Underemployment

Source: Wikipedia, the free encyclopedia.
For the television series, see Underemployed (TV series).
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.[1]

Underemployment is the underuse of a worker because their job does not use their skills, offers them too few hours, or leaves the worker idle.[2] 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,[3] and overqualified workers who have education, experience, or skills beyond their role's requirements.[4][5]

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?] Policy-makers may under-research these meanings when assessing the economy as they focus on unemployment instead:[3]

  1. "
    taxi
    driver.
  2. "Under hours"
    childcare and public transportation
    .
  3. "Overstaffing", "hidden unemployment", or "disguised unemployment" (also called "labor hoarding"[7]), 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.

Underemployment is a significant cause of

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.[8][needs update
]

Underutilization of skills

In one usage, underemployment describes the

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.[9] 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

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 layoffs. 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.[12]

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

labor markets typically do not "clear" using wage adjustment. Instead, there is a non-wage rationing
of jobs.

Involuntary part time workers, share of total employment (OECD)

Underuse of economic capacity

Underemployment can also be used in

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.[13]

Relatedly, in

Okun's Law, it is correlated with the gap between potential output and the actual real 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

The third definition of "underemployment" describes a polar opposite phenomenon: to some

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 firms focusing on tax preparation, as well as agriculture and the hospitality industry). The presence of this issue in 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,

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

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
.

In some countries, labour laws or practices (e.g. powerful

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] 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 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

References

  1. ^ O'Brien, Matt (19 November 2014). "Baristas of the world unite: Why college grads may be stuck at Starbucks even longer than they thought". Retrieved 7 April 2018 – via The Washington Post.
  2. doi:10.1177/014920639602200302
  3. ^
    S2CID 158857001
    .
  4. ^ Chohan, Usman W. "Young people worldwide fear a lack of opportunities, it's easy to see why" The Conversation. September 13, 2016.
  5. ^ Chohan, Usman W. "Young, Educated and Underemployed: Are we Building a Nation of PhD Baristas" The Conversation. January 15, 2016.
  6. doi:10.1037/a0013528
  7. ^ Felices, G. (2003). Assessing the Extent of Labour Hoarding. Bank of England Quarterly Bulletin, 43(2), 198–206.
  8. ^ Gallup, Inc. "Gallup Global Employment Tracking". Retrieved 15 October 2014. [dead link]
  9. PMID 38443080
    .
  10. ^ Vedder, Richard; Denhart, Christopher; Robe, Jonathan (January 2013). "Why are Recent College Graduates Underemployed? : University Enrollments and Labor Market Realities". Center for College Affordability and Productivity. Retrieved June 2, 2013. 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.
  11. ^ Pappano, Laura (22 July 2011). "The Master's as the New Bachelor's". The New York Times. Retrieved 17 January 2017.
  12. ^ Lederman, Doug (23 May 2018). "The Bad First Job's Lingering Impact". Inside Higher Ed. Retrieved 28 May 2018. 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.
  13. ^ "Application form example internship". Applicationform Example. Retrieved 2019-11-11.

Further reading

External links
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