that upcoming changes to Medicaid may cause reductions in health care services more broadly, including hospital closures." Similarly, the Cleveland Fed reported that healthcare providers have "indicated that potential Medicaid cuts would significantly impact their budgets."

New immigration restrictions could also reduce the supply of available healthcare workers. Recently, visa restrictions jeopardized hundreds of international doctors ahead of their residencies at U.S. hospitals. Some healthcare jobs, such as home health aides, are also heavily reliant on immigrant workers.