Underemployment is the underuse of a worker because a job does not use the worker's skills, is part-time, or leaves the worker idle.[2] Examples include holding a part-time job despite desiring full-time work, and overqualification, in which the employee has education, experience, or skills beyond the requirements of the job.[3][4]

In 2014, university graduates from the U.S. were often unable to find a job requiring a degree; 44% could only find service jobs such as barista positions that do not require postsecondary education.[1]

Underemployment has been studied from a variety of perspectives, including economics, management, psychology, and sociology. In economics, for example, the term underemployment has three different distinct meanings and applications. All of the meanings involve a situation in which a person is working, unlike unemployment, where a person who is searching for work cannot find a job. All meanings involve under-utilization of labor which is missed by most official (governmental agency) definitions and measurements of unemployment.

In economics, underemployment can refer to:

  1. "Overqualification", or "overeducation", or the employment of workers with high education, skill levels, or experience in jobs that do not require such abilities.[5] For example, a trained medical doctor with a foreign credential who works as a taxi driver would experience this type of underemployment.
  2. "Involuntary part-time" work, where workers who could (and would like to) be working for a full work-week can only find part-time work. By extension, the term is also used in regional planning to describe regions where economic activity rates are unusually low, due to a lack of job opportunities, training opportunities, or due to a lack of services such as childcare and public transportation.
  3. "Overstaffing" or "hidden unemployment" or "disguised unemployment" (also called "labor hoarding"[6]), the practice in which businesses or entire economies employ workers who are not fully occupied; for example, workers currently not being used to produce goods or services due to legal or social restrictions or because the work is highly seasonal.

Underemployment is a significant cause of poverty because although the worker may be able to find part-time work, the part-time pay may not be sufficient for basic needs. Underemployment is a problem particularly in developing countries, where the unemployment rate is often quite low, as most workers are doing subsistence work or occasional part-time jobs. The global average of full-time workers per adult population is only 26%, compared to 30–52% in developed countries and 5–20% in most of Africa.[7]