Three Signs You May Be Underemployed and What to Do About It

The income you earn is vital to your financial well-being. Your income is what enables you to spend, save and invest. But there is a threat to your income that should be avoided.

Underemployment is a threat to your lifetime earnings.   

Underemployment is “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,” according to Merriam-Webster online dictionary.

Three Signs of Underemployment

1. The job’s hours are less than you need, are often reduced and/or are unreliable. 

• If you want and need to be employed full-time for 40 hours a week but aren’t, then by definition, you’re underemployed.
• Let’s say you’re a student, and because you’re balancing studies and working, you need to work 15 hours per week. However, your employer sometimes gives you 15 hours but often only 5 or 10 hours. This, too, is underemployment.  
• Inconsistency of hours or frequent reduction in work hours, and therefore your pay, will make it difficult to plan your income and expenses.

#2: The job offers little to no employee benefits or opportunities to advance.  

• Job benefits may include: paid time off, sick leave, employer contributions towards a portion of the cost of the employee’s health insurance or employer contributions to a retirement plan. Another benefit is training provided and paid by the employer.  
• Benefits are often a sign that the employer desires to retain/keep their employees for a longer period of time. Jobs without benefits often expect high turnover and enough applicants to fill those new vacancies, so there is no focus on providing benefits. These jobs often have little opportunity to advance and are sometimes called “dead-end” jobs.

#3: The job requires less experience, education, skills, or training than you already have.

• Typically, the income earned will align with the experience and education the employee needs to have for the job position. So, positions that require fewer skills or less education pay less than those that require more skills and education. The opposite is often true as well.
• For example, if your job only requires 2 years of work experience and a High School Diploma and you have 8 years of work experience and a Bachelor’s degree, then you are underemployed—working below your level of experience/education and, relatedly, earning less income.

How to Avoid or Move Out of Underemployment

1. Focus on a career trajectory. 

Think about your unique talents and interests and research in-demand careers that align with your interests. Research potential careers through tools such as the Occupational Outlook Handbook from the United States Bureau of Labor Statistics. Then, seek education, experience, and skills that will enable you to obtain consistent, full-time employment with benefits. For more on how your career impacts your finances, read this article: Your Career is a Path to Financial Security.

2. Look for work that aligns with your level of experience and education.

Understand the positions: titles, workload, and responsibilities, both below your qualifications and above.  Search keywords at job search/employment sites like Indeed or Glassdoor and at the specific companies/organizations you wish to work for. See where your experience fits and get an idea of the career growth you can achieve. 

3. Don’t get stuck, even if you need to accept underemployment for a while.

Continue looking for opportunities such as expanded duties, assignments, and promotions. Look within your current employer and at others. Build professional relationships both inside your company and through other organizations of like-minded professionals.

If you find yourself underemployed, make a plan to find full employment matching your skills.  Remember, underemployment may happen, but for the good of your financial future, it is not a place where you want to camp out.