Underemployment Rate Adds To Economic Woes

While most Americans, economists, and news media focus on the infamous unemployment rate as a measure of economic growth or recession, there is another interesting and perhaps just as pertinent rate that needs our attention—the underemployment rate.

There are different types of underemployment. Some people are classified as underemployed if they are highly skilled and highly educated workers taking on lower skilled and lower paying jobs. Workers who can find only seasonal or part-time jobs may also be considered underemployed, as these people are usually not working at their full capacity.

Gallup, a polling company, defines underemployment for purposes of its monthly study as respondents who “are unemployed or working part-time but wanting full-time work.”

Gallup’s poll in June found that the underemployment rate had gone from 19.9 percent in January to 18.3 percent in June, peaking in March at 20.3 percent. In contrast, the federal unemployment rates were 9.7 percent in January and 9.5 percent in June, peaking in April at 9.9 percent. The good news is that June’s underemployment rate is the lowest of the year to date.

While Americans have hope in seeing lower unemployment numbers, if the underemployment rate continues at such high levels, unemployment numbers may be misleading as an indicator of the country’s overall economic health. Many workers are “settling” and finding jobs either below their work skills or through a reduction of working hours.