Underemployment
Underemployment
ECONOMIC GLOBALIZATION AND UNDEREMPLOYMENT
HOW GLOBALIZATION AFFECTS EMPLOYMENT AND POVERTY
It is difficult to estimate the percentage of the world population that is jobless. Unemployment, underemployment, informal employment, and the ratio of employment to the total population are all indicators that measure employment instability. Because the use of such measures varies across countries and organizations, it is important to provide information on a number of key labor market indicators to better assess global joblessness (International Labour Organization 2007a).
To illustrate, the adult unemployment rate captures the proportion of the labor force that is not working but is looking for work (ages twenty-five and older). The “youth unemployment rate” applies to those unemployed persons between the ages of fifteen and twentyfour. Although unemployment is a commonly used indicator of joblessness, a large proportion of the non-working population is not captured with this measure. For example, the unemployment rate does not count “discouraged workers.” Discouraged workers are those persons who are no longer included in the labor force, as they have essentially given up trying to find work. Nor does the unemployment rate represent the proportion of the labor force that is underemployed. According to the International Labour Organization (ILO) (2007b), the underemployed represent those “whose hours of work are insufficient in relation to an alternative employment situation in which the person is willing and available to engage.” Finally, another key labor market indicator, the ratio of employment to the total population, is often used to assess employment opportunities at the global level and is thought to provide a better estimate of joblessness than that measured by the unemployment rate alone. This measure, however, also fails to capture the underemployed. Hence, to adequately capture global joblessness, employment opportunities and trends, it is important to provide information on unemployment, underemployment, and the ratio of employment to the total population.
ECONOMIC GLOBALIZATION AND UNDEREMPLOYMENT
Economic globalization constitutes the process of increasing economic interdependence across borders. With greater economic integration comes the potential for greater market productivity and efficiency. The process of globalization is observed in the growth of international trade, the rise in transnational corporations and investments, and in the unrestrained cross-border movement of capital and goods. As predicted by economists and other policy analysts, globalization has contributed to worldwide economic gains. Yet a closer look at the social dimension of globalization reveals an unequal distribution of these benefits within and across countries.
Although international economic growth and development have the potential to promote employment and decrease poverty and exclusion around the world, the evidence to date suggests that the opposite has occurred. Macroeconomic policies that enhanced global economic integration failed to sufficiently consider the national and international implications for countries with an unequal distribution of wealth. Moreover, global economic policy did not address how to increase or improve employment for the majority of workers, nor did such policies seek to remedy gender- or birth-ascribed labor market inequality. Consequently, world economic growth has been realized through globalization; however, inter- and intra-country inequality persists among the core and periphery, developed, transitioning, and underdeveloped countries, and across distinct social groups. In other words, a strong global gross domestic product (GDP) did not correspond to a reduction in global joblessness or poverty. Persistent and increasing unemployment, underemployment, informal employment, and poverty are observed in all countries, regardless of development. Moreover, such employment uncertainty associated with the global economy is further stratified by gender (Heintz 2006) and by birthascribed characteristics and features associated with subgroup membership (including race, ethnicity, nativity, caste, legal status).
HOW GLOBALIZATION AFFECTS EMPLOYMENT AND POVERTY
With growing interdependence comes greater vulnerability across borders. The SARS outbreak in Asia, the spread of HIV/AIDS in sub-Saharan Africa, Russia, and the Ukraine, the impact of 9/11 in the United States, the Iraq War and other armed conflicts and violence, have all had a negative, if temporary, effect on regional economies (Harasty and Schmidt 2004). In the global economy, regional events affect the global marketplace. For example, the volatility of markets in Latin America and Asia have slowed global economic growth, and the global tourism and travel industry has been negatively impacted by 9/11 and the subsequent War on Terror. Thus, global economic stability is correlated with national economic and non-economic crises and events.
