2025 Layoffs and Gig Work Absorption: Implications for Unemployment Data and Fed Policy

The 2025 U.S. labor market has seen 1.1 million layoffs through October, a 44% increase from the total 2024 layoffs and the highest since the 2020 pandemic [1][2]. Goldman Sachs research indicates that 15% of individuals classified as unemployed or “not in the labor force” in official data are actively engaged in gig work (Uber, DoorDash, Instacart) [1]. However, the Bureau of Labor Statistics (BLS) lacks a formal definition of gig workers and relies on outdated surveys (e.g., 2017 Contingent Worker Supplement) that prioritize main jobs, leading to significant undercounting of gig work activity [3]. This undercounting creates a gap between reported and actual labor market slack, as gig workers often lack job security, benefits, and stable income [5]. For the Federal Reserve, this distortion is critical: its dual mandate (price stability and full employment) depends on accurate data, and misjudgments could lead to misaligned policy decisions (e.g., keeping rates high longer than necessary) [4].

• Cross-domain Connection: The surge in layoffs has increased gig platform usage, but BLS data limitations mean this labor market adjustment is not fully reflected in official unemployment rates.
• Deeper Implication: Gig work acts as a short-term labor backstop but exacerbates precarity, with over 55% of gig workers intending to leave their roles within three months due to low pay and poor conditions [5].
• Systemic Effect: Data gaps in gig work measurement undermine the Fed’s ability to assess full employment, potentially leading to policy errors that impact economic growth and worker welfare [4].

• Risks
  : (1) Policy misalignment: Fed decisions based on undercounted data may fail to address true labor market slack; (2) Worker precarity: Displaced workers relying on gig work face unstable incomes and lack of benefits; (3) Platform wage pressure: Increased supply of gig workers may lead to lower wages for existing platform workers [1].
• Opportunities
  : (1) Gig platforms as a flexible labor buffer during economic downturns; (2) Policy reforms to improve gig work data collection (e.g., updated BLS surveys); (3) Potential for gig platforms to offer better benefits to retain workers [3][5].

• 2025 layoffs: 1.1 million through October, up 44% from 2024 [1][2].
• Gig work absorption: 15% of unemployed/not in labor force are in gig work (Goldman Sachs) [1].
• BLS limitations: No formal gig work definition, outdated surveys leading to undercount [3].
• Fed policy impact: Undercount distorts full employment assessments, potentially leading to policy errors [4].
• Worker sentiment: 55% of gig workers plan to leave their roles soon due to poor conditions [5].

Note: This summary provides informational synthesis for decision-making support and does not constitute investment advice.