Underemployment: What It Is and Why It Matters

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Do you have a work buddy who’s become stuck in a job that doesn’t pay enough or doesn’t utilize their skills to their full extent? Or have you heard of someone unable to find a job that will use their qualifications or experience in a meaningful way?

Underemployment has become a significant issue in the US and worldwide, with millions of workers impacted by frustration, stress, and reduced productivity due to this growing problem. Underemployment is rarely discussed, but its causes and implications on the labor force are important to understand. Recognizing and overcoming such a status could have a huge impact on the future of work.

The difference between unemployment and underemployment

Unemployment and underemployment are two different issues that are often confused with one another. While “unemployment” gets a lot of coverage, underemployment flies under the radar even though its short and long-term effects ripple through society.

Unemployment refers to a situation in which an individual is actively looking for a job but can’t find one. 

Underemployment is when a worker is employed but can’t use their complete skills and experience in their current position. 

In other words, while unemployment involves not having a job, being underemployed involves settling into a position that limits a professional’s full potential.

Causes and types of underemployment

The causes of underemployment can vary from person to person. Economic factors such as recessions and automation can lead to high levels of underemployment because people are forced to settle for low-earning positions to meet a basic standard of living. Structural issues within an organization or industry, such as a lack of training and upskilling opportunities or a mismatch between job openings and skill gaps, also contribute to underemployment.

Whatever the cause is, these different types of underemployment can be recognized in today’s labor force:

• Part-time workers who would prefer to work full-time. This is known as “visible underemployment,” as it’s easy to tell that people in this position are not having their needs met either financially or professionally.
• People who have full-time jobs that do not require the level of education or experience they have. This type of underemployment is labeled as “invisible.” Invisible underemployment may be more evident in positions with overqualified professionals.
• Workers who involuntarily work in positions that keep them below the poverty line. In this instance, salary transparency laws or consumer pressure for employers to offer living wages could help influence positive change.

Signs of being underemployed

Workers who feel like their current position limits their worth are most likely experiencing underemployment without realizing it. So what are the warning signs that can help professionals recognize this common problem? Ask yourself these four questions to better analyze whether or not you are underemployed in your current job.

1) Are you getting enough hours?

Working part-time, despite being able to work full-time hours, is a telltale sign of being underemployed. This is especially true if you have qualifications for a full-time job and are unable to find one.

2) Are you overqualified for your position?

A more common indication of underemployment is taking a job that doesn’t match your qualifications, experience, or skill set. This situation can be frustrating if you desire a career that’ll allow you to develop your potential further.

3) Does your income match your worth?

Not earning enough to meet your basic needs, such as rent, food, and other essentials, is another sign of being underemployed. You may be working hard, but the pay is not enough to make ends meet.

4) Are you unchallenged and lacking growth opportunities?

Working in a job that starts to feel stagnant or fails to provide growth opportunities can also indicate that you are underemployed. This may leave you feeling stuck in a rut with no way out or upward.

Recognizing the signs of underemployment is the first step to getting back on track. If you’re underemployed and want to start looking for a job that will better utilize your skills and qualifications, try reaching out to a gpac recruiter to see what relevant job openings are available.

Implications of underemployment

Underemployment can have far-reaching implications for individuals, businesses, and economies. 

On an individual level, underemployment can lead to:

• Lower wages and an inability to save for retirement or invest in education or other activities
• Decreased job satisfaction, morale, and feeling undervalued

On a business level, underemployment can result in:

• A lack of qualified workers and increased turnover
• A decrease in workplace productivity and employee engagement

Finally, on an economic level, underemployment contributes to:

• Decreased consumer spending
• Lower GDP growth
• Increased government spending on social programs to supplement low wages

Overcoming underemployment

Addressing the issue of underemployment and ensuring that workers are able to use their skills and experience to their fullest potential begins with an action plan on all fronts.

Job seekers and employees can tailor their resumes, improve their interview skills, and strategically plan to find jobs that match their needs and experience.

Businesses and organization leaders can refine their talent search to identify and target long-lasting hires who will grow in their vacancies, not just occupy them. 

And as a workforce community, referrals and mentorship allow professionals to leverage their networks and encourages greater visibility in any industry, opening up trickle-down opportunities across the board.

In today’s labor market, where more and more workers and candidates are pushing for better quality jobs and breaking the mold of the workplace status quo, underemployment is another stepping stone for reformation.