Underemployment and the Impact on American Workers

There are many positive signs with the economy today. Unemployment rates are low and there are many jobs available. Those rates however do not tell the entire story. The term “underemployment” has different meanings and applications. All of them are important to understand when judging the health of our job market.

What Is Underemployment?

Underemployment is normally defined in three ways.  All the meanings involve a situation where a person is working. This differs from unemployment which is when someone is searching for work and cannot find a job. The three different standard definitions are:

  1. Overqualification
  2. Overstaffing
  3. Involuntary part-time

They all contribute significantly to high levels of poverty and are detrimental to American workers.

#1 – Overqualification

There are many potential workers with higher education, skill levels and experience holding jobs that do not require those advanced abilities. The proliferation of low paying, entry-level only positions has stifled and eroded those availabilities and eroded the middle-class. Companies have abused their power to hire workers to do the same job with different rates of pay and unequal benefits. The increase in college costs is releasing job seekers into the market with substantial debt with limited prospects for advancement.

#2 – Overstaffing

This is sometimes referred to as ‘labor hoarding’ and is the practice of employing workers who are not fully occupied. This can be because of the seasonal nature of work and can often create situations where trained workers are ‘laid off’ during portions of the year sometimes due to legal or social restrictions.

#3 – Involuntary Part-Time Work

Many corporations today do not hire full-time workers, even though those individuals would like to work a full work week. The rising costs of healthcare and tax implications that can come from someone being legally considered ‘full-time’ are used as a justification for keeping someone as a contractor or part-time worker. In many instances multiple part-time workers are used in a business instead of allowing those that are there to pick up the extra hours and become full-time employees. This leads the workers who need full time income to have to work multiple jobs in order to make ends meet. This has a very negative impact as the benefits that would normally go along with full-time work are not met in either position causing extreme hardships on the workers.

Of all the problems caused by underemployment, the inability to work a full-time job for a company is the most harmful to American workers. There are many mega-corporations which use this tactic to avoid additional costs. This practice can force able-bodied individuals who want to work to seek supplemented health benefits. It is a form of corporate welfare that is exploited to the detriment of American workers and American taxpayers.

How We Fix It

There are many studies and figures available that show which companies are most exploiting our current labor system through underemployment. In those cases where it is identified, we need legislation in place that protects the workers from a mega-corporation gaming the system. We also need living wages addressed at a national level. The minimum wage rate of $7.25 an hour has not been increased in over a decade. During that time the inflation rate has risen over 19%. A recent study by the Economic Policy Institute showed that worker pay has only increased 12% since 1978. CEO compensation during that same timeframe has grown by 940%. This blatant funneling of money to the ultra-wealthy has come at the expense of American workers. Even with worker productivity increasing during that time, the money has not found its way into the pockets of those who are on the job generation that income.

We need to start closing the gap between the haves and the have nots. Fair tax laws, national call center legislation, stopping the offshoring of federal contracts and living wages for workers in the United States must be addressed. The officials we elect to represent us must start putting American Workers First. They make up the overwhelming majority of the population and are the ones being most harmed by a flawed system.