What is Underemployment?

Help Wanted for the UnderemployedHave you ever been out of work, or in a part-time job for an extended period of time?

It can be demoralizing not to be able to find the type of work you’re qualified for.

The statistics show, specifically the Underemployment Rate, that it’s still a very tough job market for about a fifth of all Americans.

The Underemployment Rate (Statistics)

If statistics are your thing, here are a few to chew on. According to Gallup, the Underemployment Rate for February 2012 was 19.1%, that was up from 18.7% in January 2012, and down from this time last year (February 2011), when the rate was at 19.9%. The numbers from Gallup don’t include any “seasonal adjustments”.

The 19.1% Underemployment Rate is made up of two numbers: the unemployment rate of 9.1% and the percentage of American workers working part-time jobs, but wanting full-time employment (currently 10%). The combined number is supposed to give us an idea of the real state of employment in the U.S.

What is Underemployment (vs Unemployment)?

As noted by the stats above, the Underemployment Rate is a measure of the number of American workers that are either unemployed (and looking) or in a part-time job that is below their normal pay grade (i.e. not in the type of job they are qualified for).

So, the Underemployment Rate actually includes the Unemployment Rate. The idea here is that, “hey, he or she may be working, but it’s not a job that can support them.”

Tweet from the Underemployed

A tweet from the underemployed.

Notice that the rate does not include people who have given up on finding a job (i.e. discouraged workers). You can get a sense of that by looking at the Labor Force Participation Rate.

Michigan Underemployment Benefits

The two rates are also different in the sense that one qualifies you for benefits while the other does not.

The way I understand it, there is actually one state, Michigan, where you can file for underemployment benefits. That is, you can earn money from a part-time job and still received unemployment compensation (at a reduced level). Here’s an underemployment benefits calculator provided by the state.

To get these benefits, you just need to apply for unemployment compensation like you would if you didn’t have a job at all by visiting the Michigan.gov website. If you are currently underemployed in another state, check to see if you are eligible for these types of benefits where you live.

Who Are the Underemployed

The underemployed come from all walks of life, but they primarily fall into two categories.

First, there are people who were laid off due to the recession. These people had a job before the recession hit, but lost it because their company could no longer afford to keep them. Many of these workers have taken unemployment benefits, constantly looked for full-time employment, and even taken multiple part-time jobs to make a living.

The other major group is college graduates. Since 2009, college graduates have faced an uphill battle in finding work. Many are in the same part-time job that they held while they were in college. Many have moved back home to live with their parents. Many have settled for jobs that don’t compensate them for the degree they’ve earned.

Let’s hope that the economy improves soon so many of the underemployed can get back to work, or get back into a job that they’re qualified for.

About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon.

He created Part-Time Money® back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence.


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  1. melissa wilson says

    i have been employed for five years as acreceptionist.in june 2011 i had a stroke after being off work for 3 months i went back to work i am fully functional except i now suffer from anxiety and panic attacks when under extreme stress and commotion. i was workingcwith no bproblem for over a year sincevthe stroke. 3 weeks ago my hours were cut to two days per week or go to another office and stay full time. i tried it at another office but do to the constant chaos and my anxiety i was unable to do it. after 4 days there i feltmy heslthvwas at risk and told them i would take the 2 days instead. theycare now using this anxiety agsinst me snd say i will never get my hours back i was initially told it would only be a couple of months until i eould be returned to full time. pleade advise. i dont know what to do.

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