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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.

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.

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.

References:

1) de Jong, Gordon F. and Anna B. Madamba. 2001. "A Double Disadvantage? Minority Group, Immigrant Status, and Underemployment in the United States." Social Science Quarterly 82:117-30.

2) Dooley, David and JoAnn Prause. 2004. The Social Costs of Underemployment: Inadequate Employment as Disguised Unemployment. Cambridge, England: Cambridge University Press.

3) Feldman, Daniel C. 1996. "The Nature, Antecedents, and Consequences of Underemployment." Journal of Management 22:385-407.

4) Johnson, Gloria J. and W. Roy Johnson. 1999. "Perceived Overqualification and Health: A Longitudinal Analysis." Journal of Social Psychology 139:14-28.

5) Livingstone, D. W. 2004. The Education-Job Gap: Underemployment or Economic Democracy. 2nd ed. Toronto, ON: Garamond.

6) Maynard, Douglas C., Todd Allen Joseph, and Amanda M. Maynard. 2006. "Underemployment, Job Attitudes, and Turnover Intentions." Journal of Organizational Behavior 27:509-36.

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