What Is Underemployment?

Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being used in terms of skills, experience, and availability to work. People who are classified as underemployed include workers who are highly skilled but working in low-paying or low-skill jobs and part-time workers who would prefer to be full-time. This is different from unemployment in that the person is working but not at their full capability.

KEY TAKEAWAYS

  • Underemployment is a measure of employment and labor utilization in the economy that looks at how well the labor force is being used in terms of skills, experience, and availability to work.
  • It refers to a situation in which individuals are forced to work in low-paying or low-skill jobs.
  • Visible underemployment and invisible underemployment are types of underemployment.
  • Underemployment can be caused by a variety of factors, from economic recessions to business cycles.
  • The unemployment rate is calculated based solely on the labor force, which does not include persons who are not seeking a job.individual works fewer hours than is necessary for a full-time job in their chosen field. Due to the reduced hours, they may work two or more part-time jobs in order to make ends meet.

    The second type of underemployment is invisible underemployment. It refers to the employment situation in which an individual is unable to find a job in their chosen field. Consequently, they work in a job that is not commensurate with their skill set and, in most cases, pays much below their customar wage.

Understanding Underemployment

Underemployment is calculated by dividing the number of underemployed individuals by the total number of workers in a labor force.