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{{Short description|Underutilization of workers' talents or skills in employment}} {{For|the television series|Underemployed (TV series)}} {{More citations needed|date=July 2019}} [[File:Baristas first starbucks.jpg|thumb|right|200px|In 2014, university graduates from the U.S. were often unable to find a job requiring a degree; 44% could only find service jobs such as [[barista]] positions that do not require postsecondary education.<ref>{{cite web|url=https://www.washingtonpost.com/news/wonk/wp/2014/11/19/baristas-of-the-world-unite-why-college-grads-may-be-stuck-at-starbucks-even-longer-than-they-thought/|title=Baristas of the world unite: Why college grads may be stuck at Starbucks even longer than they thought|first=Matt|last=O'Brien|date=19 November 2014|access-date=7 April 2018|via=[[The Washington Post]]}}</ref>]] '''Underemployment''' is the underuse of a worker because their [[employment|job]] does not use their skills, offers them too few hours, or leaves the worker idle.<ref>Feldman, D. C. (1996). [https://www.sciencedirect.com/science/article/pii/S0149206396900306 The nature, antecedents and consequences of underemployment.] ''Journal of Management, 22''(3), 385–407. {{doi|10.1177/014920639602200302}}</ref> It is contrasted with [[unemployment]], where a person lacks a job at all despite wanting one. Examples of workers who may be considered underemployed include those who hold a part-time job but wish to work more hours, part-time workers who wish to work full-time,<ref name=":0">{{Cite journal |last1=Bell |first1=David N. F. |last2=Blanchflower |first2=David G. |date=August 2018 |title=The lack of wage growth and the falling NAIRU |url=https://www.cambridge.org/core/journals/national-institute-economic-review/article/abs/lack-of-wage-growth-and-the-falling-nairu/ADCBEF9A8BDCA8E0BD6F8A7F7AD2AC40 |journal=National Institute Economic Review |language=en |volume=245 |pages=R40–R55 |doi=10.1177/002795011824500114 |s2cid=158857001 |issn=0027-9501|hdl=1893/28024 |hdl-access=free }}</ref> and [[overqualification|overqualified]] workers who have education, experience, or skills beyond their role's requirements.<ref>Chohan, Usman W. [https://theconversation.com/young-people-worldwide-fear-a-lack-of-economic-opportunities-its-easy-to-see-why-65248 "Young people worldwide fear a lack of opportunities, it's easy to see why"] ''The Conversation''. September 13, 2016.</ref><ref>Chohan, Usman W. [https://theconversation.com/young-educated-and-underemployed-are-we-building-a-nation-of-phd-baristas-53104 "Young, Educated and Underemployed: Are we Building a Nation of PhD Baristas"] ''The Conversation''. January 15, 2016.</ref> Underemployment has been studied from a variety of perspectives, including [[economics]], [[management]], [[psychology]], and [[sociology]]. In economics, underemployment has three different distinct meanings and applications.{{According to whom|date=January 2024}} Policy-makers may under-research these meanings when assessing the economy as they focus on unemployment instead:<ref name=":0" /> # "[[Overqualification]]" or "overeducation", the [[employment]] of workers with high education, [[skill]] levels, or experience in jobs that do not require such abilities.<ref>Erdogan, B., & Bauer, T. N. (2009). [https://www.ncbi.nlm.nih.gov/pubmed/19271809/ Perceived overqualification and its outcomes: The moderating role of empowerment.] ''Journal of Applied Psychology, 94''(2), 557–65. {{doi|10.1037/a0013528}}</ref> For example, a trained [[medical doctor]] with unrecognized foreign credentials working as a [[taxicab|taxi]] driver. # "Under hours"<ref name=":0" /> or "involuntary part-time" work, for those who wish to work more hours and/or move from part-time to full-time. By extension, the term is also used in [[regional planning]] to describe regions where [[economic activity]] rates are unusually low due to a lack of job opportunities, [[training]] opportunities, or services like [[childcare]] and [[public transport]]ation. # "Overstaffing", "hidden unemployment", or "disguised unemployment" (also called "labor hoarding"<ref>Felices, G. (2003). [https://www.bankofengland.co.uk/quarterly-bulletin/2003/q2/assessing-the-extent-of-labour-hoarding Assessing the Extent of Labour Hoarding. ''Bank of England Quarterly Bulletin,''] ''43''(2), 198–206.</ref>), the practice in which [[business]]es or entire [[economics|economies]] employ workers who are not fully occupied. For example, workers currently not being used to produce goods or services due to legal or social restrictions or because the work is highly seasonal. Underemployment is a significant cause of [[poverty]] as pay may be insufficient to meet basic needs.