In contrast, macroeconomic policies favoring globalization, such as freer trade and markets, government deregulation, and the emphasis on private over public sector oversight, have succeeded in increasing global productivity and efficiency. In 2006, International Monetary Fund (IMF) estimates report a slow but steady growth in global output and global labor productivity. For example, global output grew by 5.2 percent and global labor productivity grew by 3.4 percent (International Labour Office 2007b). It appears, then, that globalization benefits the economy by promoting strong worldwide economic development. Yet macroeconomic policies geared toward globalization have emphasized the unrestrained flow of capital and goods. Hence, global economic policies with a social dimension, such as increasing the cross-border flow of labor, enhancing or improving employment opportunities, or policies that attempt to reduce inter- and intra-national poverty or inequality across race, class, and gender, have not been pursued. Although it is reasonable to expect that global economic growth would likely enhance employment opportunities and reduce poverty around the world, the lack of macroeconomic
policies that address these specific concerns has resulted in an increase in joblessness around the world. Employment trends between 1996 and 2006 suggest that on the whole, globalization has had a negative impact on employment outcomes and has increased poverty.
JOBLESSNESS
In 2006, global unemployment reached an all-time high of 195.2 million persons (6.3 %), and world underemployment was estimated at between 25 and 30 percent (Köhler 2004; ILO 2007). Correspondingly, the world’s employment-to-population ratio declined between 1993 and 2006 (to 61.4 %, down from 62.6 % in 1996 and 63.3 % in 1993). The persistent decline in the employment-to-population ratio coupled with the rise in unemployment and underemployment suggests that the demand for jobs in the global economy has outstripped the supply of jobs that are available (Heintz 2006; ILO 2007b). Furthermore, the employment-to-population ratio and the unemployment and underemployment rate are stratified within and across countries. Poorer, underdeveloped countries face greater unemployment and underemployment than richer, developed countries. Moreover, underemployment is a far more prevalent and pressing problem than unemployment in underdeveloped countries (Köhler 2004). In particular, North Africa and the Middle East report the highest unemployment rate and the lowest employment-to-population ratio (12.2 % and 47.3 %, respectively) (ILO 2007b). Such findings reflect the limited employment options for women in these countries, the prominence of and dependence on the production of oil in the region (and which generates relatively few jobs), and population growth (ILO 2007b). In the United States, underemployment is associated with “the underclass,” typified by U.S.-born black men who experience extreme and concentrated poverty and joblessness in America’s inner-city neighborhoods. Observers note that underemployment in the United States is more likely to occur among women than men, ethnic and racial minorities than non-Hispanic whites, and immigrants than the U.S.-born (De Jong and Madamba 2001).
POVERTY
Nations experience poverty differently. For example, Latin America has experienced the largest gap between the rich and the poor in the less developed world. In particular, indigenous people in Latin America are disproportionately more likely to experience extreme poverty, as they make up only 10 percent of the population of Latin America but constitute the majority of the poor. In the developed world, the gap between the rich and poor is greatest in the United States. In the United States, the wealthiest 1 percent of the population is richer than the combined bottom 40 percent. The inequality gap between these two groups is widening rather than narrowing over time. Moreover, although global poverty is on the decrease, from 15.1 percent in 1993 to 12.7 percent in 2004, regional disparities remain. For example, rapid growth in China and East Asia have led to poverty reduction, but similar changes have not been realized in sub-Saharan Africa or the transition economies of Central Asia and Europe. Additionally, poverty is stratified by gender, race and ethnicity, and nativity. For example, female-headed households experience poverty at a greater rate than their male counterparts. Racial or ethnic minority status intersects with gender to heighten inequality. For example, approximately 40 percent of black and Latino female-headed households experience poverty in the United States. Moreover, immigrants are more likely to live in poverty than U.S.-born residents (17.1 % compared to 11.8 %, respectively).
