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AN EXAMINATION OF PERSISTENT
UNDEREMPLOYMENT AMONG
PROFESSIONAL WORKERS IN THE UNITED STATES
Michaeline Skiba, Monmouth University, West Long Branch, New Jersey, USA
Joseph Mosca, Monmouth University, West Long Branch, New Jersey, USA
INTRODUCTION
During the last several years, the economic recession that has plagued the United States and now,
the global markets, has produced not only an inordinately large number of unemployed workers but also a
growing – and, for the most part, immeasurable – number of underemployed workers. At this time, it is
acknowledged that the collapse of the financial markets and the demise of General Motors, one of the
largest U.S. employers, were instrumental forces in what has been termed “The Great Recession.”
The unemployment rate as measured by the Department of Labor reflects the percentage of
workers who are collecting unemployment insurance. However, federal data do not count the
underemployed – those who are overqualified for their jobs. Regardless of the difficulty in measuring this
group, in late 2009, the government’s broadest measure of labor underutilization known as the U6 more
than doubled in the last two years since the recession began to 17.5%, an increase of over five percentage
points from the previous year (Dugan, 2009). In simplified terms, at the end of 2009, nearly one in five
people were either unemployed, involuntarily working part-time or were “marginally attached” (they want
jobs but haven’t searched in at least a month). It also counts what the government terms “discouraged
workers” – those who have stopped searching. Furthermore, the country may yet see another wave of
unemployed as executives who were laid off a year or a year and a half ago and received severance monies
may soon be eligible to collect unemployment insurance.
In December of 2009, Northeastern University’s Center for Labor Market Studies issued data from
the Bureau of Labor Statistics (BLS) that adjusted for the decline in labor market participation. Based on
the Center’s findings, a realistic count that combined unemployed and underemployed would amount to 30
million, with the total rate approaching 20% (Hansen, 2009). In addition, the Center’s study made it clear
that employers are not going to resume hiring in 2010 at levels that will make a dent in what is now mass
unemployment, and nothing short of sweeping job-creation legislation will prevent the highest levels of
total underemployment since the Great Depression.
To better understand how some of these issues and their consequences can be avoided in the
future, this paper will review a study that examined the persistence of underemployment in large-sized
cohorts, and how job quality affects longevity. In addition, it will briefly examine how several American
management practices should be reassessed to avoid further deterioration, and attempt to track and offer
some solutions for quelling this downward spiral of underemployment within the American workforce – in
particular, the professional level workforce.
It is important to note that preliminary data gathered in the recent U.S. Census are not referenced
in this paper.
OVERVIEW OF THE CURRENT EMPLOYMENT SITUATION
The current employment crisis is not a new phenomenon. Several experts, including Robert
Reich, former labor secretary under President Clinton and now a professor of public policy at the
University of California – Berkeley, have noted that for decades, workers have been watching their salaries
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and benefits erode (Dugan, 2009). To understand this rationale, an examination of current methods for
understanding and tracking both unemployment and underemployment is required.
As mentioned earlier, the BLS’s U-6 (underemployment) rate includes the officially unemployed
plus all marginally attached workers. Workers classified as marginally employed as well as discouraged
workers are included in the underemployment calculation. Discouraged workers are defined as “not
employed and not seeking work because they believe nothing is available for them” (VanDenBerg, 2009)
and those “who have stopped looking for work, those looking for work who may not qualify for
unemployment benefits and those who can find only part-time or low-paying jobs at a fraction of what they
used to earn” (Harrington, 2009). From these brief definitions of underemployment, it should appear clear
why so many sub-populations of the workforce are underreported. For example, in early 2009 and in the
state of Florida, the official unemployment rate was 8.1 percent. However, one author noted that several
economists stated that Florida’s rate would be closer to 18 to 20 percent if the underemployed were
factored (Ibid., 2009). Perhaps the single most startling aspect of the current economic downturn – and one
agreed upon by most economists – is the level of involuntary part-time workers, which is higher today than
at any time since the mid-1950s.
Not surprisingly, in the last quarter of 2009, countless articles in both the trade and academic press
underscored the severity of what has been termed the “Great Recession.” One author reported that as of
early November of 2009, nearly 15 million people were unemployed and more than seven million jobs
were lost since late 2007. This same author also predicted that the unemployment rate will fall in 2010
because of the federal government’s fiscal stimulus, interest-rate cuts and a variety of steps by the Federal
Reserve and Treasury Department (Leonhardt, 2009). Another researcher stated that as of October, 2009,
the national unemployment rate was 10.2 percent; however, factored with underemployed people, the rate
would have been 17.5 percent, or more than one in six workers (Allen, 2009) – to reiterate, a potentially
lower estimate of the actual percentage that are “off the radar.” This same researcher observed that
according to the Department of Labor, the average length of unemployment in October, 2009 was 26.9
weeks, compared with October of 2008 when the average was 19.8 weeks. These authors believe that this
higher number may be a conservative estimate in light of the numbers of both unemployed and
underemployed.
