The Danger of "Underemployment"

Dangerous First Jobs: The Problem Of “Underemployment”

By Stuart Esrock, Ph.D.

While the global pandemic and a tight job market might lead recent graduates to feel like they have to take the first job offer that comes along, that can lead to “underemployment.”  And the director of the UofL University Career Center thinks that is something of which you need to be wary.  

Bill Fletcher said underemployment involves a job that doesn’t utilize your education, experience or past training.  It can also involve earning less than what is normal for someone with your education and experience, or having part-time work but wanting to work full-time.  

Underemployment is fairly common, even in better economic times than we are now experiencing.  Research by the Federal Reserve Bank of New York indicated that between 1990 and 2012, about a third of college graduates aged 25-65 worked in jobs that did not require a degree.  The NY Fed reported that number rose to 44% of recent graduates aged 22 to 27 by 2012.  More recently, 76% of those surveyed in 2016 by said that they were not using their education or training, and 46% considered themselves underemployed.  

Fletcher said underemployment can have long-term negative consequences for your career.  “There is a compounding effect of starting in a lower position in terms of gaining necessary on-the-job training and earning potential. It is easier and faster to climb the career ladder if you start out on a higher rung." 

Individuals who find themselves underemployed face significant financial losses.  Burning Glass Technologies reports that recent graduates who are working in positions for which they are over-qualified earn on average $10,000 less per year than their peers who are working in college-level jobs.  

The trap of underemployment can be difficult to break.  An unfulfilling job can result in you being less than invested in work and sub-standard effort, harming your chances to advance or change positions.  And if you are not using the skills and knowledge in which you are invested, those can stagnate and further impair your ability to move into an industry or field you truly desire.  

Unfortunately, a significant number of people find themselves in a cycle of underemployment.  According to a 2018 research study from the Strada Institute for the Future of Work and Burning Glass, 43% of college grads were underemployed in their first job.  Then, 28% of college grads remain underemployed five years later and 21% still were without college-level work at the 10-year mark. 

In some financial situations, Fletcher realizes you may have to take a less than desired position to pay bills.  But he urges you to be conscious of underemployment and make the best of the situation. "Your first job, whether underemployed or not, should allow you the opportunity to volunteer for projects or take on a new role to gain skills to advance to your next position. Don't get stuck in a rut performing a task. Thus, some underemployed positions may provide better learning opportunities than others.”

Fletcher also recommends you actively work to break the underemployment cycle.  “Make sure to identify gaps in your skill base and work to better yourself in those areas.  And, always build relationships and network since that can be the key to obtaining leads on jobs that are a better fit for you.”

Other strategies to overcome underemployment include: 

* Think about the possibility of a career change to a field/industry that still allows you to apply your skills and knowledge base.

* Consider opportunities you may have neglected in the past that again fit your skills and knowledge.  

* Research the market, looking for growth industries like healthcare, logistics and IT for example.