Underemployment is the Bad News Bears of econ. What’s worse is that, in the U.S., it’s becoming more and more of a problem in the long-run for a variety of reasons.
Underemployment refers to the state of affairs where would-be full-time workers are only working part-time, or where workers' skills are being underutilized in the economy.
Why is underemployment becoming more of a problem? Well, the biggie: robots are taking our jobs. The U.S. has been losing manufacturing jobs for a long time now, leaving many people unemployed, dazed, and confused. Professional service jobs are being replaced with A.I., and just good internet user experiences. See LegalZoom.com and Houzz.com for details. Imagine how many basic lawyers and decorators they'll be replacing in the next decade.
With the near-future onset of driverless cars replacing the entire industry of long-distance truck drivers, many blue collar jobs are disappearing. Other white collar jobs at risk: accounting, administrative tasks, writing articles…even writing music (as if that's a legitimate industry for the 347 people who actually make a living doing it).
If you think teaching everyone to code is a solution, well...it’s not a good one for the entire economy. Especially since we’re not far off from A.I. being able to do basic coding on its own. What jobs are the robots not after? The ones hard to automate...like plumbers and freeway overpass builders.
Sure, some of these displaced workers whose jobs are automated get retrained into other types of work, but government retraining programs (at least in the U.S. of A) have embarrassingly low success rates. (Think about the type of people who'd sign up to have the government retrain them. Yeah...they now work at TSA, stealing toenail clippers all day long). Plus, more and more contract and gig jobs are replacing regular full-time jobs with benefits, since it saves employers money. And with an overeducated workforce, we’ve got college grads working as baristas and law school graduates loaded with student debt, unable to find a law-related job.
The mismatch of skills and available jobs, as well as the changing landscape of available jobs due to increased contract work and automation, make underemployment a real threat to the economy.
Remember, underemployment isn’t people who are choosing not to work—it’s people who made bad decisions in their educational paths and would rather have full-time jobs than not, and who would rather use their skills than not. Underemployment is associated with poverty, since people have a hard time finding enough work to support themselves.
Only time will tell what the government decides to do about increasing underemployment as retraining programs continue with their poor success rates.
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Finance: What is the Unemployment Rate?15 Views
finance a la shmoop what is the unemployment rate so negative like
shouldn't it be the employment rate at least that way we'd have a bigger number
and bigger is better in the u.s. right well anyway the unemployment rate in
this country is tracked carefully because it's one of the Canaries in the
mine shaft giving us an early heads-up on the direction of the economy well [canary hopping in cage in mineshaft]
jobs are generally highly volatile in a given range and the government copiously
inspects this data as it affects so many other things principally the costs of
renting money has set out by the Fed because high employment stimulates
inflation and low does the opposite well the government's gonna ask is the
unemployment rate shrinking too fast I eat everyone's getting jobs well if so [government officials in conference]
then beware inflation is coming which historically has motivated the Fed to
raise interest rates in response or constrict the supply of cash out there
and the opposite is true as well one of the big cocktail party conflicts and if
you find yourself at a cocktail party debating this notion make like the
Jordan Peele movie and get out but if you can't and you must debate well there
is a quote natural rate unquote of unemployment of around five or six
percent yeah zero percent unemployment ain't never
gonna happen generally the higher the unemployment rate the worse shape the
economy is in but remember the unemployment rate doesn't tell the whole
story the government can help create a bunch of temporary or low-paying jobs
too cosmetically raise the employment rate in the short term like ahead of an [happy government officials in conference]
election but the quality of those jobs is probably not great like think temp
workers at the DMV well after a while of longer term unemployment some people [long line at the DMV]
will just give up hunting for jobs and if they don't even go on indeed or
Glassdoor looking for work so they're kind of permanently in the unemployment
numbers so the unemployment rate might seem to be a bit less dire in that case [unemployed people holding up cardboard signs]
but in fact well there might still be a lot of people who needed jobs out there
we don't know we're just looking for some numbers to help us direct
understanding of where the economy has gone and help us then tweak things so
interest rates are optimized at the inflation numbers that we want to hit
got it not everyone is qualified to stick that thing on the back of your
license plate that shows you red yeah a whole lot of government workers I [hand adds stickers on back of license place]
guess do that now bad times
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