The Labor Market Hasn’t Been This Secure Since Nixon Was President
Weekly initial unemployment claims for last week came in at 215,000, which is a very low level. Even more impressive, the average over the first six months of the year is around 213,000.
To put that in perspective, the last time the January through July period had claims this low was 1968 and 1969. The workforce was much smaller then, less than half the size it is now. We were experiencing an exceptionally tight labor market, and the Vietnam War draft was taking hundreds of thousands of young men off civilian payrolls.
Even in the pre-pandemic expansion of the first Trump administration, we never got this low over a six-month period. We did dip below this in the second half of the year in the post-pandemic hiring boom of 2022 and 2023, but that was an extremely unusual period.
The low level of layoffs—jobless claims are a proxy for layoffs—is notable for two other reasons. First, it defies the narrative that artificial intelligence is killing jobs. Second, it has gone almost unnoticed and certainly uncelebrated.
The legacy media describes the labor market as being in a “low hire, low fire” era, but that’s not really accurate. We’re not in a “low hire” environment: the economy has added 3.1 million jobs since January before season adjustments. After seasonal adjustments, we’re up 392,000 despite losing 157,000 jobs in February. Since then, we’ve added 548,000 seasonally adjusted jobs, an average of 137,000 per month. That’s not a low hire environment or a labor market locked in a stasis.
The Health Care Shift: More Workers, Fewer Layoffs
Why are so few people losing their jobs in this economy? Part of the answer is the growing weight of healthcare employment. The sector now accounts for roughly 15 percent of all nonfarm payrolls, up from 13.2 percent in 2016 and 10.2 percent in 2001. Since January 2025 it has added about 410,000 seasonally adjusted jobs while the rest of the economy produced a net gain of just 208,000. In June 2026 alone, healthcare contributed 22,000 of the month’s modest 57,000 total payroll increase.
Data from the Labor Department’s Job Openings and Labor Turnover Survey show that layoff rates in healthcare and social assistance are extraordinarily low. Even in the post-financial crisis slump, the layoff rate climbed to just 1.4 percent, well below the economy-wide peak of two percent. The latest JOLTS data shows a layoff rate of 0.9 percent for healthcare and social assistance, better than the economy-wide figure of 1.2 percent and much better than, say, professional and business services.
As a larger share of the workforce moves into jobs that are structurally resistant to downsizing, the economy’s overall layoff rate falls. That is exactly what we are seeing. The composition of employment has changed, and the data show the result: fewer pink slips.
The rise of healthcare employment is not the whole story, of course. The restoration of border security has helped bring down the entry of new workers, increasing the value of the existing labor force to employers. Many businesses are allowing retirements to adjust their workforce size, creating less of a need to lay off workers. Productivity gains and record profits also make workers on the payrolls more valuable. Strong corporate balance sheets mean that there’s less financial pressure to downsize. And the shift in trade policy has taken off pressure on businesses to send jobs offshore.
None of these is likely to change in the near future, absent an unlikely political upheaval in favor of a return to globalism, open borders, and deindustrialization. In particular, our aging population will likely require a large share of the workforce in healthcare, creating a sustained downward pressure on layoffs.
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