Health care jobs drives labor market while other sectors contract

Quartz · Nicole Villalpando/The Austin American-Statesman via Getty Images

Catherine Baab

Thu, February 12, 2026 at 11:41 PM GMT+9 2 min read

The latest employment report from the Bureau of Labor Statistics contained an eye-catching surprise, with January delivering stronger-than-expected job gains. But the concentration of jobs growth in health care and “social assistance” work continues a worrying trend. If the only sectors that are adding jobs are fields characterized by inelastic demand, and tied to America’s aging population, what does that say about the overall health of the economy?

For January, the BLS report released Wednesday showed 82,000 jobs added in health care and a further 42,000 in related care work — think nursing home staff, home health aides, and childcare workers. But strip out those gains, and the picture that emerges is one of contraction, not underlying strength. Federal government employment (-34,000) fell. The same report also showed some white-collar fields — like financial services (-22,000) — seeing marked declines, while other simply stayed flat, neither growing nor contracting, even as corporate capex rises to historically unprecedented levels.

Since January of 2025, almost 750,000 jobs have been added in health care and private education, while nearly 300,000 jobs have disappeared across other fields, The Wall Street Journal reports. As Justin Wolfers, a professor of economics at the University of Michigan, told The Journal: “I worry that the rest of the economy is shrinking.”

In other words, reliance on a single sector or handful of sectors could indicate serious U.S. labor market weakness.

Demographic changes help explain rising demand for health care. Almost 20% of the U.S. population is 65 and older, while the oldest members of the massive Baby Boom generation are turning 80 years old in 2026. With birth rates and immigration falling, the median age in the U.S. now falls around 39 to 40 years old, up from 30 in 1980 and 35 in 2000.

While some countries in Asia and Europe have larger populations of older people, like Japan and Italy, the U.S. is aging faster than it ever has in its history. Experts say that if current trends continue, older Americans will outnumber those under the age of 15 by the mid-2030s.

Aside from health care, “labor demand came to a standstill last year,” Jeffrey Roach, chief economist for LPL Financial, said in a statement. “The economy has an anemic demand for workers.”

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