https://www.axios.com/2026/01/26/health-care-hiring-boom-job-growth-stalls?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top

The health care job growth that’s powered the labor market since the COVID pandemic is stalling out.

Why it matters: 

Republican cuts to federal health programs, AI automation and rising costs are making health systems and other employers level off hiring — including for jobs requiring a professional license like nurses or physical therapists.

• The results could widen gaps in care and exacerbate health disparities.

By the numbers: 

Health care employment drove most of the month-by-month job growth last year, increasing by an average of 34,000 jobs per month, according to the Bureau of Labor Statistics.

• But that’s less than health care’s monthly average increase of 56,000 roles in 2024.

Health care hiring has essentially returned to a pre-pandemic pattern of slower growth after a post-COVID surge driven by returning patients and hospitals replacing burned-out workers, said Neale Mahoney, an economics professor at Stanford.

• “It was only a question of when … and we’re starting to see it now,” Mahoney said.

Federal policy changes could further chill hiring.

• Hospitals face financial pressure from the nearly $1 trillion cut to federal Medicaid spending in the GOP budget law. That’s combined with rising costs from treating more uninsured patients and other factors.
• New caps on federal student loan borrowing could also push students away from clinical careers, many of which require pricey advanced degrees.
• It wouldn’t be a surprise if a rise in deportations — combined with fewer foreign-born health workers opting to come to the U.S. on visas — dried up the pipeline of available help, especially in segments like home care.

Case in point: 

Alameda Health System, a safety-net provider based in Oakland, California, announced last month that it’s laying off 247 employees, including clinicians.

• Administrators cited the system’s precarious finances: It expects to lose $100 million annually by 2030 as a result of the Medicaid cuts, per CBS San Fransisco.

AI automation is also pushing some providers to cut administrative staff.

• Revere Health, the largest physician-owned health system in Utah, announced in September that it will lay off 177 employees, citing a partnership with a company that automates claims processing.

• Clinical jobs in health care are more insulated from automation, and AI may actually help extend the clinical workforce where shortages exist.
• Still, some clinicians are concerned. Almost 15,000 nurses in New York City went on strike this month, demanding new safeguards around AI use in hospitals, among other things.

What they’re saying: 

This past year represented “a repositioning of the labor market,” said Rick Gundling, chief mission impact officer at the Healthcare Financial Management Association.

• Health systems are doing more targeted hiring, he said. They might look to downsize in revenue management but increase their clinical staff.

The intrigue: 

Demand for care is still high. The “silver tsunami” of aging Baby Boomers may keep jobs plentiful, said Laura Ullrich, director of economic research in North America at the Indeed Hiring Lab.

• The U.S. is projected to be short some 100,000 health care workers by 2028, after all.
• The question is whether the sector will remain near full employment, or whether circumstances will drive another surge.
• “My opinion as an economist is that the tailwinds are stronger than the headwinds in health care,” she said.