(November 2018) Every month, the government sends out detailed reports about Labor Market numbers – especially the unemployment rate. But a number you don’t often hear about is the underemployment rate. Generally speaking, you can expect a region’s underemployment rate to be about five times its unemployment rate. Here in Alabama’s Workforce Region 2, the East AlabamaWorks region, the September 2018 unemployment rate was 4.1%. The regional underemployment rate averages 23.2%. While this number is not often reported in the news, it is an important metric in our efforts to help employers find workers to fill the many open jobs in the region.
Let’s start with understanding what “underemployed” means. Underemployed workers are employees who are working in jobs that underutilize their skills, training, and experience. These workers are not counted as unemployed because they do have jobs. People in underemployed situations are often looking for better jobs because they want to earn better wages in a better career that allows them to excel using their unique skills and talents.
There are many reasons that workers find themselves underemployed – lack of updated education or training, family obligations, personal choice, among others. Many underemployed workers may have been “downsized” in a previous career and discovered that their skills were not up-to-date enough to compete in the current job market. Most people have to work and generate some kind of income, so they take a lower-paying job to keep the bills paid while they figure out their next step. Unfortunately, that next step can sometimes be hard to find because skills training programs are not often offered in the evenings, or at odd times, when adult, working students need them. Furthermore, if they are already struggling to make ends meet in a low-paying job, how are they going to pay the cost of updating their skills? They can’t quit their job to take classes, but the classes they need are often expensive or are not offered when they are not working. Yet another cycle that keeps otherwise productive workers and contributing citizens from advancing into high-demand, high-wage careers.
The underemployed segment of our workforce is gaining more and more attention because of the current workforce gap. Employers, and companies looking to move into a community, recognize these workers as an untapped resource. When the unemployment rate is low, companies start looking to the underemployed due to the unrealized potential they represent. Companies often research the area’s underemployed population looking for specific skill sets and will choose a community even when there is a low unemployment rate.
Underemployed workers also represent a significant unrealized economic impact for the community. Think about it, 23.2% of our region’s workers are not living up to their real economic potential. Moving those workers from low-paying jobs into high-demand, high-wage careers is an economic windfall for everyone. The worker gets more money, which makes them better able to care for their family and home, which causes them to have more pride in themselves and their neighborhood, which improves the quality of the whole neighborhood – plus, they consume more goods, thereby paying more in taxes, which benefits the entire community in which they live, work, and play. Additionally, the employer gets a well-trained, highly-skilled employee who is very likely to stick around for a long time. Moving underemployed workers into a better employment situation also has the added benefit of opening up entry level positions that can be filled with younger, less skilled workers who will also eventually move up, allowing even more workers to enter the workforce and start the same process. A Win-Win for everyone.
So, that’s why you will soon start hearing more about underemployment and finding ways to offer education opportunities and skills upgrades to a segment of the workforce that has been underserved in years past. You sometimes hear people say that when the unemployment rate is low “everybody who wants a job has a job”. However, you’ll hear those of us in workforce development circles say “everybody who wants a job has a job…just not always the job they want”.
If you consider yourself underemployed and would like to learn a new skill or trade, or upgrade your current skills, there are some great resources to help you start your search. Contact your local Alabama Career Center and ask about Workforce Innovation and Opportunity Act-funded On-The-Job (OJT) training programs, Individual Training Accounts (ITA), and more; check in with the Gadsden State Skills Training Division about their short-term, non-credit training programs; or visit www.eastalabamaworks.com.
*Some of the information in this article comes from Alabama Department of Labor reports and from Alabama’s 2018 State of the Workforce Regional Report.*