<ref>{{Cite web |last=Hirschfeld |first=Andy |title=America’s underemployment problem |url=https://www.aljazeera.com/economy/2024/2/8/americas-underemployment-problem |access-date=2025-02-09 |website=Al Jazeera |language=en}}</ref><ref>{{Cite web |title=The Rise And Fall Of Underemployment: Implications For Workers' Health {{!}} Health Affairs Brief |url=https://www.healthaffairs.org/content/briefs/rise-and-fall-underemployment-implications-workers-health |access-date=2025-02-09 |website=www.healthaffairs.org |language=en}}</ref> It has been associated with OECD [[Real wages#Trends and wage stagnation|wage stagnation]].<ref name=":0" /> Underemployment is a problem particularly in [[developing countries]], where the unemployment rate is often quite low, as most workers are doing subsistence work or occasional part-time jobs. In 2011, the global average of full-time workers per adult population was only 26%, compared to 30–52% in developed countries and 5–20% in most of Africa.<ref>{{cite web|url=http://www.gallup.com/poll/145487/Gallup-Global-Employment-Tracking.aspx|archive-url=https://web.archive.org/web/20110119193605/http://www.gallup.com/poll/145487/Gallup-Global-Employment-Tracking.aspx|url-status=dead|archive-date=January 19, 2011|title=Gallup Global Employment Tracking|author=Gallup, Inc.|access-date=15 October 2014}} </ref> In 2018 - 2019, the global average rose to 77%, while in low and low-middle income countries, it was around 60–70%. A similar rate was on the high income countries, while on the upper-middle income countries – around 80%.<ref>{{Cite book |url=https://www.ilo.org/sites/default/files/wcmsp5/groups/public/@ed_protect/@protrav/@travail/documents/publication/wcms_864222.pdf |title=Working Time and Work-Life Balance Around the World |publisher=International Labor Organization |pages=72-74}} </ref> A Gallup investigation of its surveys in 154 countries from 2017 to 2022 revealed that a median of 20% of men and 27% of women in the workforce were underemployed.<ref>{{Cite web |last=Inc |first=Gallup |date=2024-03-08 |title=Underemployment Carries Hidden Costs for Women |url=https://news.gallup.com/poll/611024/underemployment-carries-hidden-costs-women.aspx |access-date=2025-05-05 |website=Gallup.com |language=en}}</ref> ==Underutilization of skills== In one usage, underemployment describes the [[employment]] of workers with high [[skill]] levels and [[postsecondary education]] who are working in relatively low-skilled, [[low-wage job]]s.<ref>{{Cite web |title=Underemployment Definition, Causes & Examples |url=https://study.com/academy/lesson/what-is-underemployment-definition-types-causes-effects.html |website=Study.com}}</ref><ref>{{Cite web |title=Underemployment: Definition, Causes, and Example |url=https://www.investopedia.com/terms/u/underemployment.asp |access-date=2025-05-06 |website=Investopedia |language=en}}</ref> For example, someone with a college [[academic degree|degree]] may be a [[bartender]], or working as a [[factory]] assembly line worker. That may result from the existence of [[unemployment]], which makes workers with bills to pay (and responsibilities) take almost any jobs available, even if they do not use their full talents. That can also occur with individuals who are being [[discrimination|discriminated]] against, lack appropriate [[trade certification]] or [[academic degree]]s (such as a [[high school]] or [[college]] [[diploma]]), have disabilities or mental illnesses, or have served time in [[prison]]. Two common situations that can lead to underemployment are [[immigrants]] and new graduates.<ref name="A scoping review to map the research on the mental health of students and graduates during their university-to-work transitions">{{cite journal | vauthors = Edmonds, DM, Zayts-Spence, O, Fortune, Z, Chan, A, Chou, JSG | display-authors = 5 | title = A scoping review to map the research on the mental health of students and graduates during their university-to-work transitions| journal = BMJ Open| volume = 14 | issue = 3 | pages = e076729 | date = 2024-03-04 | pmid = 38443080 | doi = 10.1136/bmjopen-2023-076729 | doi-access = free | pmc = 11146370 }}</ref> When highly trained immigrants arrive in a country, their foreign credentials may not be recognized or accepted in their new country, or they may have to do a lengthy or costly re-credentialing process. As a result, when doctors or engineers from other countries immigrate, they may be unable to work in their profession, and they may have