Global poverty is difficult to measure. Rough estimates suggest that extreme poverty, the number of people worldwide who live on less than two dollars a day, has approached 1.4 billion persons, or about one-fifth of the world’s population (ILO 2007b). Other estimates put this number at closer to 3 billion people. Children make up a third of this total population. According to figures generated by UNICEF, approximately 30,000 children die each day due to extreme poverty, about 11 million children under five years of age each year (Shah 2006). They “die quietly in some of the poorest villages on earth, far removed from the scrutiny and the conscience of the world. Being meek and weak in life makes these dying multitudes even more invisible in death” (UNICEF 2005). Notably, these staggering numbers actually reflect a decline in poverty that has occurred in the early years of the twenty-first century. This is due, in part, to the concerted effort by the United Nations and other international organizations to highlight and combat global poverty. Additionally, the proportion of the global labor force that is female is on the rise, which further contributes to the decline in poverty. Women are more likely to experience poverty because their work is generally low-skilled, low-wage, and insecure; however, at the level of the household, women’s wages make a positive contribution to total income. The wages women contribute to the household often alleviate the risk of extreme poverty, especially in countries where women’s work compensates for the increase in male unemployment (Heintz 2006).
Poverty is related to employment outcomes; therefore, an increase in unemployment or underemployment is often associated with an increase in poverty. Since unemployment and underemployment are on the rise, a substantial segment of the global population is vulnerable to falling below the poverty line. Growing joblessness coupled with a lack of productive and decent work in the formal sector of the global economy has led to a rise in informal employment. Informal work is generally lowskilled and low-wage, often located in the service sector, agriculture, or the non-durable manufacturing industry (Heintz 2006).
LABOR MARKET SEGMENTATION
National labor markets are stratified by gender and one or more birth-ascribed characteristics rooted in race, caste, ethnicity, nativity, or indigenous status, among others. The international labor market is a macrocosm of such structural inequality. For example, in the United States, globalization has ushered in a restructuring of the economy that is characterized by a decline in good-paying jobs in durable goods manufacturing and the aerospace and defense industries. At the same time, there has been a rise in low-wage, low-skilled jobs in non-durable goods manufacturing, such as in the garment or electronics industry, and the service industry. Hence, although jobs at the bottom and at the top of this “hourglass economy” remain plentiful, the “narrowing middle” forces occupational segregation and constrains intergenerational mobility, especially among racial and ethnic minority groups. Additionally, recent immigration policy reforms, such as the Hart-Cellar Act of 1965, the Immigration Reform and Control Act of 1986, and the Immigration Act of 1990, have dramatically increased legal immigration to the United States. Alongside legal immigration, illegal immigration by Mexican and Central American migrants continues unabated (Valdez 2005). Such economic and demographic changes have spurned a wage and work gap between non-Hispanic whites and ethnic and racial minorities that persists into the twenty-first century. For example, native-born ethnic and racial minorities are more likely to be unemployed and underemployed; native-born and foreign-born Latinos, regardless of legal status, are concentrated among the working poor. For men, such occupations include labor-intensive work in the construction or service industries. For women, occupations include domestic work or factory work in sweatshop-like conditions in the garment industry. Other industrialized nations face similar patterns of stratification across subgroups. In Japan, for instance, foreign-born men from Brazil and Pakistan work in occupations characterized as “dirty, dangerous, and difficult,” while Filipinas are relegated to work in hostess bars and other occupations in the “entertainment” industry.
INFORMAL EMPLOYMENT
Informal employment in developed and underdeveloped countries and in rural and urban settings is on the increase for men and women, as “lean” and “just in time” production techniques decrease the number of jobs that are available in formal employment. Informal employment constitutes non-standard work that is lowskilled and low-wage, often requires excessive hours of work, is generally inflexible and insecure, and lacks protections, regulations, and benefits that more formal employment guarantees. Women engage in informal employment to a greater degree than men. In less developed countries, the majority of non-agricultural women’s labor takes place in the informal sector. In developed countries, the highest percentage of informally employed women occurs in sub-Saharan Africa (84%).
The disproportionate number of women working in the informal sector relative to men is due, in large part, to gender inequality in developed and especially underdeveloped countries. For example, women in underdeveloped nations may work for subcontractors assembling work at home for a fixed price or work as unpaid family workers in family-owned enterprises. In developed nations, women’s informal employment includes domestic work, work in the entertainment industry, factory work, “home work,” and unpaid family work. Because such informal labor market practices lack the protections found in more formal employment such as childcare support or sick leave, and because women are more likely to engage in this type of work, women are more likely to experience poverty than men; this has been termed the “feminization of poverty.”
