Healthcare has been propping up a shaky labor market. For the first time in over four years, the sector shed thousands of jobs

Despite making up nearly a fifth of the U.S. economy and providing a much-needed set of crutches, the latest healthcare jobs data highlights just how wobbly the labor market is.

Over 28,000 jobs in the healthcare industry were lost in February, according to the  Bureau of Labor Statistics jobs report on Friday, making up nearly one-third of the 92,000 total jobs lost for the month. The dip marks the sector’s first decline in more than four years.

The sector has long been considered to be safeguarded from the factors that have led to a growing period of contracting employment in most other industries, such as tariffs, AI, and other economic uncertainties. Almost all growth last year came from healthcare and social services. While the U.S. economy only saw an increase of 116,000 jobs in 2025, the healthcare industry alone added 693,000 jobs. That means without the industry, the total U.S. economy would have lost roughly 577,000 jobs.

“Clearly, healthcare and social assistance have been propping up the labor market,” Laura Ullrich, Director of Economic Research at hiring platform Indeed’s Hiring Lab, told Fortune.

But economists are not sounding the alarms just yet: the dip is not an immediate cause for concern as earlier in the year, the industry faced some of the largest nursing strikes in decades But this stumble has laid bare how vulnerable the labor market is, should this one sector experience challenges in the future. 

“We’ve been talking a lot over the past seven, eight months about the fact that the labor market was heavily reliant on healthcare for employment growth—healthcare and social assistance—and that there’s some danger there,” Ullrich said.

“When you have an economy that is—or a labor market—where job growth is really unbalanced, where it’s just happening in one sector or a couple of sectors, you’re at the risk of seeing job losses if that sector doesn’t remain strong,” she added. “And that’s what we saw Friday.”

The silver lining of a silvering population

Healthcare’s continued growth amid a cooling labor market is largely a result of an aging population of baby boomers, the oldest of which are 80, and the youngest of which are nearing retirement age. Personal healthcare spending for older adults surged to $1.2 trillion in 2020, equivalent to more than $22,000 per person, according to Centers for Medicare & Medicaid Services data. Moreover, this older generation holds a disproportionate amount of wealth compared to Gen Z and millennials, and surprisingly, are electing to not just spend on required healthcare, but also on optional procedures and wellness experiences to increase quality of life.

Jobs in healthcare may also have the advantage of being resistant to some AI-driven displacement. Anthropic’s latest research on AI’s labor market impacts found healthcare practitioners would be able to have AI cover 58% of tasks, with just 5% of task coverage being observed today. For healthcare support, 38% of tasks could be capable of being covered with AI, 4% of which are currently. That’s compared to 94% of office and administration tasks capable of being covered by AI, with 42% observed to already be covered by the technology.

“They’re clearly using AI and that use will continue as the technology improves,” Ullrich said. “But much of healthcare employment is in sectors that are in jobs that require a lot of physical interaction, and so those jobs are less likely to be disrupted by AI.”

While healthcare’s growing demand from an aging population means it will continue to grow, a shortage of nurses—predicted to hit 8% by 2028, according to the National Center for HealthWorkforce Analysis—threatens the rate of that growth. Licensing requirements necessary for many healthcare roles make it harder for individuals to apply for opportunities in the industry. Moreover, fewer hiring opportunities for healthcare jobs outside of medical institutions may also slow down the industry’s job growth.

“I expect to see a continuation of increased demand, but also limited labor supply,” Ullrich said.

This story was originally featured on Fortune.com