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The underemployment problem

Rachel Dornhelm Dec 5, 2008
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Tess Vigeland: So we in the media can stop asking that fairly ridiculous question about are we in an official recession. Yes, we are, and have been since last December according to the pointy heads who track such things. So then it’s no surprise that the latest unemployment figures show more than half a million jobs dropped off payrolls in November, the biggest loss since the mid-70s.

Believe it or not, that’s only a small part of the story. The government also puts out underemployment stats. That figure is almost double the number of people who are unemployed.

But what exactly does it mean to be underemployed? We asked Rachel Dornhelm to find out.


Rachel Dornhelm: Let’s start with the easy part: official definitions. The unemployment number counts anyone who is actively looking for work.

Jared Bernstein: Now there are a lot of people who have given up looking for work. There are people who are working, but not as many hours as they’d like. Those people are counted in the underemployment rate.

That’s Jared Bernstein from the Economic Policy Institute. He says of the two concepts, underemployment gets less attention. But it’s a bigger problem.

Bernstein: It has gone up considerably faster than unemployment and that’s partially because when this recession got started, employers didn’t necessarily lay people off as much as they cut their hours.

He says that’s what has so many families feeling so pinched right now — wage earners who don’t have enough hours or are no longer applying for jobs. But Bernstein says that’s only part of the story.

Bernstein: But then there’s this other group of unknown size who is working below their potential.

This is where the concept of underemployment gets fuzzy. There are a lot of people who are excluded from the official number. They’re almost impossible to track, but they’re not hard to find. Just ask Katherine Levenson.

Katherine Levenson: I have a B.A. from UC Santa Barbara in Anthropology and then an M.A. from Harvard plus about another 6 years of Ph.D. work.

In February, she left a job as a school teacher in Berkeley, CA, after she was injured breaking up a fight between two students. Since then she has been living off savings, working part-time in retail and applying for countless jobs. Just recently, she started selling insurance on commission.

Dornhelm: Is it where you imagined you’d be after getting after all that education?

Levenson: Um, totally not.

Another unofficial definition of underemployment would include people who have full-time jobs with benefits but still can’t make ends meet.

Dennis Elston: My name is Dennis Elston. I’m working at near minimum wage.

Elston is 54 and lives in Flint, MI. He drives 84 miles roundtrip to his full-time job every day. He says the other month his boss gathered his department around a table…

Elston:…and was talking about what if we lost our job or were going onto part-time instead of full-time work and if we could survive on just 40 percent of our pay. And at that point I had already realized I wasn’t surviving on 100 percent of what I was working for.

Elston says he got through last year thanks to an extra $1,000 from a home equity loan for roof repairs. And help from his parents

Then there are those left out of the official underemployment figures because they’re working for themselves. Like Jeff Wenker. He was laid off from his PR job in Seattle two months ago and is now self-employed, getting small jobs here and there. And that’s on top of his other responsibilities.

Jeff Wenker: If you’re underemployed and you’re looking for full-time employment, you are always working. You’re working to find a job, you’re working to take care of the kids…

Wenker says as time goes on he’s willing to take any full-time job just to get the benefits. But until he lands that opportunity, he’s trying to look on the bright side of underemployment and indulge his creative dreams. He says he’s sleeping just four and half hours a night so he can write a series of blogs and a screenplay.

I’m Rachel Dornhelm for Marketplace Money.

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