Stable Jobless Rate Masks Rise in Side Gigs and Involuntary Part-Time Work

The Bureau of Labor Statistics’ January employment report, released Wednesday (Feb. 11), delivered the kind of headline that suggests calm. Payrolls rose by 130,000 and the unemployment rate held at 4.3%. On its face, that’s a labor market that’s still adding jobs, but no longer running hot. Yet for banking, FinTech and payments leaders, the more interesting story isn’t the top line. It’s the way work and income is getting more fragmented under the surface.

The BLS tracks an important pressure gauge: people working part-time for economic reasons. In plain English, it means workers who want full-time hours but can’t get them. That group totaled 4.9 million in January. While the figure fell from December, it remains 410,000 higher than a year ago, a sign that some employers may be managing demand with fewer hours rather than layoffs.

That matters to the digital economy because “hours volatility” quickly becomes “income volatility.” When schedules flex, households patch the gap with second jobs, app-based gigs, contract work and, increasingly, faster ways to get paid and manage cash flow between paydays.

PYMNTS Intelligence research has been pointing to the same underlying dynamic: more Americans are relying on nontraditional income streams, not always by choice.

In “Income Instability Is Redefining the Paycheck-to-Paycheck Economy” found that “Six in 10 consumers earn their primary income outside of fixed salaries.” A separate PYMNTS Intelligence report, “The Great Squeeze: Paycheck-to-Paycheck Living Fuels the Side Hustle Economy,” put a number on how mainstream supplemental work has become: “Four in 10 U.S. consumers now earn additional income through side jobs.”

Put those findings next to the BLS’ elevated level of involuntary part-time work, and a consistent picture emerges. Even when the labor market looks “stable,” many households are still managing uneven paychecks, which has direct implications for bill-pay timing, credit performance, and demand for products like early wage access and instant payouts.

The BLS Top Line

Beyond underemployment, the January report showed little movement in labor-force engagement: participation held at 62.5% and the employment-population ratio was 59.8%. Long-term unemployment (jobless for 27 weeks or more) was 1.8 million, about a quarter of all unemployed workers.

Job gains were concentrated in a few areas — healthcare (+82,000), social assistance (+42,000) and construction (+33,000) — while financial activities lost 22,000 jobs and federal jobs fell by 34,000.

Wages continued to rise at a moderate pace: average hourly earnings increased 0.4% in January to $37.17 (up 3.7% year over year), and the average workweek edged up to 34.3 hours. technical, but meaningful, footnote: The Bureau’s annual benchmark revisions cut the estimated March 2025 payroll level by 898,000 and revised total job growth in 2025 from +584,000 to +181trimmed November and December payroll gains by a combined 17,000.

The Analyst View

Analysts also saw meaning in the nuances of the report.

“Today’s strong employment report contradicts recent surveys suggesting a cooling labor market, but it is consistent with our relatively stable outlook for banks’ consumer credit performance this year,” said Mike Taiano, vice president of financial institutions group Moody’s Ratings. “However, downward revisions to previous months indicates the job market is less robust than this month’s job growth suggests. This underlying weakness could eventually lead to higher layoffs and a more challenging credit environment later in the year.”

“As 2026 begins, the labor market is likely to remain fragile. We expect job growth to remain below trend, averaging roughly 25,000 per month in the first half of 2026 which is below the 30,000-40,000 breakeven pace, while the unemployment rate drifts higher toward 4.7%,” said EY-Parthenon Chief Economist Gregory Daco. “From a policy standpoint, these data are unlikely to shift the Fed’s trajectory. We continue to anticipate 50 bps of easing in 2026, with the first rate cut no earlier than June, as cooler labor demand aligns with gradually easing inflation, moving from just under 3% toward 2.5% by year end.”