Underemployment: Definition, Causes and Effects

Critics worry that military spouse underemployment may be one reason nearly 5,000 active-duty military families are food stamp eligible. Underemployment of skills is one of the biggest concerns among recent graduates. «Young people worldwide fear a lack of opportunities, it’s easy to see why» The Conversation. This section includes a list of references, related reading, or external links, but its sources remain unclear because it lacks inline citations.

under employment meaning

Online resources for data producers to build or improve their labour force survey, such as PAPI and CAPI model questionnaires. Do existing statutory exclusions to employment under the Unemployment Insurance Code remain in effect after the passage of AB 5? The Unemployment Insurance Code excludes certain types of services from the Code’s definition of employment, which affects who is eligible for Unemployment Insurance benefits.

Underemployment: Definition, Causes and Effects

As job descriptions change or jobs are automated, laid-off workers can be retrained or retired from the workforce. Those who do not have the resources or means to retrain themselves are generally susceptible to underemployment. A third type of underemployment refers to situations in which individuals who are unable to find work in their chosen field quit the workforce altogether, meaning they haven’t looked for a job in the last four weeks, per the Bureau of Labor Statistics’ definition of «not in the labor force.»

Visible underemployment comprises employees who work fewer hours than what is considered normal in their field or industry. They possess the skills to work in a full-time position but are unable to find regular employment. Underemployment occurs when a person does not work full time or takes a job that does not reflect their actual training and financial needs. That is, their job doesn’t use all their skills and education, or provides less than full time work. This is not the same as unemployment, which refers to people who are not currently employed at all. The unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.

This can be induced by a lack of job opportunities, training opportunities, or services such as childcare and public transportation. Such difficulties may lead residents to accept economic inactivity rather than register as unemployed or actively seek jobs because their prospects for regular employment appear so bleak. (These people are often called discouraged workers 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.


In many economies, some firms become insulated from fierce competitive pressures and grow 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 costs and depressed profits. «Overstaffing» or «hidden unemployment» or «disguised unemployment» (also called «labor hoarding»), the practice in which businesses or entire 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.

Since data are obtained from household surveys, the determination for the area type is based on the location of the household (i.e., the dwelling) rather than that of the job . For the purposes of this indicator, youth is defined as all persons between the under employment meaning ages of 15 and 24 . Thus, the measurement of the unemployment rate requires the measurement of both employment and unemployment. Formal employment refers to persons who are employed and are not in informal employment according to the above criteria.

In fact, the resolution adopted by the 19th ICLS in 2013, restated the definition of time-related underemployment and its central role as a measure of labour underutilization. A new indicator meant to account for time-related underemployment and to supplement the unemployment rate was also introduced, the “combined rate of time-related underemployment and unemployment” (calculated as the number of persons in unemployment or time-related underemployment as a percentage of the labour force). Thus, the indicator on time-related underemployment can provide insights for the design, implementation and evaluation of employment, income and social policies and programmes. Particularly in developing economies, people only rarely fall under the clear-cut dichotomy of either “employed” or “unemployed”. Rather, many workers will be the underemployed who eke out a living from small-scale agriculture and other types of informal activities. Charges shall be in writing under oath or affirmation and shall contain such information and be in such form as the Commission requires.

In prescribing requirements pursuant to subsection of this section, the Commission shall consult with other interested State and Federal agencies and shall endeavor to coordinate its requirements with those adopted by such agencies. The Commission shall furnish upon request and without cost to any State or local agency charged with the administration of a fair employment practice law information obtained pursuant to subsection of this section from any employer, employment agency, labor organization, or joint labor-­management committee subject to the jurisdiction of such agency. Such information shall be furnished on condition that it not be made public by the recipient agency prior to the institution of a proceeding under State or local law involving such information. If this condition is violated by a recipient agency, the Commission may decline to honor subsequent requests pursuant to this subsection. National definitions of time-related underemployment vary significantly between countries, as do the operational criteria used, affecting the comparability of the data.

under employment meaning

Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. It can also occur when a worker is qualified for a more senior position in their field but hold a lower-level job. An example would be someone with a law degree working as a legal clerk or paralegal. The verb employ also means to use, and underemployed can be used to describe something that’s not used as much as it should be, as in an underemployed strategy. And my perception is that they do not necessarily see women’s underemployment behind the scenes and women’s underrepresentation onscreen as a problem. The reality is that veterans like many americans are faced with unemployment or underemployment.


