BROWSE

Underemployment

Definition

Underemployment is the under-use of a worker due to a job that does not use the worker's skills, or is part time, or leaves the worker idle. Examples include holding a part-time job despite desiring full-time work, and overqualification, where the employee has education, experience, or skills beyond the requirements of the job.

What is 'Underemployment'

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work. Labor that falls under the underemployment classification includes those workers who are highly skilled but working in low paying jobs, workers who are highly skilled but working in low skill jobs and part-time workers who would prefer to be full time. This is different from unemployment in that the individual is working but is not working at his full capability.

Explaining 'Underemployment'

For example, an individual with an engineering degree working as a pizza delivery man as his main source of income is considered to be underemployed and underutilized by the economy as he, in theory, can provide a greater benefit to the overall economy if he works as an engineer. Also, an individual who is working part time at an office job instead of full time is considered underemployed because he is willing to provide more employment, which can increase the overall output.

Weaknesses of the Unemployment Rate

The unemployment rate, which receives the majority of the national spotlight, can be misleading as the main indicator of the job market's health because it does not account for the full potential of the labor force. The U.S. unemployment rate was 4.7% as of May 2016, but at the same time, the U.S. underemployment rate was 13.7%. The unemployment rate is defined by the Bureau of Labor Statistics (BLS) as including "all jobless persons who are available to take a job and have actively sought work in the past four weeks." As illustrated by the engineering major who works as a delivery man, a measure of underemployment is needed to express the opportunity cost of advanced skills not being used.


Further Reading


Work-time underemployment and financial hardship: class inequalities and recession in the UK
journals.sagepub.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Underemployment in Australia: a panel investigationUnderemployment in Australia: a panel investigation
www.tandfonline.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Underemployment in south africaUnderemployment in south africa
www.tandfonline.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Financial distress and underemploymentFinancial distress and underemployment
academic.oup.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Unemployment, underemployment, occupational stress and psychological well-beingUnemployment, underemployment, occupational stress and psychological well-being
journals.sagepub.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

The effects of unemployment and underemployment on employment opportunities: Results from a correspondence audit of the labor market for college graduatesThe effects of unemployment and underemployment on employment opportunities: Results from a correspondence audit of the labor market for college graduates
journals.sagepub.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

The nature, antecedents and consequences of underemploymentThe nature, antecedents and consequences of underemployment
www.sciencedirect.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Underemployment and life satisfaction: A study of internationally trained engineers in CanadaUnderemployment and life satisfaction: A study of internationally trained engineers in Canada
www.tandfonline.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …

Accounting and finance graduate employment outcomes: Underemployment, self‐employment and managing diversityAccounting and finance graduate employment outcomes: Underemployment, self‐employment and managing diversity
onlinelibrary.wiley.com [PDF]
… Format, Tips on citation download. Download Citation. Download article citation data for: Work-time underemployment and financial hardship: class inequalities and recession in the UK. Tracey Warren. Work, Employment and Society 2015 29:2, 191-212. Download Citation …



Q&A About Underemployment


Is it possible for someone with advanced skills such as an engineering major delivering pizzas to be considered unemployed or underemployed?

Yes, this person falls under both categories since he has advanced skills but works part-time at a low paying job he doesn't enjoy doing."

What does the U.S. unemployment rate represent?

The U.S. unemployment rate represents all jobless persons who are available to take a job and have actively sought work in the past four weeks.

Does everyone fall under one category or another when it comes to employment status?

No, some people fall under both categories because they may want more money than their current position offers them while also wanting more time than their current position allows

What does the unemployment rate include?

The unemployment rate includes all jobless persons who are available to take a job and have actively sought work in the past four weeks.

How does underemployment differ from unemployment?

Unemployment includes those workers who are not working but would like to be, while underemployment includes those workers who are working but would like to be working more hours or with better pay.

What is underemployment?

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience and availability to work.

Who determines what constitutes full potential for an individual's labor force?

The Bureau of Labor Statistics (BLS) defines full potential as "the maximum number of jobs that could exist based on current levels of productivity." This figure is determined by calculating total output divided by total hours worked multiplied by 100 percent, which yields approximately 115 percent due to rounding off errors.""

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