Additionally, women’s non-market work—unpaid labor that contributes to the maintenance of the household—is crucial for its socioeconomic stability. The time expended in non-market unpaid work is largely non-negotiable, however, and the hours left available for paid market work are compromised by such household responsibilities. The combination of unpaid non-market work and the fewer hours left available for wage-work, and the likelihood that such work will be located in the informal sector, results in the devaluation of women’s work. This “feminization of labor” characterizes the majority of women’s work in developed and developing nations (Heintz 2006).
Finally, in underdeveloped, post-colonial countries, the exploitation of children, women, and indigenous workers occurs at the national and international level. Outsourcing by developed countries leads to increased employment opportunities in less developed countries, but the factory or service jobs that are generated are labor intensive and low paying. In 2004, the ILO reported that one in six of the world’s children (ages five to seventeen) engages in child labor, which may include forced labor, prostitution, or work that is hazardous and dangerous (Harasty and Schmidt 2004). Moreover, sex tourism in Southeast Asia, the Dominican Republic, and the Caribbean promotes the exploitation of women and children from underdeveloped countries by Westerners. For example, Thailand’s sex tourism industry generates 4.3 billion U.S. dollars annually, which accounts for 3 percent of Thailand’s GDP.
FAIR GLOBALIZATION
Research on globalization has emphasized the possibility of “fair globalization” (Halonen 2005). Fair globalization seeks to promote economic growth and development while at the same time improving employment opportunities and reducing poverty. Rather than suggesting that a fair globalization is ethical, moral, or idealistic, scholars, activists, and organizations argue that the observed economic growth that has been attributed to globalization cannot be sustained without a population of decently employed workers. In other words, macroeconomic policies that facilitate economic internationalization need to expand beyond policies that promote the unrestrained cross-border flow of capital and goods. Additional policies are required that would ensure decent and productive work. The ILO (2007) defines “decent and productive work” as “opportunities for women and men to obtain decent and productive employment in conditions of freedom, equity, security and human dignity.” Such work is not produced in the informal sector but must be created in the formal sector. Policies in the early twenty-first century that target the social dimension of globalization are taking root, such as the United Nation’s Millennium Declaration, which seeks to halve world poverty and achieve universal primary education by 2015, and the ILO’s commitment to worldwide decent and productive employment as well as their strategic and aggressive policy to end child labor.
The attention being paid to the contradictions of globalization and global economic growth on the one hand and rising joblessness and poverty on the other, may have the desired effect. Macroeconomic policies may begin to address the unequal distribution of resources across developed and underdeveloped countries, if only to sustain future global economic growth. Whether such policy changes at the international (or national) level can address socioeconomic stratification at the national level is less clear, since gender and birth-ascribed stratification appears to be an endemic, structural feature of labor markets.
SEE ALSO Poverty; Social Problems; Undocumented Workers.
BIBLIOGRAPHY
De Jong, Gordon F., and Anna B. Madamba. 2001. “A Double Disadvantage? Minority Group, Immigrant Status, and Underemployment in the United States.” Social Science Quarterly 82 (1): 117–130.
Halonen, H. E. Tarja. 2005. “A Fair Globalization.” Globalizations 2 (2): 250–253.
Harasty, Claire, and Dorothea Schmidt. 2004. Global Employment Trends. Geneva: International Labour Organization. Available from http://www.ilo.org.
Heintz, James. 2006. “Globalization, Economic Policy and Employment: Poverty and Gender Implications.” Employment Strategy Papers, Employment Policy Unit, International Labour Office. Available from http://www.ilo.org/publns.
International Labour Organization. 2007a. Key Labor Market Indicators. Geneva: Author. Available from http://www.ilo.org.
