America’s labor market is cooling, and workers are quietly turning to Uber and DoorDash to fill the income gap

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America's labor market continues to cool, and the gig economy is quietly absorbing some of the employment strain being felt across the country.

A new Goldman Sachs analysis found that platform-based gig work opportunities — which include major tech players like Uber (UBER), DoorDash (DASH), and Instacart (CART) — are holding up as traditional payroll growth cools.

About 20% of people who lost pay, lost a job, or had hours cut turned to gig platforms to make up the difference, the analysis said. More signs of a shrinking labor market are expected in this week's delayed September payrolls report, which is set to be released on Thursday.

Goldman found that gig hours rose the most in cities where payroll growth slowed, signaling that workers are taking on extra shifts to make up for lost hours or pay in traditional jobs.

That shift is happening as broader labor market cracks begin to show.

Data from Challenger, Gray & Christmas reported that over 153,000 job cuts were announced in October, the worst reading for that month since 2003.

And according to payroll processor ADP, private employers shed an average of 11,250 jobs per week for the four weeks ended Oct. 25. This data showed a deterioration from the firm's report earlier this month, which indicated private employers added 42,000 jobs in October, the first monthly gain since July.

All told, companies have announced more than 1.1 million layoffs so far this year, a 44% increase from the total number of layoffs in 2024. Tech and retail have led the reductions, with notable announcements from Amazon (AMZN), Target (TGT), and UPS (UPS), among others.

Those pressures help explain why the gig economy is becoming a backstop. But even as it expands, the official data doesn’t capture the full picture.

According to Goldman's work, 15% of people counted as unemployed or “not in the labor force” in federal jobs data are actually doing gig work. In other words, far more Americans are working than the headline numbers suggest but in jobs that don’t resemble traditional employment.

The growing number of people who are technically working but in lower-paying, less stable roles helps explain why many Americans still feel squeezed. Workers are stitching together income from multiple sources, often without benefits, predictable hours, or the wages they earned in full-time jobs.

The analysis found that gig workers earn only 50%-65% as much per hour as they did in their previous traditional jobs — even as this year's decline in immigration has marginally pushed up gig worker wages in some metro areas.

While the gig economy can cushion some of the blow from layoffs, that safety net has limits. Goldman wrote: "The support available to some workers in normal times would likely be inadequate for all job losers in a recession."

Read more: Worried about job security? Take these 5 steps now to protect your finances.

And workers aren’t the only ones adjusting. Employers, especially smaller firms, are too.

Entrepreneur and “Shark Tank” investor Daymond John told Yahoo Finance last week, many small businesses “are cutting back on their staff and people” as tariffs, slower demand, and tighter margins weigh heavily on Main Street.

"If you're struggling, understand that most jobs are going to go away," he said.

All of this sets the stage for Thursday, when the government will finally release the delayed September employment report, the first official labor-market readout since September after the longest government shutdown in US history.

White House officials have already cautioned that the report may be incomplete, limiting how much clarity economists can glean on the state of hiring.

The uncertainty comes as some Fed officials have taken a more cautious tone on the need for additional rate cuts, shifting expectations for a December move from a near certainty to a coin toss.

Allie Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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