to seek menial work. New graduates may also face underemployment because even though they have completed the technical training for a given field for which there is a good job market, they lack experience. Recent graduates with a master's degree in [[accounting]] or [[business administration]] may have to work in a low-paid job as a [[barista]] or store clerk, which does not require a university degree, until they are able to find work in their professional field. Another example of underemployment is someone who holds high skills for which there is low [[demand (economics)|market-place demand]]. While it is costly in terms of money and time to acquire [[academic degree|academic credentials]], many types of degrees, particularly those in the [[liberal arts]], produce significantly more graduates than can be properly employed.<ref>{{cite web| last1 =Vedder| first1 =Richard| first2 =Christopher |last2=Denhart |first3=Jonathan |last3=Robe| title =Why are Recent College Graduates Underemployed? : University Enrollments and Labor Market Realities| publisher =Center for College Affordability and Productivity| date =January 2013| url =http://centerforcollegeaffordability.org/research/studies/underemployment-of-college-graduates| access-date = June 2, 2013|quote=Increasing numbers of recent college graduates are ending up in relatively low-skilled jobs that, historically, have gone to those with lower levels of educational attainment.}}</ref> Employers have responded to the oversupply of graduates by raising the academic requirements of many occupations [[credentialism and educational inflation|higher than is really necessary to perform the work]].<ref>{{cite news | last =Pappano | first =Laura | title =The Master's as the New Bachelor's | newspaper =The New York Times | date =22 July 2011 | url =https://www.nytimes.com/2011/07/24/education/edlife/edl-24masters-t.html?pagewanted=all&_r=0 | access-date =17 January 2017 }}</ref> A number of surveys show that skill-based underemployment in North America and Europe can be a long-lasting phenomenon. If university graduates remain in a prolonged state of underemployment, the skills they gained from their degrees can atrophy from disuse or become out of date. For example, a person who graduates with a [[PhD]] in [[English literature]] has advanced research and writing skills when they graduate, but if they work as a store clerk for a number of years, these skills may atrophy from disuse. Similarly, technically specialized workers may find themselves unable to acquire positions commensurate with their skills for extended lengths of time following [[layoff]]s. Skilled machinists who are laid off may find that they cannot find another job as a machinist and so they may work as a server in a restaurant, a job which does not use their professional skills.<ref>{{cite web | url =https://www.insidehighered.com/news/2018/05/23/college-graduates-whose-first-job-doesnt-require-bachelors-degree-often-stay | title =The Bad First Job's Lingering Impact | last =Lederman | first =Doug | date =23 May 2018 | website =Inside Higher Ed | access-date =28 May 2018 | quote =New report finds that bachelor's degree recipients whose first job does not require degree are more likely to remain "underemployed" five years later -- and women fare worse than men.}}</ref> As the tertiary education of most students in Western countries is fully or partially subsidized by government monies (because it takes place at a [[state university]] or [[public university]] or because the student receives government loans or grants), the underemployment of recent college graduates may also be an ineffective use of public resources. Several solutions have been proposed to reduce skill-based underemployment: for example, government-imposed restrictions on public university enrollment in degree fields with a very low labor market demand (e.g. fine arts), or changes in degree cost model that reflect potential labour market demand. A related kind of underemployment refers to "involuntary part-time" workers, who could (and would like to) be working on a standard work-week (typically [[Full-time job|full-time]] [[employment]] means 40 hours per week in the [[United States]]) schedule but can find only part-time work. Underemployment is more prevalent during times of economic stagnation (during [[recession]]s or [[depression (economics)|depressions]]) and when financial pressures increase.