HR Management & Compliance, Talent

Recognizing and Aiding the Underemployed

Many people work multiple hourly, part-time jobs but still can’t afford their full-time bills. While these employees are hardworking, they often struggle financially because of unstable hours and low hourly wages. This group of people falls into the category of the underemployed. According to the Bureau of Labor Statistics, 8% of all American workers, hourly and otherwise, are currently underemployed.

Source: David Sacks / DigitalVision / Getty

Underemployment is often defined as when workers don’t use their skills or education advantageously in their job or when an employee is working fewer hours than typical in the field. The current rate of unemployment is 3.8%, but this declining statistic may correlate with a growth in underemployment, which can also leave a negative influence on the workforce.

While human resource executives may not be able to offer traditional benefits to underemployed workers, they should consider utilizing nontraditional benefits to ease these employees’ stress and help them get beyond living paycheck to paycheck.

The Problem of Underemployment

Underemployment is a silent social problem affecting job growth, poverty levels, business growth, and career growth. Perhaps this phenomenon isn’t recognized as much due to the weight that unemployment numbers hold. People are often satisfied as long as there is a low percentage of unemployment and don’t take into consideration the rate of underemployment.

Some Millennials and recent graduates need to take an hourly or part-time job while conducting a job search aimed at a career in their desired field. However, they often fall into a cycle of odd jobs in order to make ends meet.

Nearly 40% of individuals surveyed in a recent study conducted by Snag identified themselves as underemployed. While underemployment can be found in any industry, it is most commonly seen in the restaurant, hospitality, and retail spaces. These underemployed workers are twice as likely to accumulate debt as those who work a sufficient full-time job.

False Assumptions: Damaging Underemployment Further

Inaccurate assumptions made by business owners and HR managers about their employees’ knowledge contribute to the cycle of underemployment. It is in the self-interest of managers to utilize their employees in ways that allow their skills to shine and to contribute to the company’s bottom line.

In 1983, Jack Stack, CEO of SRC Holdings, set out to eliminate underemployment by teaching his employees—the majority of whom were high-school-educated, blue-collar workers—concepts taught in business school. He then encouraged them to act on the information they learned and later helped those who outgrew their jobs by funding their start-up enterprises. His results were promising: He saw the company stock increase and was able to partner with many of the blue-collar workers he educated.

Eliminating the Problem

In order to eliminate underemployment, it needs to first be recognized as an issue in the workplace. Employers must create a healthy environment where employees are fully engaged with their tasks and are appropriately challenged. This also benefits the employer, as the company can receive greater value from its employees and can grow with increased talent.

Some underemployed workers may not know what they want to pursue as a career, but they are willing to work hard to find their calling. Employers should offer employees opportunities to explore their unique skills and to discover how they can grow in their roles. Instead of letting an employee slip away, strive to aid him or her in finding his or her potential through side projects and one-on-one meetings, as well as by providing more challenging work.

A Full-Time Benefit to Help the Underemployed

Workers who are underemployed may need to search for other positions if they know their current job cannot transition to a full-time role. However, if employers cannot offer extra hours, there are a few things they can offer to help employees financially and increase morale. Employers need to determine what’s realistic for the business and highlight these perks to employees.

While employers may not be able to offer all traditional benefits to their underemployed workers, a few nontraditional benefits should be taken into consideration. For example, the implementation of a financial wellness program could serve as a tool for continued education for the underemployed and increase their financial confidence. These employees may be making enough money to live paycheck to paycheck, but they don’t know how to strategically manage their money or invest in their future.

Only 30% of the underemployed are confident in their ability to cover basic expenses, creating stress at home. They often bring that financial stress into the workplace, which decreases their day-to-day productivity. Financial education that goes beyond retirement and includes tools like budgeting or navigating complex money decisions is beneficial to both employees and employers alike.

To recognize and eliminate underemployment, employers must understand how the problem affects their company and its staff. While assisting these underemployed workers in utilizing their skills and planning their career, offering nontraditional benefits like financial wellness will help them feel confident in the present and allow them to plan for the future.


Chris Whitlow is the founder and CEO of Edukate, a workplace financial wellness provider with a mission to give every person access to expert financial guidance. Whitlow works with the Edukate team to solve problems that ease the financial stress most Americans experience each day. Edukate helps employers provide the best financial wellness benefits, thus helping employees manage their financial stress, increase their productivity, and live happier, healthier lives.

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