One Sector Props Up America's Employment Numbers While Others Collapse
The U.S. economy lost 13,000 jobs in June 2025, according to revised government data, ending a 53-month consecutive job-growth streak that began in January 2021. That reversal would dominate headlines except for one detail: the top-line numbers Americans see each month still show modest gains because healthcare and social assistance added 73,300 jobs in July alone, mathematically offsetting collapses across manufacturing, construction, and hospitality. Remove healthcare from the equation, and the labor market reveals what aggregate statistics conceal, a return to hiring weakness not seen since the aftermath of the 2008 financial crisis.
This isn't a story about one strong sector balancing a few weak ones. Outside of the pandemic, the U.S. economy hasn't added this few jobs in the first eight months of a year since 2010, according to employment data. The economy added just 22,000 jobs in August, with unemployment rising to 4.3 percent, its highest level in almost four years. Employers have been hiring at the slowest pre-pandemic pace since about 2013. These aren't temporary adjustments or seasonal fluctuations, they represent a fundamental shift in labor demand that healthcare's structural boom is obscuring from view.
Why Healthcare Keeps Hiring When Everyone Else Stops
Healthcare operates on different economic logic than the rest of the labor market because its demand comes from demographics rather than business cycles. The nursing sector maintains just 1.6 percent unemployment, and projections show an average of 193,100 job openings for registered nurses per year through 2032. The problem: between 2022 and 2032, only 177,400 nurses are expected to enter the workforce. This creates a structural shortage of roughly 16,000 nurses annually, meaning healthcare employers must continuously recruit regardless of whether the broader economy thrives or contracts.
This demographic imperative, an aging population requiring more medical care, makes healthcare countercyclical in ways other industries are not. When the Federal Reserve's beige book reports that many companies are delaying hiring until uncertainty diminishes, healthcare administrators cannot afford that luxury. The 73-year-old recovering from hip surgery needs nurses today, not when economic conditions improve. That inflexibility creates steady hiring even as other sectors freeze, producing employment numbers that suggest mild softness rather than the sectoral collapse actually underway.
The Collapse Hiding Behind the Averages
Strip away healthcare's contribution and a starkly different labor market emerges. Manufacturing saw outright job losses in July, continuing a pattern that began with the loss of roughly 1.4 million manufacturing jobs in 2020. As of April 2025, 313,000 durable goods manufacturing job openings remain unfilled, not because employers are hiring aggressively but because the positions exist in theory while hiring has effectively stopped. Construction tells a similar story: the industry averaged 383,917 job vacancies per month in 2023 while 480,333 experienced workers searched for positions, creating a surplus of nearly 100,000 qualified workers competing for insufficient openings.
Leisure and hospitality, which maintained the highest hiring rates among all industries since November 2020, ranging between 6 percent to nearly 19 percent, saw little or no hiring in July. Transportation joined construction in adding essentially zero jobs. The national average hiring rate has hovered around 3.7 percent since January 2024, but that average conceals the reality that most sectors have stopped expanding their workforces while healthcare continues hiring out of necessity rather than optimism.
The unemployment picture reinforces this divergence. In July, the number of unemployed people eclipsed the number of job openings for the first time since April 2021, marking a fundamental shift in labor market dynamics. More telling, the number of people searching for work for more than 27 weeks jumped 11 percent to 1.8 million in July compared with a year earlier. Long-term unemployment indicates not temporary disruption but structural mismatch, workers possess skills that no longer align with available positions, or positions simply don't exist in sufficient numbers.
When Participation Meets Obstruction
The labor force participation rate of prime working-age individuals, those 24 to 54 years old, reached a 20-year high of 83.9 percent in August 2024 and now hovers around 83.6 percent. This near-record participation demolishes the narrative that workers have abandoned the labor market or chosen not to work. Americans in their prime earning years are showing up, looking for jobs, and increasingly finding nothing. The slight decline from the August 2024 peak doesn't represent workers giving up so much as the mathematical reality that some eventually exhaust their searches and exit the counted labor force.
The revised employment data underscores how quickly conditions deteriorated. The U.S. added just 19,000 jobs in May and 14,000 in June according to government revisions, with the July employment report showing employers hired fewer people than expected and sharp downward adjustments for the prior two months. The Bureau of Labor Statistics revises its data each month to reflect new information, with numbers frequently moving both up and down, but the pattern of consistent downward revisions suggests initial reports have been overstating labor market strength for months.
The Measurement Problem That Shapes Policy
Aggregate employment statistics serve a critical function in economic policymaking, they tell officials whether to stimulate growth or tap the brakes on an overheating economy. But averages that combine healthcare's demographic-driven expansion with other sectors' contraction produce a misleading picture of moderate softness rather than crisis. When the Federal Reserve evaluates whether to cut interest rates or maintain current policy, officials rely on headline unemployment and job creation numbers that healthcare's performance is artificially elevating.
This creates a dangerous feedback loop. Policymakers see 22,000 jobs added in August and 4.3 percent unemployment, concerning but not catastrophic figures, and calibrate their response accordingly. They don't see that construction workers face a labor market with 25 percent more job seekers than openings, or that manufacturing has returned to 2013-era hiring rates, or that removing one demographically-driven sector would reveal negative job growth. The aggregate numbers suggest an economy that needs modest support when sector-specific data indicates some industries require emergency intervention.
The comparison to recent coverage of China's electric vehicle overcapacity illustrates the broader pattern. Just as China's EV export numbers masked severe domestic market weakness, factories producing far more vehicles than Chinese consumers would purchase, healthcare hiring masks the collapse in domestic labor demand across most of the U.S. economy. In both cases, one strong metric obscures systemic problems, leading observers to misdiagnose the situation's severity and potentially misjudge the appropriate response.
What Happens When the Mask Slips
Healthcare cannot indefinitely compensate for weakness everywhere else, both mathematically and structurally. The sector added 73,300 jobs in July, but the broader economy lost ground in manufacturing while construction, hospitality, and transportation stagnated. Healthcare would need to accelerate hiring significantly just to maintain current aggregate job growth levels if other sectors continue declining, an impossibility given the structural nurse shortage already constraining expansion.
More fundamentally, healthcare's countercyclical stability only delays recognition of problems it cannot solve. Nurses treating patients contribute to economic activity, but they don't purchase the houses that construction workers build, the manufactured goods that factory workers produce, or the restaurant meals that hospitality workers serve at the same rate as a fully employed economy would. Healthcare hiring keeps unemployment statistics from spiking while doing little to address the demand collapse affecting other sectors. The result is an economy that looks stable in aggregate while experiencing sectoral depression in industries that employ tens of millions of workers.
The labor market's current configuration reveals a measurement system designed for different economic conditions, one where sectors rose and fell together rather than diverging into separate realities. When manufacturing, construction, hospitality, and transportation all weaken simultaneously while healthcare booms, averaging their performance produces numbers that accurately describe none of them. Policymakers and workers alike need sector-specific data to understand what's actually happening, but the headlines Americans see each month continue reporting averages that obscure more than they illuminate. Until that changes, expect continued surprise when aggregate numbers fail to match the economic reality that millions of workers outside healthcare experience daily.