After the first quarter of 2010, many of the aforementioned (and positive) predictions did not
materialize. A Gallup poll was conducted during the month of March, 2010 with more than 20,000
randomly selected adults who were part of the workforce and aged 18 and older. Gallup reported that “a
rise in the percentage of part-timers wanting to work full time (from 9.2% to 9.9%) is responsible for the
March increase in underemployment. Unemployment saw a slight, but insignificant, decline in March”
(Marlar, 2010). Gallup experts concluded that even though Americans who were unemployed were finding
part-time, temporary, and seasonal work – and the official unemployment rate reflected this in a small
decline – this did not mean that more Americans were working at their desired, full-time capacity. Another
prediction – notably, the federal government’s fiscal stimulus – only presented a short-term upward surge
in employment offered through the collection of the U.S. Census. In fact, according to an examination of
the most recent quarterly report published in early July of 2010, “every pillar of the economic recovery that
started a year ago has showed signs of weakening” (Irwin & Montgomery, 2010).
The high budget deficit on both federal and state levels will not decrease significantly until the
jobless rate decreases, yet government officials appear to be reluctant about creating policies that would
improve employment and simultaneously raise the deficit further. In response to the challenges associated
with this stalemate, Christina Romer, chairman of the White House Council of Economic Advisors, said,
“If you look at previous recoveries, they bounce around. They’re faster for a while, then slower for a
while, then faster again. What we’re going to focus on is getting things into the up direction” (Ibid., 2010).
Unfortunately, yet another obstacle may inhibit her commitment, and that is the autumn’s mid-term
elections. Bipartisanship, combined with voters’ frustrations with economic recovery, most certainly will
impact both the unemployment and underemployment landscapes.
Another and very important challenge to positive predictions is the measurement and
dissemination of the real unemployment rate. As briefly explained here, the unemployment rate is a
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“moment in time” or snapshot view of a shifting population. One finance researcher points to the fact that
several other unemployed populations are not included in the BLS’s official “count.” These include people
who are hired but let go before they reach 14 weeks of employment – the qualification for receipt of
unemployment insurance); people who simply drop out of the workforce and are no longer counted as part
of it; small business owners who do not pay unemployment insurance and who are not qualified to collect
it; and the self-employed (Smith, 2009). Clearly, one might conclude that all of these populations are or
may well become members of the growing ranks of the underemployed.
THE SPECTRE OF PERSISTENT UNEMPLOYMENT AND UNDEREMPLOYMENT
As noted by Robert Reich earlier in this paper, the Economic Policy Institute (EPI), a nonpartisan
think tank that examines various economic phenomena, concurs that “while the past 35 years have been
marked by generally strong growth in productivity, most working people have not seen comparable gains in
their wages and benefits. Essentially, they are being denied a fair share of the growth that they helped to
create” (Anonymous, 2010). On this same website page, EPI presented two current and sobering pieces of
data: there are now more than six workers for every single job opening in the country, and for the first time
on record, the real incomes of middle-class families actually declined over the course of the last business
cycle from 2001 to 2007.
Apart from the groups that are unqualified to receive unemployment insurance is another
demographic that falls under the radar of the underemployed. These are the people who work for less
money than they would earn in jobs in their field of education or expertise. Heidi Shierholz, a labor
economist with the EPI, said it bluntly: “By all counts, the engineer working at a Safeway (grocery store) is
having a dramatic adverse labor market outcome, and we don’t have a measure of that” (Harrington, 2009,
Wire feed).
Thus far, these authors have examined the methods used to measure unemployment and
underemployment, and how these methods do not adequately reflect the severity of the current recession’s
effects on various types of American workers. From this point forward, the concentration will focus on the
ramifications of persistent unemployment or underemployment experienced by professional/managementlevel American workers.
THE EMPLOYER/EMPLOYEE RELATIONSHIP
It stands to reason that during economically unstable times, employees will do anything needed to
sustain their employment and income status. In a small study of 300 professional and middle-level
managers, Accenture, a large U.S.-based management consulting firm, reported that 61 percent said that
employees are concerned about losing their jobs or that morale is down. Additionally, more than half –
53% - said they are dissatisfied or only somewhat satisfied with their jobs, and more than one-quarter (27
percent) are taking steps to improve the security of their jobs by working harder or longer hours
(Anonymous, 2008). While the importance of keeping employees engaged to maintain their job
performance through such non-monetary techniques as flexible schedules and compressed work weeks was
mentioned, it is unclear whether such efforts will be enough to retain these layoff survivors once the
economy improves. Regardless of the recession, astute companies may look to these and other techniques
to manage and develop their most talented employees, but will these methods sufficiently improve morale,
productivity, and job satisfaction within a workforce whose earnings over time have been slowly eroding?
