By David Wainer

Forget the AI hype and the data-center boom. What's keeping the jobs market afloat these days is Grandma and Grandpa.

The recent numbers tell a lopsided story. Over the past year, the U.S. has added 156,000 jobs -- but healthcare alone was responsible for 375,000 new jobs. Strip out the medical sector, and the rest of the American economy is actually losing jobs.

That fragility was laid bare in February when a drop in healthcare hiring helped tip total employment into the red, shattering any illusion of broad-based growth. The dip was distorted by labor strikes, but it raises an important question: Can healthcare keep the economy healthy?

That question matters more than ever as tariffs, surging energy prices and the threat of artificial intelligence bear down on the broader economy. Healthcare is a bulwark against all three.

An aging population will keep demanding more services regardless of what happens in Silicon Valley or the Strait of Hormuz. No algorithm, trade war or oil shock is likely to change that.

For investors, this suggests that while healthcare employment will continue to expand, not every part of the sector will benefit equally. Providers delivering care in lower-cost settings -- particularly outside large hospitals and institutional facilities -- are positioned for steadier volume growth over time.

Health insurers, by contrast, might continue to face structural pressure from Washington.

The 2025 tax-cut law included more than $1 trillion in reductions to federal healthcare spending over the next decade, much of it carved out of Medicaid. At the state level, fiscal pressures have already prompted several legislatures to cut health services to balance their budgets.

"There will be a tug of war between an aging population and Medicaid cuts over the coming months and years," says Neale Mahoney, a health economist at Stanford University. Immigration policy adds another wrinkle: Home healthcare, a sector heavily staffed by foreign-born women, could face a labor squeeze.

Even so, don't bet against continued growth in this sector. That's because, quite simply, the math of aging is too large to ignore.

By 2034, according to the U.S. Census Bureau, older adults are expected to outnumber children. The 85-and-over population, the most care-intensive cohort, is projected to nearly double by 2035.

This demographic wave is why the Bureau of Labor Statistics expects healthcare and social assistance to be the biggest job creator over the next decade, adding about two million jobs. Its projected 8.4% growth rate eclipses the 7.5% projected for the AI-heavy professional and technical-services sector.

Crucially, healthcare jobs and health-insurance coverage, which is set to start declining owing to government policies, need not move in tandem. Much of the employment growth is happening where care is cheapest and most labor-intensive: in private living rooms and outpatient clinics. Home-visiting nurses, aides and physician assistants in outpatient settings can actually reduce costs, or at least aren't the primary driver of rising spending. The reason is straightforward. What drives labor growth isn't necessarily what makes U.S. medicine costly.

A $500,000 cancer treatment or a $35,000 heart procedure can cost two to three times what other wealthy nations pay, and you can't blame that on nurse salaries. If anything, the numbers suggest we are growing where care is cheaper.

Since 2020, home-health and personal-care roles have expanded by roughly 20%, and outpatient-center employment has grown at the same clip, according to an analysis by Mahoney and Caleb Brobst at Stanford. Meanwhile, employment at nursing and residential-care facilities -- where care is pricier -- has grown only 2%, while hospital employment has increased 10%.

Some of this growth is clearly a catch-up from the pandemic, when many healthcare jobs were initially lost. Healthcare can't expand at this pace indefinitely.

But a reset at a higher share of the workforce is entirely plausible. That's especially true as the caregiver-support ratio, the number of potential caregivers for every person 80 and over, is projected to drop from greater than 7 to 1 in 2010 to 4 to 1 by 2030.

One way to expand the workforce while containing costs is by helping seniors age in place. Many older Americans now prefer to stay at home, especially after the nursing-home scandals that emerged during the pandemic.

One company betting on that shift is InnovAge, which participates in PACE, a federal program designed to keep frail seniors in their communities rather than in institutions. The company has faced regulatory scrutiny in recent years, a reminder that caring for vulnerable populations will always demand close oversight. Still, Chief Executive Patrick Blair says rising costs and pressure on state budgets will likely accelerate the move toward community-based care.

As other sectors slow under the weight of tariffs, automation and higher energy prices, healthcare stands apart. Not because it's immune to pressure, but because the demographic math leaves little choice.

Write to David Wainer at david.wainer@wsj.com

(END) Dow Jones Newswires

March 22, 2026 05:30 ET (09:30 GMT)

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