U.S. Labor's Structural Shift: Jobs, Tech, Healthcare
Last week, the U.S. Bureau of Labor Statistics released its employment report for August. Key quotes and observations include:
Stable Rate, Stagnant Growth “Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April … the unemployment rate, at 4.3 percent, also changed little in August.” The U.S. labor market is shifting into a new equilibrium where wages rise because companies are retaining existing workers rather than adding new ones.
Federal Contraction “Federal government employment continued to decline in August (-15,000) and is down by 97,000 since reaching a peak in January.” Federal jobs may have a diminishing role in labor market stability, with ripple effects for regions reliant on government employment.
Healthcare Resilience “In August, health care added 31,000 jobs, below the average monthly gain of 42,000 over the prior 12 months.” Healthcare is emerging as America’s new manufacturing base: labor-intensive, resilient, and resistant to automation.
Workforce on the Sidelines “The number of people not in the labor force who currently want a job, at 6.4 million… was up by 722,000 over the year.” This suggests the U.S. economy is being sustained less by broad hiring and more by capex spending (tech, energy, automation) and care for an aging population.
OUR TAKE
The U.S. labor market is undergoing permanent structural change. Companies pay existing workers more while simultaneously investing in automation and technology to drive productivity growth.
The economy is bifurcating into productivity-driven sectors (AI, automation, enterprise tech) and care-intensive services (healthcare, elder care, social services). In contrast, industries such as traditional manufacturing and retail remain under pressure as they face both automation risks and shifting demand patterns
Companies that maintain unsustainable workforce levels may eventually be forced into significant employment corrections.