_____ 2007b. Global Employment Trends, updated. Geneva: Author. Available from http://www.ilo.org.
Köhler, Gernot. 2004. “The Global Stratification of Unemployment and Underemployment.” Centro Argentino de Estudios Internacionales, Programa Teoria de las Relaciones Internationales. Available from http://www.caei.com.ar/es/programas/teoria/t12.pdf.
Shah, Anup. 2006. “Global Issues: Social, Political, Economic and Environmental Issues that Affect Us All.” Available from http://www.globalissues.org.
UNICEF. 2005. The State of the World’s Children. Available from http://www.unicef.org/sowc05/english/index.html.
Valdez, Zulema. 2005. “Two Sides of the Same Coin? the Relationship Between Socioeconomic Assimilation and Entrepreneurship Among Mexicans in Los Angeles.” In Latino Los Angeles: Transformations, Communities, and Activism, edited by Enrique C. Ochoa and Gilda L. Ochoa. Tucson: University of Arizona Press.
Zulema Valdez
Underemployment Rate
Underemployment Rate
Underemployment generally refers to one of several situations that result in employment in an economically inadequate position. In this context the underemployment rate refers to the fraction of those employed who are “underemployed.” Some scholars utilize an alternative version of this definition by considering some nonemployed individuals as underemployed. Regardless of the definition of underemployment, the concept evolved from inadequacies in the unemployment rate in capturing work-related hardships (Jensen and Slack 2003, p. 25).
Ignoring for now the definition of underemployment that includes nonemployed individuals, the underemployed work while incurring some form of employment-related hardship. This includes individuals working in occupations with an insufficient number of hours, individuals working in positions with insufficient pay, individuals working in occupations below their levels of educational attainment, and individuals working in positions involving some combination of the above scenarios. Because they have employment they are not considered to be unemployed according to the standard definition of unemployment.
First, underemployment refers to a situation where employees work fewer hours than they desire. Such an event may occur because of real-world labor-market rigidities such as a fixed-hour workweek. For example, workers desiring a thirty-hour workweek at a job that requires forty hours for full-time employees or twenty hours for part-time employees will be considered underemployed if they accept the part-time position. A similar case occurs when workers accept part-time employment without choice, often referred to as “involuntary part-time.” This is the most widely cited reference to the underemployment rate, perhaps because it is easier to measure than the other types of underemployment. John Ham (1982) estimates that in the United States in 1970 over a quarter of the labor force was either unemployed or underemployed according to the hours worked measurement of underemployment.
Alternatively, workers may accept positions that offer the desired workweek but with low pay. In this case workers will be considered underemployed when their expected wages—based on personal (i.e., educational attainment, experience) and job-specific characteristics—are higher than their actual wages. This type of underemployment may occur within the context of either full-time or parttime employment. In a sense, workers accept such employment rather than become unemployed. Measuring the underemployment rate by this definition is difficult due to the need for an empirical estimation of one’s expected wage.
Some scholars consider all working-poor individuals to be underemployed, thereby eliminating the need for wage estimates. Such scholars would likely categorize a full-time employee earning the minimum wage as underemployed. Other researchers note that this need not be the case if the earnings of low-wage individuals are consistent with their level of human capital. Among those who consider all working poor as underemployed, a debate exists as to what the threshold level of income should be. Frequently a percentage of the official poverty threshold (either 100% or 125%) or a fraction of the median wage (from one-third to two-thirds) is utilized. Critics contend that such levels are arbitrarily determined.
Moreover, some workers are in occupations with an adequate workweek and pay but are not using all of their human capital, most notably by not fully using their educational qualifications. For example, individuals with a bachelor’s degree working in positions requiring only a high-school diploma are considered underemployed when compared to degree holders with higher-level jobs. As noted by Stephen Rubb (2005), the same individuals are considered “overeducated” when compared to others in their own occupational category. Measuring the underemployment rate by this definition is difficult due to the need for an estimation of the required level of education (and other human capital characteristics) for various occupations. Implicit in such a calculation of an “occupational mismatch” is the idea that all jobs within an occupational category are homogenous and that educational quality is uniform. Many scholars find such assumptions objectionable. Due to such complexities, researchers tend to focus on underemployment from other categories. A similar concept is “disguised unemployment” introduced by Joan Robinson (1937, p. 84) “where workers’ productivity is less than in the occupation they have left,” presumably because the worker’s new occupation does not make full use of their human capital.
