Underemployment refers to employment that is inadequate, inferior, or of low quality, relative to some standard. Researchers—mostly economists, industrial-organizational psychologists, and sociologists—agree that there are several distinct types of underemployment, although there is less agreement on exactly what counts as underemployment or how many types there are. Nevertheless, the following experiences are regularly classified as underemployment:
- Overqualification: These workers possess surplus (a) formal education, (b) work experience, and/or (c) knowledge, skills, and abilities (KSAs), relative to the job demands or requirements.
- Involuntary Part-Time and/or Temporary Employment: These workers are employed in part-time and/or temporary jobs because they cannot find full-time and/or permanent positions.
- Underpayment: The worker’s wages are significantly less than a certain standard. Standards include (a) the worker’s wages from a previous job, (b) typical wages for someone with the worker’s educational background, and (c) a livable wage.
Other types of work experiences occasionally identified as underemployment include unemployment, intermittent (un)employment (workers who either have experienced recent periods of both employment and unemployment or work on jobs that are seasonal or otherwise sporadic), sub-employment (workers who are not currently employed and have ceased the job search process because they do not believe that jobs are available), involuntary educational mismatch (workers employed in a field outside their area of education), status underemployment (workers who receive less occupational prestige from their jobs than expected based upon their background), and jobs providing few opportunities for skill development.
In general, a key prerequisite for defining a work situation as underemployment is that it be involuntary. For example, an individual who moves from full-time work to part-time work as part of a transition to retirement is not underemployed, whereas someone who would prefer a full-time job but can only find a part-time job is underemployed. This is an important distinction, as researchers have begun to show that employees who voluntarily choose a given work situation (e.g., part-time work) experience more positive job attitudes than employees who find themselves in the same work situation despite preferring something more (e.g., full-time work).
Each type of underemployment, by definition, represents a discrepancy between the actual work situation and an alternative situation that is preferred by the employee. Recognizing this, researchers are beginning to utilize person-job fit and related models to frame underemployment research and generate hypotheses. In essence, each type of underemployment can be viewed as an instance of poor person-job fit. For example, overqualification reflects poor fit between worker abilities and job demands, whereas underpayment reflects poor fit between worker needs and job supplies.
Measurement of Underemployment
Researchers may measure underemployment by using either personnel data or self-report measures. For example, overqualification may be assessed by comparing one’s level of education and experience (as stated on a resume or job application) to a job description. Alternatively, the employee could be asked to complete a questionnaire with items designed to tap perceptions of overqualification. In addition to these strategies, some researchers measure underemployment by culling data from databases containing labor statistics, such as the National Longitudinal Survey of Youth. Importantly, self-report measures have the advantage of accounting for whether one’s current work situation is voluntary or involuntary. Unfortunately, measurement of underemployment is currently idiosyncratic to each research project; no valid self-report measures have yet gained widespread use.
Prevalence and Demographic Correlates of Underemployment
Estimates vary, but it appears that at least one in five U.S. workers currently experiences underemployment in one form or another. This rate is significantly higher than the typical unemployment rate, which has remained below 8 percent in the United States for the past 2 decades. Other developed nations seem to have similar levels of underemployment. Not surprisingly, the proportion of individuals who may be classified as underemployed fluctuates along with the status of the economy, with the experience being more common in times of economic recession. However, some have argued that, even in more prosperous times, most newly created jobs are low-paying, low-skill positions that effectively keep unemployment rates low (the rate typically used as an index of labor market health) while channeling job seekers into employment situations that are inadequate for most of them.
Several groups of workers are particularly likely to experience underemployment. Researchers consistently find that females are underemployed at higher rates than males. Cultural norms place the primary responsibility for child care and elder care upon women. This results in geographic and time restrictions, forcing some women to choose jobs that are flexible over ones that may best utilize their education or offer the greatest career opportunities.
Ethnic minorities are also prone to underemployment. In the United States, underemployment is especially prevalent among African Americans and Latin Americans. Discrimination, lower educational attainment, and cultural differences may contribute to underemployment of minorities. For minority immigrants, language problems and limited social networks create additional barriers to adequate employment.
Several other personal characteristics may also put a person at risk for particular types of underemployment. Those with low levels of education tend to be involuntarily employed in temporary or part-time positions, whereas highly educated workers are more likely to experience overqualification. Research findings are inconsistent about age, although recent college graduates (who are highly educated but often have little work experience) and older white-collar workers (who are among the most common victims of downsizing) commonly experience underemployment. Finally, underemployment may be more prevalent in some job sectors (e.g., manufacturing) and regions (e.g., rural) than in others.
Consequences of Underemployment
Researchers consistently hypothesize a variety of negative consequences associated with underemployment, from dissatisfaction with one’s job, to higher rates of absenteeism and turnover, to poor physical and psychological health. Managers tend to avoid hiring applicants who appear overqualified because of similar predictions.
Underemployed individuals report lower levels of job satisfaction than non-underemployed individuals, particularly for facets of satisfaction that are relevant to the type of underemployment. For example, overqualified workers seem most unhappy with the work itself but are not necessarily dissatisfied with their coworkers or supervisor. Some have argued that higher education promotes lofty expectations for one’s career, making underemployment even less satisfying. Some evidence also exists that underemployment may also be associated with a relatively weak emotional attachment to the organization (called “affective commitment”).
Researchers posit that, because of a lack of motivation or commitment, underemployed workers may perform their tasks at a lower level and engage less in organizational citizenship behavior (such as working late to help a coworker finish a project). In some cases, however, the reverse could be true. For example, temporary workers who prefer a permanent work arrangement with the organization may be highly motivated to perform at a higher level and/or engage in citizenship behaviors to maximize the chances that they will be offered a permanent position. Unfortunately, practically no data exist on the relation between underemployment and either type of job performance.
Some early evidence suggests that underemployment correlates with higher rates of absenteeism, intentions to quit one’s job, and job search behavior. Other research has found that local levels of underemployment may discourage some groups from seeking work or changing jobs. However, at this time, the proposition that underemployment will predict actual turnover behavior remains untested. This is surprising, as researchers and managers commonly predict that the underemployed (particularly overqualified workers) are particularly likely to search for more adequate employment and leave their present jobs.
Research shows that underemployment, whether it is involuntary part-time employment, underpayment, or intermittent employment, has negative psychological and behavioral effects, including low self-esteem, stress, substance abuse, health problems, and depression. In fact, being underemployed may be as traumatic and damaging as being out of work entirely. Also, in some cases, the relationship between underemployment and mental health may be bi-directional, with factors such as low self-esteem placing the individual at greater risk for underemployment, which then may produce further negative psychological effects.
Potential Solutions to Underemployment
Underemployment is a complex phenomenon, prevalent across the globe and influenced by myriad factors at the personal, organizational, and societal levels. Many researchers argue that the problem is due largely to the lack of skilled, full-time, and permanent jobs, rather than an underskilled workforce.
Organizational practices, such as regular layoffs and the shipping of manufacturing jobs to countries where labor is less expensive, may play a role, as might industry restructuring toward service-sector jobs. The many potential causes of underemployment require solutions at every level, from vocational programs, which aid job seekers in identifying appropriate positions, to government initiatives, which promote the creation of high-quality jobs.
Douglas C. Maynard
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