The hidden toll of underemployment

Original Reporting | By Mike Alberti |

Erdogan said that that situation could quickly lead to anger and “self-defeating behavior,” which could affect the way that underemployed workers do their jobs. “If you don’t feel appreciated in your job, and feel like it’s unfair to be there, you might not do your job as well. If you’re working in a coffee house, in the end you may not end up treating your customers very well,” she said.

In his research, Maynard has found that workers who perceive themselves to be overqualified for their jobs report less job satisfaction even than workers who are involuntarily employed part-time.

Erdogan said that evidence also exists that workers who are overqualified for their jobs are more likely to have bad relationships with their managers and co-workers, and that this can make them more likely to get fired from their jobs.

“If you don’t leave a job on good terms,” she said, “that in turn diminishes your chances of finding another job.”


Depression and boredom

Psychologists stress that the duration of underemployment is a very important factor. If a person finds a better job within a few weeks or months, said Daniel Feldman, associate dean of the Terry College of Business at the University of Georgia, the negative psychological impacts are more likely to be limited.

But if the worker remains underemployed for more than six months, Feldman said, it would be a short step from the combination of boredom and self-doubt to clinical depression. Researchers have shown that depression is strongly associated with underemployment, especially if the person is making less money than he or she had come to expect. Others have also found that underemployed workers are just as likely as the unemployed to show signs of depression.

“People spend a huge number of their hours at work,” said David Pedulla of Princeton. “If that work is making them depressed, then it’s easy for that to affect other parts of their lives.”

Going back to the example of a worker who went from an accounting job to a retail job, Feldman said that an huge factor would be the dissonance in the worker’s mind between his present situation and the future that he had imagined.

“You went from doing something where you were using your skills to folding shirts,” he said.  “That’s a very strong contradiction [of] the idea that you had of where you were going to end up.”

“You’re going to be constantly bored with that job,” he said. “You’re never going to be happy working there.”

Depression has long been linked to self-destructive behavior such as an increased incidence of alcoholism, drug use, aggression toward family members, and suicide. While little research has been done examining the incidence of these behaviors among underemployed people, the connection between self-destructive behavior and unemployment is quite strong.

“We would expect to see many of the same effects in some underemployment situations,” said Meghna Virick, an associate professor of management at San Jose State University.

Feldman has also found that if workers who are laid off blame themselves for losing their jobs, there is an increased likelihood that they will engage in self-destructive behavior.

Characteristically, people who suffer from depression can have strong feelings of shame, guilt and worthlessness, as well as fatigue and irritability. They can also lose interest in things that were once important to them, such as their families, friends, and hobbies.

“People spend a huge number of their hours at work,” Pedulla said. “It’s central to the construction of their identity. If that work is making them depressed, then it’s easy for that to affect other parts of their lives.”

Long-term economic effects…and effect on happiness, too?

Although economists have not done much work that specifically focuses on the long-term implications of underemployment, they have examined the long-term implications of recessions. What they have found is that negative effects are persistent. And new research offers a intriguing hints that underemployment, too, may cause persistent negative effects on workers.

Lisa Kahn, an economist at Yale University, has studied the long-term economic consequences of graduating into a recession. In one study, she found that for every 1 percent increase in the unemployment rate, young people who graduate during a recession can expect in their first job to earn 6 to 7 percent less than they otherwise would have.

Till von Wachter, an economist at Columbia University, and colleagues have conducted similar research, and found that the wage loss associated with graduating into a recession lasts an average of 10 years. This is especially significant with a view toward the long-term earnings of those graduates, because other economists have found that two-thirds of the wage-growth of American workers happens in the first ten years that they are in the labor market.

Von Wachter has also studied the economic effects of being laid-off during a recession, and found that workers who experience a mass layoff were still making twenty percent less even 15-20 years afterwards. The accumulation of those annual earnings totaled between $110,000 and $140,000. If the worker would have been expected earn $50,000 a year during those twenty years, the loss of $110,000 represents a lifetime earnings loss of twenty percent.

Paola Giuliano, an assistant professor of economics at the University of California Los Angeles, is currently doing research investigating the long-term effects on well-being that result from experiencing a recession between the ages of 18 and 25. Though her results so far are only preliminary, she said that, across countries and regions, it seems as though those people report that they are less happy many years later.

“Unfortunately, it seems like the effects can stick with you for the rest of your life,” she said.

In her study, Giuliano is controlling for employment status, so she is not able to say how much one’s labor market status affects his or her happiness in the future. However, she said that, drawing from the psychological research, it stands to reason that those who are unemployed and underemployed would be the most affected.

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