The hidden toll of underemployment

Original Reporting | By Mike Alberti |

Nov. 9, 2011 — The many impacts of unemployment — including social and psychological ones — have long been catalogued. But much less is known about the consequences of “underemployment.” Millions of Americans — at least as many as are unemployed, and perhaps more — have either been forced to take part-time work because full-time jobs are not available, or are forced to work in jobs for which they are overqualified. (See “How many are there,” below.)

What is underemployment?

One of the primary difficulties in measuring underemployment is that there is no consensus about how it should be defined. For many years, underemployment was thought of only in terms of “hours,” that is, a situation in which a worker is not able to work as many hours as he or she wants.

In 2003, psychological researchers Daniel S. Friedman and Richard H. Price wrote an influential paper on underemployment in which they sought a broader definition. They emphasized the importance of studying the implications of four different “types” of underemployment: hours-based, income-based, skill-based, and status-based.

Income-based underemployment is a situation in which workers makes less money than they would be expected to, given their skill-level and educational background. Skill-based underemployment represents whether a worker is overeducated for his or her current job. Status-based underemployment is more complicated (and somewhat more controversial), drawing on a “socioeconomic index” that combines the income and educational attainment associated with a specific occupation with a more subjective measure of the “value” a specific occupation is perceived to have in society.

“We have never experienced anything like this,” said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University. It is “not something that as a society we’re used to dealing with.”

Since the recession, researchers have begun to take more of an interest in the psychological effects of underemployment, and what they have found is not encouraging. In the short-term, it appears that those who are underemployed — like those who are unemployed — have an increased risk of depression, increased stress, and lowered self-esteem.

And there may be long-term negative effects, too. On the psychological side, there are intriguing hints of a downward spiral that might affect underemployed workers in their family, social, and employment relationships. In economic terms, there is already data that show that the effects of being underemployed directly after graduating from college can linger for more than 10 years.

“Unemployment is an emergency,” Van Horn said. “Underemployment is a crisis.” Nevertheless, the United States, unlike other countries, is not gathering the data needed to pinpoint what the full costs of underemployment actually are. Making it difficult to know which policies might be effective in helping those affected.


What’s wrong with me?

Douglas Maynard, an associate professor of psychology at the State University of New York in New Paltz is one of only a few psychologists who has studied the mental health effects of underemployment.

“There are a few things that we know for sure,” he said. “We see very clear evidence of lower self-esteem, greater stress, and less job satisfaction,” he said.

To illustrate those effects, David Pedulla, a doctoral candidate at Princeton who is writing his dissertation on the consequences of underemployment, suggested considering the case of a worker with a degree in accounting who is laid off from an accounting firm and has to take a new job working in retail.

How many are there?

The Bureau of Labor Statistics (BLS) keeps track of one class of underemployed workers, which it calls “involuntary part-time workers,” that is, workers who want full-time employment but cannot get it. According to BLS, the number of these workers has risen even faster than the number of unemployed workers since the beginning of the recession. As of September there were 9.2 million such workers.

But BLS does not take into account another class of the underemployed: those workers who hold jobs below their skill and education level.

Andrew Sum, director of the Center for Labor Market Studies at Northeastern University, has shown that, between Sept. 2010 and Jan. 2011, nearly two million college graduates under the age of 30 were working in jobs that did not require a college degree.

But even this does not capture the full scope of their numbers. Sum’s analysis, for example, did not include those college graduates aged 30 and older who were working in jobs not requiring a college degree. It also did not include workers with lesser level of education whose jobs do not fully utilize their skills. 

“We know the problem is big, but we actually don’t know how big it is,” said Francis McKee-Ryan, a professor of management at the University of Nevada in Reno, who has studied underemployment.

And there is still another category to be accounted for. Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University, pointed to those workers not traditionally categorized as underemployed but whose status has markedly deteriorated because of pay cuts imposed during and after the height of the financial crisis.

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