The term underemployment refers to individuals that are not working to their full capacity in terms of their work hours and skillset. Underemployment can also refer to an economy that is not able to support the skill, experience, and education of its workforce.
When underemployment is said to exist, it can refer to two related, but slightly different circumstances. The term can refer to an individual that is working in a job that does not fully leverage the knowledge they possess, or allow them to work their desired number of hours each week.
When discussing macroeconomic conditions, the term underemployment refers to an economy that is not able to provide jobs that fully utilize the education, skills, and experiences of its workforce. For example, a nation may have a relatively high level of education in its workforce, but companies doing business within that nation do not generate enough jobs to leverage their knowledge. When widespread, underemployment is thought to be a significant contributor to the level of poverty that exists in a nation.
Ann holds a degree in environmental science and has worked in the past as an environmental health and safety (EH&S) officer. After leaving the workforce to raise her children, Ann is once again seeking a full time position as an EH&S officer. Unable to locate a suitable job, Ann is currently working as a part-time cashier in a local retail store. In this example, Ann is not fully utilizing her skills and she is not working in a full time position. Ann is not unemployed, she is working; but in her present role she is underemployed.