Home>Finance>Underemployment: Definition, Causes, And Example

Underemployment: Definition, Causes, And Example Underemployment: Definition, Causes, And Example


Underemployment: Definition, Causes, And Example

Discover the definition, causes, and examples of underemployment in the finance industry. Understand the implications for job seekers and the economy.

(Many of the links in this article redirect to a specific reviewed product. Your purchase of these products through affiliate links helps to generate commission for LiveWell, at no extra cost. Learn more)

Underemployment: Definition, Causes, and Examples

Have you ever felt dissatisfied with your current job? As an employee, few things can be as frustrating as being underemployed. In this blog post, we will explore the concept of underemployment, delve into its causes, and provide examples to help you better understand this phenomenon. So, fasten your seatbelts as we take a deep dive into the world of underemployment!

Key Takeaways:

  • Underemployment refers to a situation where individuals are working in jobs that are below their skill level and do not fully utilize their education, experience, and qualifications.
  • Causes of underemployment include economic recessions, automation, technological advancements, and lack of available jobs in specific industries.

1. Understanding Underemployment

Underemployment occurs when individuals are employed in jobs that do not match their qualifications, skills, or experience. It is not simply about being unemployed but rather working in a role that fails to fully utilize one’s potential. This can be deeply frustrating as individuals may feel unchallenged, underpaid, and lacking in growth opportunities.

Underemployment can manifest in various ways, such as working part-time when seeking full-time employment, being overqualified for the job tasks at hand, or being in a job that does not align with one’s professional aspirations. It can affect individuals across different industries and educational backgrounds, which makes it an important issue to address.

2. Causes of Underemployment

The causes of underemployment can be attributed to various factors in the job market and economy. Here are some common causes:

  1. Economic Recessions: During economic downturns, companies may downsize or freeze hiring, leading to limited job opportunities and increased competition for available positions. As a result, individuals may accept jobs that are below their educational or skill levels to secure employment.
  2. Automation and Technological Advancements: Rapid advancements in technology and automation have led to the displacement of certain jobs. As a result, individuals may be forced to take on lower-skilled roles that are more resistant to automation.
  3. Lack of Available Jobs: In some industries, there may be a shortage of jobs that match individuals’ qualifications and skills. This can be particularly challenging for recent graduates who are entering a competitive job market.

3. Examples of Underemployment

To help illustrate the concept of underemployment further, let’s consider a few examples:

  • 1. Jenna: Jenna holds a master’s degree in finance and has several years of experience working as a financial analyst. However, due to the economic recession, she was laid off from her job. She has since taken up a part-time role as a sales associate at a retail store to make ends meet, despite her qualifications and aspirations for a career in finance.
  • 2. Mark: Mark recently graduated with a degree in computer science. However, he struggled to find a job in the technology industry, so he accepted a position as a customer service representative. While Mark’s job provides him with income, it does not fully utilize his technical skills and expertise.
  • 3. Sarah: Sarah completed her education in graphic design and was excited to start her career in a creative agency. Unfortunately, due to limited job opportunities in her area, she ended up working as a freelance designer on a project basis. Although Sarah enjoys her work, she feels underemployed as she lacks job security and the benefits of a stable position.

These examples demonstrate how underemployment can affect individuals from various educational backgrounds and industries, highlighting the need for strategies to address and reduce this issue.


Underemployment is a widespread phenomenon that can leave individuals feeling unfulfilled and dissatisfied in their job roles. Whether caused by economic downturns, changes in technology, or limited job opportunities, underemployment is a challenge that must be addressed. By understanding its definition, causes, and examples, we can begin to find solutions to ensure individuals can reach their full potential in the workforce.