Causes and Effects of Underemployment

Job Candidates Waiting for Interview


AnnaMarie Houlis
AnnaMarie Houlis4.87k
Journalist & travel blogger

Underemployment is bad for society. But what exactly does it mean to be underemployed and how can you wiggle your way out of it?

Being underemployed refers to "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" according to Merriam Webster. But let's dive into what that really means...

What does it mean to be underemployed?

A person becomes considered underemployed when they are working at a job for which they're simply overqualified. This might mean that they're working part-time hours when they'd prefer to be working a full-time job, or they're working for a low wage when they could be earning more if there were more jobs available to them.

Who might be underemployed? Workers with high skill levels and postsecondary education who are working in relatively low-skilled and low-wage jobs may be considered underemployed. For example, if you have a college degree and are bartending bar, you may be considered underemployed since you don't need your degree in order to be a bartender.

That said, underemployment is divided into three main common categories, according to the Corporate Finance Institute:
  • Skilled workers in low-income jobs
  • Skilled workers in jobs that don’t fully utilize their skills
  • Part-time workers that would rather work full-time

What Are the Different Types of Underemployment?

There are also two different types of underemployment, according to the Corporate Finance Institute:
  1. Visible Underemployment
  2. Invisible Underemployment
"Visible underemployment comprises employees who work fewer hours than what is considered normal in their field or industry; they possess the skills to work in a full-time position but are unable to find regular employment, and they usually work part-time jobs to make ends meet," according to the institute. "Invisible underemployment refers to people who work in jobs that don’t utilize all the skills. Such a type of underemployment is very difficult to measure and requires extensive research and surveys."

The difference between underemployed and unemployed

Underemployment and unemployment are two totally different terms, though they sound similar. While underemployment refers to when someone is indeed working a job but isn't working at his or her full capability, unemployment refers to a situation when that person is seeking a job and cannot find one or still has yet to land one.

Being underemployed, in this case, might be considered better than being unemployed. At least a person has a job and can be earning money but, nonetheless, the situation could be a lot better if he or she were able to work for a wage that they deserve.

Causes of underemployment

What are the causes of underemployment in an economy? There are many factors that can cause underemployment in an economy, which all force skilled and educated workers to take low-skilled, part-time jobs. Here are just a few causes of underemployment:
  1. There's a lot of recent graduates, which means that there are a lot of educated people and not enough jobs for them all.
  2. Employees who were underemployment have no full-time work experience, so they don't have the experience to gain full-time work when it does become available, thus perpetuating underemployment.
  3. There's a low demand for skilled workers and a high supply of them. This may be because of a decrease in demand for a product or service, so certain industries no longer need workers with the skills to create that product or offer that service.
  4. Technology takes over the jobs of workers who would have previously been employed for those positions.

Effects of underemployment

Underemployment is a problem that significantly affects society. Here are three major effects of underemployment.

  1. Underemployment contributes to rising poverty levels, since people pay for schooling and training and then don't get jobs that compensate them to pay off their debts, let alone earn what they should be earning given their backgrounds and credentials.
  2. Underemployment can lead to psychological problems in those who are underemployed. They may experience high stress and anxiety as a result of not being able to make ends meet. On top of that, they may feel like they've wasted their time and money when they're not able to utilize their skills.
  3. Underemployment can lead to unemployment, since underemployed workers won't be able to update their resumes with skills and on-the-job training, etc. This, of course, can hinder them when they go to apply for jobs in the future, and it may even prevent them from being able to land another job.

Opportunities for underemployed candidates

Why is it harder to land a job when underemployed? It's harder because you don't have experience actually using your skills and expertise, or because you don't have full-time experience — and, often, better wages or hours may not be available.

So what are an underemployed candidate's options? Here are three options for someone who is underemployed.

1. Consider a job fair.

Consider going to a job fair where you'll be face to face with hiring managers. This way, you don't need to worry about anyone finding your resume in a pile-up of others; you can walk right up to hiring managers and tell them about your experience and goals to work in a longer-term position that utilizes your hard and soft skills. They'll already be able to see some of your soft skills by the way you carry yourself and present yourself at the job fair.

2. Find creative ways to revamp your resume.

Find creative ways to revitalize your resume if you're not able to add new hard skills to it, since you're not really building on your hard skills while underemployed. This might be by volunteering, starting your own business or passion project and updating your soft skills. Of course, you may even be able to upskill by taking free online courses that won't cost you any more money, but you will find yourself even more overqualified for the position you're then in.

3. Ask for a raise or a promotion.

If you're in a position in which you're unable to use your skills and expertise, after spending some time in the position, ask for a raise or a promotion. The best result is that your employer says yes or that they offer to consider you the next time that there's an opening. The worst your employer can say is no. Or you might even be able to make a lateral move that, at least, would allow you to utilize different skills or get to know another side of the business that may be more challenging for you. 

Key Takeaways:

  1. Unemployment and underemployment are different. The former refers to not having a job and the latter refers to not working to your fullest capacity.
  2. Underemployment can take a toll on your mental health and hurt your career in the long run if you can't update your resume with skills and experiences.
  3. You can ask go to a job fair to find a new job that employs you full time or find creative ways to boost your resume with skills outside of work if you are underemployed.

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AnnaMarie Houlis is a feminist, a freelance journalist and an adventure aficionado with an affinity for impulsive solo travel. She spends her days writing about women’s empowerment from around the world. You can follow her work on her blog,, and follow her journeys on Instagram @her_report, Twitter @herreportand Facebook.