During the great recession, the underemployment rate in the United States reached a historical peak of 17.1% in October 2009. Since then, the underemployment rate has steadily declined to reach 7.2% in June 2019. COVID-19 increased the underemployment rate in the United States. Underemployment reached 8.5%-9% of the total workforce since the beginning of the pandemic.
1- Underemployment Situation Over the Last 10 Years
- Calculated as a percent of the total workforce, underemployment rates represent “the number of workers placed in jobs that are below their qualifications from a bachelor’s degree and beyond.”
- Thirty-three percent of college graduates in the United States are underemployed.
- According to Gallup, the underemployment rate in the United States decreased from 18.1% in July 2010 to 12.6% in July 2017.
- During the great recession, the underemployment rate reached a historical peak of 17.1% in October 2009.
- After the great recession, the underemployment rate has steadily declined to reach 7.2% in June 2019, while the unemployment rate was 3.7% in June 2019. “This makes clear that while a relatively small percentage of people are both out of work and currently searching for a job, there is still a considerable amount of underutilized labor and many people for whom the labor market is not providing adequate opportunities.”
- The annual underemployment rate in the United States has changed over the last years as follows:
- Between 1994 and 2018, underemployment rates for white workers are lower than Hispanic or Black workers.
- After the great recession (2009), the underemployment rate for Black workers reached a peak (16.8%) in March 2010. It continued to increase, reaching a historical peak of 24.9% (April 2011) in decades
- Similarly, the underemployment rate for Hispanic workers “rose 12 percentage points from December 2007 to December 2009, compared to 10 percentage points for blacks and just under seven percentage points for whites. “
2- COVID-19 Impact
Current and Future Impact
- COVID-19 increased the underemployment rate in the United States. Underemployment reached 8.5%-9% of the total workforce since the beginning of the pandemic.
- Underemployment caused by the 2009 crisis persisted long after the recovery from the great recession: To recover from the great recession, it took the United States more than ten years to reach pre-recession underemployment rates (7.9% in 2007 and 7.7% in 2019). As such, while it is expected to “see a relatively quick rebound in unemployment once the coronavirus subsides,” underemployment caused by COVID-19 will impact the labor market in the United States for years to come.
- As a direct effect of the pandemic, “44 million to 57 million jobs will be vulnerable to inactivity that could lead to reduced income, furloughs, or even layoffs, potentially affecting up to one-third of the entire US workforce.”
Impact on Different Industries
- While we were unable to find data that shows how COVID-19 affects industries differently in terms of underemployment rates, we found that underemployment is “expected to increase on a large scale, as the economic consequences of the virus outbreak translate into reductions in working hours and wages. ” Thus, we assumed that underemployment rates would increase significantly for the industries experiencing reductions in working wages and hours.
- The industries expected to have the highest underemployment rate increase are retail, food services, and accommodations, as these industries have the highest reported layoffs and furloughs.
- The chart below shows the industries that are vulnerable to reduced income, layoffs, and furloughs.
Most Impacted Demographics
- To identify the most affected demographics, we relied on a US-specific list from the International Labor Organization (ILO). The list, titled “United States-Monthly” is found under the “Northern America” header. To identify the impact of COVID-19 on underemployment, we limited the search by setting the following variables:
- Indicator: Time-related underemployment rate by sex and age (%)
- Sex: Total
- Breakdown 1: Unchanged
- Breakdown 2: Unchanged
- Time frame: 2019-2020
- However, we provided screenshots for the tables in the ILO list here.
- Based on ILO data, the most impacted demographic group is men over 25 years old: The underemployment rate increased from 0.9% in March 2019 to 1.7% in March 2020.