un·​der·​em·​ploy·​ment | \ ˌən-dər-im-ˈplȯi-mənt How to pronounce underemployment (audio) \

Definition of underemployment

1 : 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
2 : the condition of being underemployed

Examples of underemployment in a Sentence

Recent Examples on the Web

Due to the effects of underemployment, stagnant wages, and rising costs of living, millions of Americans struggle to get by. Vincent Andrunas, San Diego Union-Tribune, "Pairing up to fight hunger," 7 June 2019 Data for underemployment were provided by Strada Institute for the Future of Work and Burning Glass Technologies. WSJ, "Corrections & Amplifications," 19 Dec. 2018 According to this view, the asset-market booms of the quarter century between 1982 and 2007 distracted America from ominous trends like wage stagnation and the upward march of male underemployment. Edward Glaeser, WSJ, "‘Capitalism in America’ Review: The Commercial Republic," 18 Oct. 2018 But this still doesn’t explain the wide underemployment in the tech sector. Michael Harriot, The Root, "State of Black America," 4 May 2018 After decades of social isolation, underemployment or unemployment, and even homelessness, receiving a diagnosis that explains how your brain works can be truly liberating.. Ari Ne'eman, Vox, "The CDC just announced 1 in 59 children are autistic. Here’s why that’s not evidence of an epidemic.," 28 Apr. 2018 Young people in Nigeria face chronic unemployment and underemployment, so the president's remarks have hit a raw nerve in a country where many are struggling in a tough economic climate. Munachim Amah And Bukola Adebayo, CNN, "'We are not lazy,' Nigerian youth lash out at President Buhari on social media," 20 Apr. 2018 The unemployment rate has narrowed since the Great Recession from more than 15% to 3.8%, but Witherspoon said that number masks the shift to underemployment that weighs on the community. Jamie Mcgee, USA TODAY, "Tyson chicken plant rejected in one town, welcomed in another," 24 Mar. 2018 Factory closings increased unemployment and underemployment, lowering wages and labor force participation. Henry Farrell, Washington Post, "Donald Trump says trade wars are ‘good, and easy to win.’ He’s flat-out wrong," 2 Mar. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'underemployment.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of underemployment

1909, in the meaning defined at sense 1

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Last Updated

26 Jun 2019

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The first known use of underemployment was in 1909

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Financial Definition of underemployment

What It Is

Underemployment occurs when one does not have a job that is full-time or that reflects his or her training and financial needs. It is not the same as unemployment, which is the percentage of employable people in a country’s workforce who are over the age of 16 and who have either lost their jobs or unsuccessfully sought jobs in the last month and are actively seeking work.

The formula for underemployment rate is:
Number of underemployed / Total labor force

How It Works

For example, let's say that John Doe graduates from college with a degree in electrical engineering, but the only job he can find is a retail sales clerk. John Doe has a job, so he is not unemployed, but his job does not reflect is skill set, and so he is underemployed.

It is important to note that underemployed is different from not working. Some people may be in school full time, working at home, disabled or retired. They are not considered part of the labor force and therefore are not considered unemployed. Only people not working who are looking for work or waiting to return to a job are considered unemployed.

Some level of underemployment will always be present in an economy as industries expand and contract, as technological advances occur, as new generations enter the labor force, and as long as workers can voluntarily search for better opportunities. This is why most economists agree that there is a natural rate of unemployment in the economy (usually 4% to 6%), and accordingly there will be a natural rate of underemployment as well.

Why It Matters

Underemployment may be most affected by the number of youthful workers in the labor force, who tend to experience more underemployment as they change jobs and move in and out of the labor force, and public policies that may discourage employment or the creation of jobs (such as a high minimum wage, high unemployment benefits, and low opportunity costs associated with laying off workers).

Employment is the primary source of personal income in the U.S. and thus a source of economic growth. This is primarily why underemployment, which is a lagging indicator, can provide considerable information about the state of the economy and about particular sectors of that economy. For example, high underemployment is generally indicates an economy is underperforming or has a falling gross domestic product, suggesting weak labor demand, unproductive labor policies, or mismatches between the demands of workers and employers. Low or falling underemployment may signal increases in the supply of whatever the new jobs produce, which suggests an expanding economy.

Source: Investing Answers

More from Merriam-Webster on underemployment

Britannica.com: Encyclopedia article about underemployment

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