It should be noted that many scholars (e.g., Jensen and Slack 2003) use underemployment to capture all forms of employment hardship, including those associated with nonemployment. As such, their definition of underemployment includes both discouraged and unemployed workers in addition to those employed in inadequate situations. For such scholars, the underemployment rate is the fraction of the labor force that is “underemployed” with a slight adjustment to include “discouraged workers” as part of the labor force. Discouraged workers are individuals who are neither employed nor looking for work, and typically they are not counted as part of the labor force. Using such a definition, Jensen and Slack find that in the United States in 2000 the overall underemployment rate was 13.5 percent, and that it was notably higher during the global recession in the early 1990s. In their model the most common type of underemployment is the working poor. This is followed by unemployment, insufficient hours, and discouraged workers as the second, third, and least common types of underemployment. They do not estimate the level of occupational mismatches in their calculation of the underemployment rate. Researchers who include nonemployed workers in their estimates of the underemployment rate tend to also automatically include working-poor individuals in their calculation. In general, their work tends to focus on issues involving the equitable distribution of income. Other researchers disagree with the inclusion of discouraged and unemployed workers in the estimates of the underemployment rate, contending that underemployment implicitly infers employment.
SEE ALSO Natural Rate of Unemployment; Unemployment
BIBLIOGRAPHY
Ham, John C. 1982. Estimation of a Labour Supply Model with Censoring Due to Unemployment and Underemployment. Review of Economic Studies 49 (3): 335–354.
Jensen, Leif, and Tim Slack. 2003. Underemployment in America: Measurement and Evidence. American Journal of Community Psychology 32 (1/2): 21–31.
Robinson, Joan. 1937. Disguised Unemployment. In Essays in the Theory of Employment. London: Macmillan.
Rubb, Stephen. 2005. Overeducation, Undereducation, and the Theory of Career Mobility: A Comment and a Note on Underemployment. Applied Economic Letters 12: 115–118.
Stephen Rubb
Underemployment
Underemployment
The labor force concept of underemployment can be defined as a comprehensive way to identify and measure the underutilization of labor resources. In this sense, it goes beyond plain unemployment—being jobless while looking for work—to further include different forms of inadequate employment, such as being discouraged or subemployed, or employed involuntarily in part-time and low-income jobs with marginal or unstable labor market attachments.
The globalization of the world economy and the corresponding industrial restructuring of developed countries—away from manufacturing and towards services—have had a considerable impact on the composition and characteristics of the labor market. While labor force participation has increased, it has also resulted in an important rise in employment hardship with the emergence, among a considerable portion of the labor force, of unstable, poorly paid, and often involuntarily part-time jobs. This new situation has led labor-market researchers to point out the need for a new term (beyond unemployment ) to better capture all meaningful forms of employment hardship.
Interestingly, the origin of this researchers’ concern can be traced back to the 1930s in the work of British economist Joan Robinson (1903–1983). At that time, she wisely argued that in a society where no regular system of unemployment benefits exists and where poor households are unlikely to be supported by social institutions (i.e., a social welfare system), individuals who are out of work and who cannot find a job fitting their skills will naturally employ their time as usefully as they possibly can.
Thus, except under peculiar conditions, a decline in effective labor demand which reduces the amount of employment offered in the general run of industries will not lead to unemployment in the sense of complete idleness, but this surplus of labor will rather get employment into a number of occupations still open to them … [where] their productivity is less than in the occupations that they have left. (Robinson 1936, p. 226)
Robinson referred to this phenomenon as disguised unemployment. Other researchers later drew attention to the existence of such disguised unemployment in certain economic sectors (e.g., agriculture), particularly in the economies of developing countries (Moore 1953; Lewis 1954) where the presence of an unlimited supply of labor makes its marginal productivity negligible, zero, or even negative.
