A good job is hard to find. The number of qualified workers who are forced to take low-paying or part-time jobs is increasing, which spells continued trouble for the U.S. economy.
In the classic horror flick Halloween, a psychopathic killer terrorizes a small Midwestern town. The fictitious story is certainly unsettling, but somehow, it doesn't seem as scary as the latest bit of bad economic news. A rising trend of underemployment is holding some households on the edge of financial collapse.
Not enough work to go around
You may have already heard that unemployment figures have been on the rise. But you may not know that underemployment is ticking up, too. That trend signals trouble for millions of U.S. workers.
Unemployment and underemployment are related issues, but each measures a separate category of workers. Unemployed workers have no job, and are actively seeking full-time employment. Underemployment, however, involves underutilization of a working individual's skills or ability. Examples include:
- A laid-off mortgage executive who now works in telemarketing
- A former full-time electrician who's cut back to 20 hours per week
- A college graduate who works in retail part-time as she looks for a full-time position
- A laid-off manager who needs a job, but has grown tired of looking
Certain aspects of underemployment are difficult to track, particularly those involving underutilization of a worker's skill or expertise. The Labor Department periodically offers underemployment statistics, however. The measure includes workers who want full-time jobs, but have given up looking, and "involuntary" part-time workers-those who are working part-time jobs as they search for full-time work. A recent report indicates that underemployment has ticked up to 11 percent, which is the highest it's been since April of 1994.
The report also indicates that the number of involuntary part-time workers now totals 6 million, up some 30 percent from a year ago. An increase that sharp hasn't happened since the World Trade Center attacks in 2001.
A grim picture
Prior to this economic crisis, the average American routinely spent more than he earned, and used credit cards to fill the gap. That was a workable way to live, as long as credit was in rich supply. Unfortunately, things have changed. Credit card limits and home equity lines are being ratcheted back, and pre-approvals are a thing of the past. Americans are now forced to accept this new, tighter credit environment at the worst possible time-when hours are being cut, and jobs are being lost.
That combination of circumstances could prove to be disastrous for many households. It also spells continued problems for the economy in general, as businesses struggle to adapt to lower levels of consumer spending.
In short, both households and businesses are being terrorized by the forces at work in our economy. It isn't as frightening as having a psychopathic killer on the loose, but the damage will be far more widespread.