<ref>{{Cite journal |last=Gouzoulis |first=Giorgos |last2=Iliopoulos |first2=Panagiotis (Takis) |last3=Galanis |first3=Giorgos |date=2023 |title=Financialization and the rise of atypical work |url=https://onlinelibrary.wiley.com/doi/10.1111/bjir.12701 |journal=[[British Journal of Industrial Relations]] |language=en |volume=61 |issue=1 |pages=24–45 |doi=10.1111/bjir.12701 |issn=0007-1080|hdl=1983/df731b1e-4bd4-495d-9582-22eff68f5628 |hdl-access=free }}</ref> During the [[Great Depression]] of the 1930s, many of those who were employed were underemployed. Those kinds of underemployment arise because [[labor market]]s typically do not "[[market clearing|clear]]" using [[quantity adjustment|wage adjustment]]. Instead, there is a non-wage [[rationing]] of jobs. [[File:Incidence of involuntary part time workers.svg|thumb|700px|none| Involuntary part time workers, share of total employment (OECD)]] ==Underuse of economic capacity== Underemployment can also be used in [[regional planning]] to describe localities where [[economic activity]] rates are unusually low. This can be induced by a lack of job opportunities, [[training]] opportunities, or services such as [[childcare]] and [[public transport]]ation. Such difficulties may lead [[Residency (domicile)|residents]] to accept economic inactivity rather than register as [[unemployment|unemployed]] or actively seek jobs because their prospects for regular employment appear so bleak. (These people are often called [[discouraged worker]]s and are not counted officially as being "unemployed.") The tendency to get by without work (to exit the [[labor force]], living off relatives, friends, personal savings, or non-recorded economic activities) can be aggravated if it is made difficult to obtain unemployment benefits.<ref>{{Cite web|url=https://www.applicationformexample.com/applicationform-example-internship/|title=Application form example internship|website=Applicationform Example|language=en-US|access-date=2019-11-11}}</ref> Relatedly, in [[macroeconomics]], "underemployment" simply refers to ''[[unemployment#Cyclical unemployment|excess unemployment]]'', i.e., high unemployment relative to [[full employment]] or the [[natural rate of unemployment]], also called the [[NAIRU]]. Thus, in [[Keynesian economics]], reference is made to [[underemployment equilibrium]]. Economists calculate the cyclically-adjusted [[full employment]] unemployment rate, e.g. 4% or 6% [[unemployment]], which in a given context is regarded as "normal" and acceptable. Sometimes, this rate is equated with the [[NAIRU]]. The difference between the observed unemployment rate and cyclically adjusted full employment unemployment rate is one measure of the societal level of underemployment. By [[Okun's Law]], it is correlated with the gap between [[potential output]] and the actual real [[gross domestic product|GDP]]. This "GDP gap" and the degree of underemployment of labor would be larger if they incorporated the roles of underemployed labor, involuntary part-time labor, and discouraged workers. ==Underuse of employed workers== {{no footnotes|section|date=December 2018}} The third definition of "underemployment" describes a polar opposite phenomenon: to some [[economist]]s, the term refers to "overstaffing" or "hidden unemployment," the practice of [[business]]es or entire [[economics|economies]] employing workers who are not fully occupied (in other words, employees who are not [[productivity|economically productive]], or underproductive, or [[economic inefficiency|economically inefficient]]). This may be because of legal or social restrictions on firing and lay-offs (e.g. union rules requiring managers to make a case to fire a worker or spend time and money fighting the union) or because they are ''overhead'' workers, or because the work is highly seasonal (which is the case in [[accounting|accounting firms]] focusing on [[tax]] preparation, as well as [[agriculture]] and the [[hospitality industry]]). The presence of this issue in [[White-collar worker|white collar]] office jobs is described in the [[boreout]] phenomenon, which posits that the major issue facing office workers is lack of work and [[boredom]]. This kind of underemployment does ''not'' refer to the kind of non-work time done by, for instance, [[firefighters]] or [[lifeguards]], who spend a lot of their time waiting and watching for emergency or rescue work to do; this kind of activity is necessary in case there are multiple simultaneous incidents. This kind of underemployment may exist for ''[[structural]]'' or ''[[business cycle|cyclical]]'' reasons. In many economies, some firms become insulated from fierce competitive pressures and grow [[inefficiency|inefficient]], because they are awarded a government [[monopoly]] (e.g., telephone or electrical utilities) or