Sponsored by the International Labor Organization, labor statisticians have gathered on numerous occasions to discuss and develop concrete measures of underemployment. In this ongoing discussion, American sociologist Philip Hauser (1909–1994) made an important contribution by developing what became widely known as the labor utilization framework (LUF) to capture a more accurate picture of employment, acknowledging both the official forms of unemployment, as well as different categories of economically inadequate employment based on hours (involuntarily part-time work) and wages (poverty-level pay) (Hauser 1974). The LUF has evolved through time and now has both a substantial literature and a more elaborated set of subcategories (Clogg 1979; Sullivan 1978) to better capture the employment situation and to adapt more efficiently to datasets other than the U.S. Current Population Survey (CPS, compiled monthly by the U.S. Census Bureau for the Bureau of Labor Statistics), where all the original empirical work came from.
Nevertheless, the operational definitions of states of underemployment typically used by researchers can be summarized as follows, from the most to the least severe:
Subunemployed is a proxy for “discouraged workers” and includes individuals who are not currently working and who did not look for work during the previous four weeks because they felt no jobs were available.
Unemployed follows the official definition and includes those not working but who (1) have looked for work during the previous four weeks, or (2) are currently on layoff.
Underemployed by low hours (or involuntary part-time employment) parallels the official definition of those who are working “part-time for economic reasons” and includes those who are working less than thirty-five hours per week because they cannot find full-time employment.
Underemployed by low income (or working poor ) includes those whose labor market earnings during the previous year, adjusted for weeks and hours worked, were less than 125 percent of the official poverty threshold for an individual living alone.
Underemployed by occupational mismatch (or overeducated) includes those whose educational level (measured as years of schooling) is greater than one standard deviation above the mean education for workers with the same occupation.
All other workers are defined as adequately employed, while those who are not working and do not want to be working are defined as not in the labor force.
Of course, no standardized measure of any important concept will be perfect, and underemployment is not without flaws. Some of these deficiencies are related to problems with the operationalization itself (e.g., using poverty thresholds that ignore cost-of-living differences), while others have to do with other related forms of employment hardship, such as job security, which are not included in the definition. Notwithstanding, these criticisms are minor since underemployment provides a useful way to analyze trends over time, as well as inequality between groups in the prevalence of employment hardship.
In all years, these trends are unequivocally countercyclical, a phenomenon reflected in the fact that underemployment rose and then fell over the 1990s owing to the recession early in the decade and subsequent economic expansion. Inequality between groups in the risk of underemployment is often striking and should be an issue of great policy concern. Women, minorities, the young, and those with low educational attainment are all especially vulnerable to underemployment. Moreover, these vulnerabilities are often particularly acute among residents of rural areas and central cities. As a result, economists continue research (both theoretical and empirical) on the topic to further contribute to the understanding of these trends in employment hardship over time and between groups.
SEE ALSO Unemployable; Unemployment
BIBLIOGRAPHY
Clogg, Clifford C. 1979. Measuring Underemployment: Demographic Indicators for the United States. New York: Academic Press.
Hauser, Philip M. 1974. The Measurement of Labor Utilization. The Malayan Economic Review 19: 1–17.
Lewis, W. Arthur. 1954. Economic Development with Unlimited Supplies of Labor. Manchester School of Economic and Social Studies 22: 139–191.
Moore, Wilbert E. 1953. The Exportability of the “Labor Force” Concept. American Sociological Review 18 (1): 68–72.
Robinson, Joan. 1936. Disguised Unemployment. Economic Journal 46 (182): 225–237.
Sullivan, Teresa A. 1978. Marginal Workers, Marginal Jobs: The Underutilization of American Workers. Austin: University of Texas Press.
Esperanza Vera-Toscano
underemployed
un·der·em·ployed / ˌəndərimˈploid/ • adj. (of a person) not doing work that makes full use of their skills and abilities. ∎ (of a person) not having enough paid work.DERIVATIVES: un·der·em·ploy·ment / -ˈploimənt/ n.