The Labor Market May Face Dislocation Under a Second Trump Administration
The labor market may be poised for significant changes as President-elect Donald Trump prepares to take office for the second time. Over the past two years, the healthcare sector has dominated job growth, adding 902,000 jobs in 2024, largely due to Covid-related spending and an aging population. However, this trend may be disrupted by a second Trump administration, particularly if it leads to mass deportations and a renewed debate over foreign labor visas.
Immigrants account for nearly 18% of healthcare workers, and mass deportations could lead to shortages and higher costs. This could result in inflation and macroeconomic problems. The government sector, which has been the second-fastest growing sector over the past two years, may also face workforce reductions under Trump’s proposed Department of Government Efficiency.
On the other hand, a Trump administration may benefit sectors such as manufacturing and mining and logging, which saw weak job creation in 2024. Trump’s proposed tariffs could boost growth in these industries, but the impact is uncertain.
As the labor economy moves forward, experts are focused on the share of corporate sector income that goes to workers versus profits, which remains “very, very low.” When workers have more money in their pockets and spend it on goods and services, it drives production and services. There is still room for wages to rise without putting upward pressure on inflation.
