Underemployment: Definition, Causes and Effects

Reviewed by Melina Theodorou

Illustration of three women, one carrying some documents that are falling out of her hands, another carrying a large stack of files on her back whilst the third woman adds another file on top of the stack

Have you ever been employed in a position where you felt you were not fully utilising your skills, training or professional experience? Or a position in which your responsibilities remained the same day after day, one with an obvious lack of progression? Have you ever had your work hours cut drastically, forcing you to look for a second job just to make ends meet? If you have ever been in any of these situations, chances are you have been underemployed.

While unemployment is a phenomenon all too common in today’s job market, not everyone is familiar with the concept, even though they may have fallen victim to it at some point in their professional career. Worse still, if you are not aware that you have been underemployed, it could negatively affect your job search

Therefore, let us now examine the meaning of underemployment, as well as its causes and effects.

What is underemployment? 

Underemployment is defined as ‘the condition in which people in a labor force are employed at less than full-time or regular jobs or at jobs inadequate with respect to their training or economic needs.’ Or, to put it in another way, underemployment is a situation in which a worker’s skills, training or availability to work are not fully utilised by his or her employer.   

Furthermore, there are two types of underemployment: visible and invisible. Visible underemployment occurs when employees are working fewer hours than what is normal for their field or industry. For example, the typical workweek for an office employee, such as an administrative assistant, a bookkeeper, or an IT support technician, is 35 to 40 hours. And each of these individuals carries a specific set of skills which are necessary for the day-to-day operation of a typical office. Nevertheless, due to circumstances beyond their control (see below), their hours have been reduced, perhaps even cut in half. Although these employees may be willing and able to work a regular schedule of hours, they cannot do so, and often must start looking for a second job. They are victims of visible underemployment.

The U.S Bureau of Labor Statistics measures underemployment by counting workers who want full-time jobs but instead have part-time jobs. However, this category does not include individuals who want to work more hours but cannot accept them. This is usually due to a commitment at home, such as having a child or being a primary caretaker, and not being able to afford their care while working extra hours. The technical term for this is ‘underemployed for economic reasons.’

Invisible underemployment occurs when an employee is not fully utilising their skills, training and experience at their workplace. As a professional résumé writer, I have consulted with dozens of clients who were underemployed in such a fashion. 

For example, I prepared a résumé for a registered nurse who spent most, if not all, of her day at the front desk of a medical practice, answering phones, scheduling appointments, greeting patients and handling other clerical functions. Although this woman had completed extensive training in all aspects of patient care, both in the classroom and through on-site clinical rotations, she was not using these skills at all in her current job. Her employment situation, therefore, was a textbook case of invisible underemployment.

There are two additional categories of workers which are generally considered to be underemployed. The first are workers who are considered marginally attached to the labour force. 

This category includes individuals who have looked for a job sometime during the last year, would like to work and are available to work. The second category includes those employees who work full-time, but still live below the poverty line. This category is also known as the working poor.

What causes underemployment? 

There are numerous factors which can lead to underemployment, and they are mostly the same as those which lead to unemployment. Chief among these factors are negative trends in the economy, such as recession, which causes employers to lay people off, or reduce their hours. This reduction of hours results in a corresponding reduction in wages, which results in a reduction in consumer spending, which further fuels the fire of recession. 

Another major cause of underemployment is the ever-accelerating advance of technology. Many positions which were once handled by employees have now been fully or partially automated. For example, many department stores, supermarkets and other retail stores now have self-checkout lanes, where consumers can process their transactions and pack their items. 

As such, a store can employ one cashier to oversee an entire bank of checkout lanes, rather than a whole cashier team. Some retail chains have even removed the checkout process altogether; customers simply use an app while shopping to scan the items they are purchasing, and then check themselves out and pay via their phone before leaving the store. 

Even positions which require a high level of education and certain credentials have been negatively impacted by technology. Preparing your income tax used to require a visit to a tax preparation service or the office of a certified public accountant; now people can easily accomplish this task at home with any number of online, user-friendly tax services.

