What is Underemployment?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 09 October 2019
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The term "underemployment" has three distinct related meanings. In one sense, it refers to a situation in which someone with excellent job qualifications is working in a position which requires lesser qualifications, as for instance in the case of a lawyer driving a school bus. In the second sense, underemployment means working part time when one would prefer to be working full time. In the third sense, underemployment is a form of overstaffing in which employees are not being fully utilized.

All forms of underemployment have repercussions for the economy and the health of the business community. By not allowing people to work to their full potential, underemployment can generate worker frustration, leading to a dissatisfaction with a job or employer. For employers, overstaffing can be problematic, because it requires paying people who are not producing, potentially leading to a decline in income.

Chronic underemployment can also conceal the truth behind the employment situations. When nations compile employment statistics, they usually come up with a base number of "unemployed" individuals, using that number to gauge the health of the job market. This number does not include part-time workers looking for full-time jobs, as they are considered employed, and it also doesn't reflect workers who are underpaid, considering their qualifications. This means that competition for jobs may actually be more fierce than employment statistics would suggest.


In the first sense, underemployment is a common problem in much of the developed world. Many people with college degrees are working in low-level or service industry jobs because the job market is saturated. In addition, very qualified individuals from the developing world who immigrate to the developed world in search of work may find themselves working in positions for which they are grossly overqualified; accountants, lawyers, and doctors, for example, may work as nannies, janitors, or cab drivers.

The issue of part-time employment when full-time employment is desired is also very serious. Some people are forced into part-time jobs through cuts of their hours, while others find themselves taking a part-time job because nothing else is available, even though they really need to work full time. This problem is especially common in areas with seasonal employment, where employers find it cheaper to maintain and lay off part-time staffs, rather than keeping a full staff at all times.

In the sense of understaffing, underemployment appears in a variety of situations. Some companies, for example, maintain a full staff to be prepared for seasonal work, or to retain well-trained, qualified workers so that they will be available when needed. Labor laws and union pressures may also prevent a company from cutting down on staff or working hours, leading to a situation in which people report to work, but have nothing to do. In addition to being bad for the company, this can also be very frustrating for employees.


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Post 4

Underemployment is a common issue in certain areas that depend on seasonal work, not only is it easier to hire part-time workers, but it is easier on employers to fire part-time workers.

I used to live in a ski town, and hotels and restaurants would often hire part-time employees because they were cheaper to let go. In some cases, they would only hire part-time employees outside of management.

In the state I lived in, most part-time employees had no claims to unemployment benefits, no access to employment benefits, and could be laid-off much easier than an employee who worked 35 hours or more. Employers could also force out unwanted employees much easier because there was no guarantee to hours. When the season ended, the employers would often schedule all of their unwanted part-time help for one short shift a week until they either quit, or stuck around until the next season.

Post 3

Sneakers41- I think work at home moms that take on part time work may also fall into the underemployed category. Many of these women had professional careers before staying home to raise their children. Some even had advanced college degrees.

Many of these women seek flexible work that allows them to raise their children. For example, many firms that hire customer service agents for virtual positions say more and more that their at home workforce is very educated and often overqualified for many of their positions.

These underemployed moms seek these positions because of the flexibility and the companies hire them because of their backgrounds.

This is becoming more and more commonplace as more companies seek virtual workers for their entry level positions.

Although underemployment is not ideal, it just might be the right circumstance for many stay-at-home moms.

Post 2

SauteePan- I agree that many people seeking acting careers are underemployed.

I wanted to add that according to a recent Gallup poll, the underemployment rate is over 18% of Americans.

They are either working part time or looking for more qualified work.

Post 1

I just wanted to add that the underemployed are such because they may be in a very competitive field in which there are limited number of openings.

A classic example of this would be in the acting field. Many actors with advanced degrees in theater often resort to working in a restaurant as servers or as bartenders due to the lack of work.

These underemployed workers are not working to their true potential but seek an alternative job until one becomes available. Some prefer to work in the restaurant industry because it allows the necessary flexibility to purse their acting ambitions during the day.

By working at night they are able to go on daily auditions to pursue their chosen career.

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