due to a situation of abuse of market power (e.g., holding a [[monopoly]] position in a certain industry). As such, if they may employ more workers than necessary, they might not be getting the market signals that would pressure them to reduce their labour force, and they may end up carrying the resultant excess [[cost]]s and depressed [[profit (economics)|profits]]. In some countries, labour laws or practices (e.g. powerful [[labor union|unions]]) may force employers to retain excess employees. Other countries (e.g. [[Japan]]) often have significant cultural influences (the relatively great importance attached to [[worker solidarity]] as opposed to [[shareholder]] rights) that result in a reluctance to shed labour in times of difficulty. In Japan, there is a long-held tradition that if a worker commits to serve a company with long and loyal service, the company will, in return, keep the worker on the payroll even during economic downturns. In [[central planning|centrally-planned economies]], layoffs were often not allowed so that some state-run companies would have periods when they had more workers than they needed to complete the organization's tasks. Cyclical underemployment refers to the tendency for the [[capacity utilization]] of firms (and therefore of their demand for labor) to be lower at times of [[recession]] or [[economic depression]].{{Citation needed|date=November 2019}} At such times, underemployment of workers may be tolerated and indeed may be wise business policy, given the financial cost and the reduction of [[morale]] from shedding and then rehiring staff. Alternatively, paying underused overhead workers is seen as an investment in their future contributions to production. This kind of underemployment has been given as a possible reason why [[Airbus]] gained [[market share]] from [[Boeing]]. Unlike Airbus, which had more flexibility, Boeing was unable to ramp up [[Production (economics)|production]] fast enough when prosperous times returned because it had dismissed a great part of its personnel in lean times. Another example is the [[tourism]] sector, which faces cyclical demand in areas where attractions are weather-related. In some tourism sectors, such as the sun and sand tours operated by [[Club Med]], the company can shed bartenders, lifeguards, sports instructors, and other staff in the off-season because there is such a strong demand for young people to work for the company since its glamorous beachfront properties are desirable places to work. However, not all tourism sectors find it so easy to recruit staff. Some tourism sectors require workers with unusual or hard-to-find skills. Northern Ontario hunting and fishing camps that require skilled guides may have an incentive to retain their staff in the off-season. Another example is companies that run tours for foreign tourists using staff speaking the travelers' native tongue. In Canada, guided tours are available for Japanese and German tourists in their native languages; in some locations, it may be hard for companies to find Japanese- or German-speaking staff and so companies may retain their staff in the off-season. ==See also== * [[Unemployment]] * [[Credentialism and educational inflation]] * [[Dead-end job]] * [[Discouraged worker]] * [[Effective unemployment rate]] * [[Job guarantee]] * [[Labor force]] * [[Overqualification]] * [[Tang ping]] ("lying flat") * [[Underearners Anonymous]] * [[Working poor]] ==References== {{Reflist}} ==Further reading== * Dooley, David and JoAnn Prause. ''The Social Costs of Underemployment: Inadequate Employment as Disguised Unemployment''. Cambridge University Press. {{ISBN|978-0-521-81014-2}} | {{ISBN|0-521-81014-0}}. * Maynard, Douglas C. and Daniel C. Feldman (Eds.). ''Underemployment: Psychological, Economic, and Social Challenges.'' Springer Business + Science. {{ISBN|978-1-4419-9412-7}} | {{ISBN|1-4419-9412-2}} ==External links== * [http://www.ukcpr.org/Publications/Bollinger_DP2003-08.pdf A Study of Underemployment in Kentucky] – The University of Kentucky * [http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Underemployment_and_potential_additional_labour_force_statistics Statistics Explained: Underemployment and potential additional labour force statistics (Europe)] – Eurostat, April 2012 * [http://www.bls.gov/news.release/empsit.t15.htm United States Underemployment] – US Bureau of Labor and Statistics {{Employment}} {{Authority control}} [[Category:Employment]] [[Category:Personal financial problems]] [[Category:Employment classifications]] [[Category:Unemployment]]
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