Underemployment’s Potential to Undermine the US Recovery

Research by the Federal Reserve Bank of Atlanta indicates 49 percent of people who worked less than 35 hours a week, and who were seeking full-time employment, were able to find a full-time position within a year. This figure is 12 percent less than what it was in 2006. Furthermore, a paper by the Federal Reserve Bank of Chicago points out that Americans who are unemployed for at least 27 weeks are more likely to settle for part-time jobs than those who are unemployed for a shorter period of time. This means many workers are underemployed, which many policy makers argue is a sign of uneven recovery.

Slack is going to be gradually picked up, rather than just disappearing overnight and causing an upturn in wages… It buys the Fed time to keep policy accommodative,” says Emanuella Enenajor, economist at Bank of America Corp.

Bloomberg News reports 7.3 million people were involuntarily working part time in August, up from the 4.6 million in December 2007 as the US emerged from the recession. Economists have also noticed that since the recession the type of jobs people are employed by have shifted from manufacturing towards the service industry, with the number of people employed by bars and restaurants having climbed 13.4 percent. In contrast, total employment only grew by 6.2 percent.

The recent data suggests that the apparent economic recovery may be coming in short of expectations, as the decline in unemployment rates and other data often fails to account for cases of underemployment.

 

Read more here- “Workers in Part-Time Limbo Point to US Job-Market Slack,” (Jeanna Smialek, Bloomberg)

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Olivia is a graduate of Villanova University where she studied Economics and History, minoring in Gender and Women's Studies. She also has experience working with federal legislatures on health care policy, women's issues, and Internet safety.

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