Being underemployed at your current position can also signal that the organisation is preparing to terminate your employment. For example, I once prepared a résumé for a police officer who was suddenly taken off his beat and assigned to a desk job, even though he had years of experience in the field. As it turned out, a complaint had been filed against him for excessive use of force, and the department was preparing a case to dismiss him.

What are the effects of underemployment? 

As with the causes of underemployment, the effects are similar to those of unemployment. Both result in a loss or reduction of wages, an increase in the level of poverty, a decrease in spending and consumer demand, a reduction in the rate of business growth, and other negative economic trends. 

Furthermore, when workers are underemployed over a long period, they do not have the opportunity to fully use their skills. So, they may start to fall behind with industry trends and developments. As a result, they may need to re-train for a position in which they have already been employed.

Furthermore, underemployment does not affect all sectors of the job market evenly. Recent graduates with college or post-graduate degrees are often forced to take a job that is beneath their education level or skill set and may find it quite difficult to move into the career they trained for. Underemployment can also have a great effect on someone’s job satisfaction. 

As devastating as these effects are to the economy and the workforce, they were greatly magnified when the COVID-19 pandemic hit in 2020, creating what amounted to an underemployment crisis. 

During the first five months of the pandemic, the number of workers that the US government counted as part-time, or underemployed for economic reasons soared from 4 million to 9 million. Many individuals, particularly those employed in office settings, maintained full-time employment by working from home. However, by working remotely, one may not fully utilise their skills, as they would in an office setting. 

Of course, the pandemic’s effects were more overwhelming for certain industries, such as travel, restaurants and hospitality. Businesses were shut down for weeks or months at a time, forcing employees in a limbo of underemployment, desperately waiting for their employers to be permitted to re-open.

How should you address underemployment on your CV or résumé? 

Underemployment can be difficult to address when applying for a job. However, you can employ certain strategies when writing your CV or résumé, which can help to minimise the impact of underemployment. As someone who has written thousands of successful CVs and résumés, here are a few suggestions:

1. Highlight your skills

When you write your summary of skills or profile, on your CV or résumé, make sure to include the skills you have trained for or experience in, even if you are not utilising them in your current position. For example, let’s say you are a bookkeeper who has extensive experience with Microsoft Excel and QuickBooks. However, you are currently underemployed in a cashier position, and your job entails processing transactions on a cash register. Your summary should include Excel and QuickBooks, even though you don’t use those applications in this job.

2. Include an all-encompassing job description

Another strategy to minimise the impact of underemployment on your CV or résumé is to have one job description that covers all or multiple positions you have held. This only works, however, if you have held the same type of position with different employers. For example, I created a résumé for a client who was a manager at five different restaurants. At most of these locations, he was responsible for inventory, purchasing, front and back-of-the-house operations, menu planning, hiring, customer satisfaction and so on. (Of course, to provide him with an effective, results-oriented résumé, I also detailed all of his career accomplishments following the job description.) 

However, at one restaurant, he was treated as nothing more than a head waiter, whose sole function was to oversee the other servers. Nevertheless, his underemployment at this one location was not evident on his résumé. This was due to the complete set of responsibilities detailed in his all-encompassing job description.

3. Create a skills-based CV/résumé

You may also disguise, or minimise, instances of underemployment in your professional work history by utilising a functional résumé format instead of a chronological structure. 

A functional résumé is one which presents your work history through specific skills. However, the drawbacks of this type of résumé may outweigh the benefits, as functional résumés are often used to hide gaps in employment, chronic job-hopping and other undesirable aspects of one’s employment. HR professionals who will be reading your application are fully aware of this, and will likely be suspicious of your document before they even begin to read it. Therefore, use this CV structure with caution. 

Underemployment has surged over the past few years. Nevertheless, understanding the causes and effects can help minimise its impact on our professional lives and overcome any career obstacles thrown our way. 

Have you ever experienced underemployment? How did you overcome this challenge? Share your experiences with us in the comments section below!