The examination of various job levels of professional employees across different industries in not
examined here. However, it is interesting to note that the Information Technology (IT) industry, known for
its progressive hiring and talent management practices, is experiencing potentially serious compensation
issues compounded by the recession. Computerworld’s 2010 Salary Survey revealed that IT salaries for
both men and women stagnated in the last year, and earnings disparities between men and women remained
stable, with male Chief Information Officers (CIOs) earning an average of $177,843 and female CIOs
earning $148,965 (Collett, 2010). Although more and more women are entering the IT industry and staying
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there because of the attractiveness of lifestyle and work-life balance benefits, “lower salaries lead to
women dropping out of the IT workforce when child care and other expenses start outweighing the income
benefits,” according to Laura Sherbin, director of research at the New York-based Center for Work-Life
Balance (Ibid., 2010, p. 34).
In a study of the influence of relative cohort size on underemployment, Slack and Jensen
examined data from the March Current Population Survey for the period spanning 1974-2004. The purpose
of their study was to test the Easterlin thesis, which concluded that individuals from unusually large cohorts
will experience adverse labor market conditions relative to the members of the smaller cohorts that bracket
them (Easterlin, 1980 in Slack and Jensen, 2008). In this examination of the relationship between relative
cohort size and underemployment, these researchers had the opportunity to study the U.S. baby boom
population (largest demographic cohort), and their findings supported what has been written about longterm compensation erosion. “When measuring only the effects of age, period, and relative cohort size on
underemployment, our results suggest that the baby boomers were actually slightly better off in terms of
their odds of being underemployed than were those in the cohorts that preceded and followed them.
However, in the presence of additional control variables, in particular educational attainment…and net of
other important predictors, members of large cohorts (i.e., the baby boom) were significantly more likely to
be underemployed than were members of small cohorts” (Slack and Jensen, 2008, p. 744). Although this
study is one among others designed to capture and explain underemployment criteria, and various labor
market and social changes must be factored, it is difficult to comprehend how a larger and more highly
educated workforce has not escaped underemployment.
CONCLUSIONS AND RECOMMENDATIONS
The slow diminishment of the American professional worker cannot be ignored. For example, one
journal article written in 2002 examined career trends, transitions and periods of job-related change.
Within this document, an industrial psychologist and “career transition specialist” referred to his use of
Edgar Schein’s four-part career stages model, explained as follows: “At the start of their careers, during the
exploration phase, people often change jobs. At this stage, people are often confronted with reality, and a
disillusionment phase follows. The next phase is one of consolidation: the person finds a niche and is
promoted. Generally, at mid-life or mid-career, between the ages of 37 and 43 for men and later for
women, people stop to reassess their careers and look to the future. A new period of confirmation or
renewal ensues. Disengagement and retirement conclude the cycle” (Demers, 2002, p. 12). Obviously, the
linear progression of this cycle no longer can be applied to the professional workforce.
During the course of the last 15 years, many academicians and business management experts have
warned of both the economic and psychosocial repercussions of unemployment created by layoffs,
restructurings, and short-term profit at the expense of whole populations of professional workers. Alan
Downs’s Corporate Executions ((1995) documented the financial and social wreckage of layoffs, and
Charles Heckscher’s White Collar Blues (1996) followed shortly thereafter with mid-management’s
response to corporate downsizing and restructuring. Dangerous Company (O’Shea and Madigan, 1997)
unveiled the advantages and disadvantages of large consulting firms and their work ethic, while Richard
Sennett’s The Corrosion of Character (1998) warned of the destruction of sustained purpose, integrity of
self, and trust in the workplace. One of the most recent and well-researched indictments of layoffs recently
appeared in the popular press and was written by Jeffrey Pfeffer, professor of organizational behavior at
Stanford University’s Graduate School of Business. He strongly contends that layoffs do not increase stock
prices, profitability or productivity. Rather, they increase costs, reduce morale, increase fear and, perhaps
most importantly, “literally kill people” (Pfeffer, 2010, p. 37).
In an editorial in The New York Times on June 29, 2010, it was noted that 30 states will be forced
to raise taxes and cut spending even deeper in the budget year that begins on July 1, and both of these
actions will worsen unemployment, “meaning slower growth, or worse, renewed recession” (Anonymous,
2010). Regardless of whether this opinion materializes, it is clear that American management practices
must change in ways that require a fundamental overhaul of existing practices and beliefs. Professional
work practices that include the composition and use of teams, job duties directly tied to compensation
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levels, and a renewed sense of respect for all workers are needed. Sennett said it best: “The old work ethic
was founded on self-disciplined use of one’s time, with the emphasis laid on a self-imposed, voluntary
practice rather than merely passive submission to schedules or routine” (Sennett, 1998, p. 99). The sense of
worker autonomy and independence described as “old” need not be so; it begs to be revitalized.
The reinvention and implementation of these management practices will demand a renewed sense
of community as well. As one of these authors’ colleagues suggested, perhaps we should look to ancient
history to appreciate our accomplishments. Under brutal conditions, whole civilizations traveled across
continents and endured hardships to create better lives. Nothing short of a genuine, grassroots, communitycentered effort within and outside of the business sector appears to show potential for improving the slowmoving yet downward direction of underemployment.
REFERENCES
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Leonhardt, David (2009), “Jobless Rate Hits 10.2%, With More Underemployed,” New York
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