Underemployment: The Untold Story

Underemployment: The Untold Story

By State Representative Bill Aman

Connecticut prides itself as one of the highest per capita earning states in the country. Our state is marked by highly skilled labor and high paying jobs. Being so highly employed, however, makes us particularly vulnerable to the latest statistics on employment in this recession. For us, statistics aren’t just numbers reported on television, they have a face, live next door and might even share our bed. According to the Department of Labor, the jobless rate has steadied a bit, remaining just under 10 percent, but a decrease in job losses isn’t the same as job creation.

Perhaps more alarming, and often overlooked in this Great Recession, is the untold story of the underemployed. Underemployment happens when people who have lost their job begin working again but below their skill capacity, making below their earning power, working part-time but desire full time work, or have stopped looking for work all together. Examples include IT specialists working a cash register, a full time construction employee now working one or two part-time jobs, or a laid-off manager taking an entry level position; these are all examples of underemployment. I’m a homebuilder and see underemployment on a regular basis, so this subject hits close to home for me. The housing industry is one of the hardest hit by this present recession. I see contractors and subcontractors working below their skill levels if they aren’t looking for work. When skilled tradesmen are working below capacity, they are not training a new generation of skilled workers, which creates a long-term problem for skilled workers.

Gallup captured one of the results of this hard-to-quantify phenomenon in a recent study. According to its daily survey, around 20% of the U.S. workforce was underemployed during the month of January. This means around 30 million Americans are working at less than capacity. The numbers are staggering when combined with the unemployment rate, telling us about 1/3 of Americas have undesirable employment situations. Gallup continues to watch the underemployment phenomenon and recently released a study on one subtle economic effect. “Those who are underemployed reported spending 36% less than those who were employed” it claims. This translates into an average of approximately $48 per day versus $75 per day, or a difference of $27 per day less, potentially costing the U.S. hundreds of millions. Every industry is affected, from retail to healthcare.  People are making less so they are spending less.

The real question economists are asking now is what will be the long-term effect? Is underemployment here to stay? Professionals have given up tens of thousands in salary earning power and advancement.  Will this mean a permanent standard of living decrease for these individuals and a whole generation of American families? At this point, we don’t have answers to those questions. I do know, however, that in a time of deficit spending, we must remember debt payments will one day come due. Deficit spending combined with possible permanent underemployment could have catastrophic standard of living effects on our young people. When making spending decisions, we as leaders need to keep the future in mind.

This legislative session in Hartford is dubbed the “jobs” session. Connecticut needs jobs. As leaders, we must make Connecticut a friendly place to do business because by so doing, we make Connecticut a job-friendly state once again. This session, I hope to work with my colleagues in the General Assembly to do just that.

As always, if you have any questions or concerns, please call me at home (860) 528 3564, email me bill.aman@cga.ct.gov, stop by my office hours at the library, or speak up if you see me around town.

This column was originally featured in the Reminder News on Wednesday, March 17: http://www.remindernews.com/node/7/&town=southwindsor&url=SWIN-2010-03-16-10-Ar01000