Wages paid for services described in Subdivision , , or are included in determining the wages paid for the purpose of Subdivision . Subsection applies without regard to whether the individual is hired or paid directly by the employing unit or by the employee or agent. If this state is the state of jurisdiction for services covered as employment under Subsection , the employer shall so notify its employees. «Indian tribe» has the meaning assigned by Section 3306, Federal Unemployment Tax Act (26 U.S.C. Section 3306), as amended.

  • Whether or not the worker and the potential employer believe they are creating an employer-employee relationship (this may be relevant, but the legal determination of employment status is not based on whether the parties believe they have an employer-employee relationship).
  • During this period of their life-cycle, women tend to leave the labour force to give birth to and raise children, subsequently returning – but at a lower rate – to economically active life.
  • Users can obtain the underemployment rate by dividing the number of underemployed individuals by the number of individuals in the workforce.
  • Differences may result from age coverage, such as the lower and upper age bounds for labour force activity.
  • 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.
  • Where the information is based on household surveys or population censuses, differences in the questionnaires can lead to different statistics − even allowing for full adherence to ILO guidelines.

Someone who is working a job that doesn’t pay enough to make ends meet, like a tuition teacher or small healthcare worker who feels undervalued and underpaid. In terms of the analysis of the indicator, in order to avoid misinterpreting it, it is important to bear in mind that it is composed of two different sub-groups . The prevalence and composition of each sub-group would have policy implications, and thus, should also be considered when analysing the NEET rate.

In addition, if they are ina job that pays them less, it doesn’t satisfy them professionally. It is the situation, and the intentions of the people involved that lead to voluntary underemployment. For example, when an employer hires over-qualified people, it is either because they are not getting a relevant candidate for the post or they intend to make them serve multiple purposes at a lower rate. On the other hand, the ones who accept such offers do it only when they require a job to earn their living. For example, automation has affected workers in industries ranging from retail to manufacturing to transportation and warehousing. While we tend to talk about these changes in the context of increased unemployment, underemployment is also a problem, as employers cut hours and workers lose bargaining power in the market.

Population censuses

Contributing family workers are those workers who hold “self-employment jobs” as own-account workers in a market-oriented establishment operated by a related person living in the same household. To some degree, the way in which the labour force is measured can have an effect on the extent to which men and women are included in labour force estimates. Since women, more so than men, are found in these situations, it is to be expected that the number of women in employment will tend to be underestimated to a larger extent than the number of men. It is also instructive to look at labour force participation rates for males and females by age group.

Labour force activity among the young reflects the availability of educational opportunities, while labour force activity among older workers gives an indication of the attitude towards retirement and the existence of social safety nets for the retired. Labour force participation is generally lower for females than for males in each age category. Among the prime working age, the female rates are not only lower than the corresponding male rates, but they also typically exhibit a somewhat different pattern.

Regarding the international comparability of unemployment rates, there are a host of reasons why the statistics may not be comparable between countries. Where the information is based on household surveys or population censuses, differences in the questionnaires can lead to different statistics − even allowing for full adherence to ILO guidelines. In other words, differences in the measurement tool can affect the comparability of results across countries. Also, national statistical offices, even when basing themselves on the ILO conceptual guidelines, may not follow the strictest measurement of employment and unemployment. They may differ in their choices concerning the conceptual basis for estimating unemployment.

There are instances where people are hired as part-time employees, though they are available for the rest of the day. They might be employed in a position that does not fully utilize what they know and how they could help organizations grow with their knowledge and experience. In addition, there are https://1investing.in/ a few who remain underpaid or even opt for voluntary underemployment. An unemployed worker is actively seeking employment but is unable to find a job at any level. There are many factors that may cause unemployment, and the worker may have access totemporary supportduring their time between jobs.

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