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Underemployment
What is Underemployment?
What does it mean to be underemployed? Find out who is impacted most by underemployment and how education, job choice, economic trends and salary factor into this new reality for 43 percent of U.S. workers. Methodology

Underemployment: Overeducated, Underpaid, and Overworked

What is underemployment? Unlike unemployment, which has a pretty clear definition, underemployment could mean a number of things depending on who you ask, including: being paid less than your market worth; toiling at a job that doesn't use your education, training, and skills; or just not logging enough hours to make ends meet.

In a recent PayScale survey, 43 percent of the total respondents across all age groups and occupations in the U.S. identified themselves as underemployed. By examining who considers themselves underemployed and why, we can gain insight into the current landscape of the job market, and what workers need to do in order to position themselves for a career that's fulfilling both emotionally and financially.

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Who Is Underemployed?

No matter how PayScale breaks down the data, being underpaid was the primary reason respondents considered themselves underemployed. Some occupations were more likely to agree with the statement, "I am not working in a job that uses my education or training," than other occupations, but even those occupations tended to qualify themselves as unemployed based primarily on perceived low pay. For example, 38 percent of data entry operators and 30 percent of cashiers said they were not working in a job that used their education or training, but both occupations were more likely to consider themselves underemployed because of how much they were making.

The least likely reason for respondents to consider themselves underemployed was wanting full-time work, but only getting part-time. Even in occupations where lack of full-time hours was an issue -- e.g. retail sales associates and cashiers -- respondents were much more likely to point to low pay as the defining issue.

The same held true when we parsed the data by college major. The top 10 underemployed majors included such diverse fields of study as Criminal Justice, English Language and Literature, Business Management and Administration, and Health Care Administration, but the number one reason for feeling underemployed across all of these majors, by a wide margin, was being underpaid.

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Underemployment by Gender and Generation 


Women were more likely to consider themselves underemployed than men (48 percent and 39 percent, respectively).

Again, money is the big issue for everyone: 81 percent of men and 80 percent of women said they were underpaid. 15 percent of men felt they weren't using their education and training; 14 percent of women. Women were slightly more likely to want full-time but only have part-time work: 6 percent, compared to 4 percent of men.

Likewise, there was little variation based on age, in terms of reasons for feeling underemployed. Money was the primary reason for feeling underemployed for Gen Y (77 percent), Gen X (82 percent), and Baby Boomers (80 percent).

Are Workers Really Underpaid, or Do They Just Think They Are?

Eighty percent of all workers who identified as underemployed in the survey said it was because of money. However, PayScale found that approximately 45 percent of users in this study who said they were underpaid were actually paid in line with the market for their current position.

What's causing this gap between perception and reality?

"There's very little salary transparency in general, and even less for people early in their career," said Josh Jarrett, Co-founder and Chief Learning Officer at Koru, a company that runs an experiential education program, connecting recent graduates and employers. "What may be happening is people hear about high salaries via the rumor mill and assume the outliers are the norm."

In addition, there's the possibility that workers' assessments of their place in the market is based on a flawed understanding of what employers are looking for or what their skillsets are worth.

The Skills Gap

There's some debate about whether the skills gap -- the supposed gulf between what employers want and what workers are able to provide, in terms of education, training, and experience -- even exists, and if it does, exactly what that skills gap looks like.

48 percent of employers agreed with this statement, "There is a lack of qualified applicants for open job positions," when PayScale surveyed more than 3,000 employers as part of our annual Compensation Best Practices Report

Perhaps most interestingly, despite the media focus on employers looking to fill highly technical jobs requiring advanced training or higher education, our research and others' shows that employers are also looking for soft skills like work ethic and teamwork, and technical skills that take less time to acquire, like word processing and spreadsheet software.

"The most important skills college students should acquire are communication skills," said Alison Doyle, About.com's job searching expert. "Strong verbal and written communications skills can only help you get hired, regardless of the type of jobs that interest you. The other types of skills that are important are tangible ones. Work experience is vitally important whether it’s an internship or job during school or post-graduate experience. The more concrete skills you can offer an employer, the better your chances of getting hired."

At the same time, technical skills are important -- although the most in-demand skills don't necessarily require a computer science degree in order to compete. Research from Chegg Media Center found that employers were looking for skills like word processing and spreadsheet software, as well as data analytics and database queries and manipulation.

In other words, if you find yourself stuck in a personal skills gap, you might be able to fill it pretty quickly, using online courses or short-term classes.

The Millennial Challenge

The job market Millennials are entering is far different than the one that greeted previous generations. Jarrett points to two major shifts: increasing expectations for entry-level roles and decreasing job tenure.

"For example, today, entry-level marketing jobs require statistical analysis using Google Analytics, Marketo, HubSpot, and other specific, sophisticated digital tools," Jarrett said. "The bar is simply higher than it has ever been."

In addition, he says, younger workers only stay in their jobs for an average of 18 months. Employers are therefore less likely to invest time and money in on-the-job training.

For Doyle, the issue is less which generation of workers we're talking about, and more about the world of work in general.

"It's more difficult to find jobs that provide a solid career path and meaningful compensation than it was in the past," she says. "Employers, including those who typically hired large numbers of recent college graduates in the past, have streamlined their workforces and shifted to a 'hiring based on immediate needs' model."

How to Fight Underemployment, Both Before and After Graduation

Having a degree is no longer enough to get hired. Employers are looking for real-world experience, not GPAs. Doyle relates the story of a student who recently graduated with a 3.7 GPA, but no work experience other than her summer waitressing job.

"She is still struggling to get hired because she has nothing more than her degree to offer an employer. Unfortunately, in this competitive job market, a degree isn't enough," Doyle says. "Another 2014 graduate I know did internships almost every semester, worked at jobs related to the careers she was exploring (which also helped her knock some job options out of contention) during the summer, and studied and interned abroad. That student was hired before graduation."

College and universities provide resources like career counseling, internships, and job leads, but Doyle cautions that it's still up to students to make their own connections and build their own resumes.

"Unemployed and underemployed millennials need to manufacture real-world experiences," Jarrett says. 

In fact, regardless of a worker's age, the most important lesson is to keep learning and gaining experience -- especially skills that employers value and are willing to pay top dollar to acquire. 

If you find yourself caught in the cycle of unemployment, the first thing to do is to accurately assess the market, using tools like PayScale's Salary Survey, to determine whether you actually are underpaid. Then, regardless of whether your current pay is on target, research your job title and identify any personal skills gaps. Fill those, and you stand a better chance of finding new opportunities that use your education, time, and skills to best advantage -- and pay top dollar for the privilege.

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