Millions can find only part-time or lower-paying jobs
Underemployed workers can't spend as much. Those individual hardships add up to a drag on the economic recovery.
By Don Lee
Los Angeles Times
September 7, 2010
Beyond the 15 million Americans who have no jobs at all, millions more are caught in part-time or limited jobs that don't pay them enough to maintain their standard of living — much less contribute to the strong consumer spending needed to power the nation out of the economic doldrums.
Economists have a technical term for these people: underemployed.
But there's nothing technical about it for David Linehan of Quincy, Mass., who lost his job as an analyst for an energy-trading firm during the recession, along with his $30,000 salary and benefits.
The 43-year-old now tries to get by on less than one-third that amount as a driver for a rental car company. His new employer limits his work to less than 30 hours a week because any more would make him eligible for company-provided health insurance.
"I'm so sick of news about the recovery," said Linehan, who has some college and technical-school training.
The latest Labor Department report shows there are nearly 9 million people like Linehan who want full-time jobs but can't find them. In some cases, their formerly full-time employers have reduced their hours because of a lack of business.
The lack of full-time work is both a hardship for individuals and their families and a substantial drag on the still-feeble recovery. With consumer spending accounting for 70% of the nation's total economic activity, having millions of underemployed workers means a loss of economic vitality — along with lower tax revenues and more budget problems for governments at every level.
"It creates a huge macro effect on your ability to buy things and on the output potential for the country," said Andrew Sum, an economics professor and director of the Center for Labor Market Studies at Northeastern University in Boston.
Dan Stormberg, 36, knows the problem firsthand. The West Los Angeles illustrator strings together as many art projects as he can to make ends meet.
When he came up short last year, he started working part time as a barista at a Peet's Coffee & Tea shop. He quit that job in March after landing some freelance work. But with July unemployment at 12.3% in California, Stormberg would rather have a full-time gig.
"The security of having a paycheck and getting medical would be kind of nice," said Stormberg, who estimated that he's making less than a quarter of what he could earn if he worked full time. "There are so many candidates desperate to get jobs now.
"They want you to be completely overqualified and be able to wear many hats, even if the job doesn't require you to wear those hats," he said. "They want you to be versatile enough to be able to step into another job if they need you to. So it's harder to find jobs."
The surge in underemployment that began during the recession cut almost evenly across all major industries and occupations and affected workers in all age groups, the Labor Department data showed, and hit especially hard older people — some of whom have reluctantly opted to file for early Social Security benefits.
The number of involuntary part-timers — who on average worked just 23 hours a week in the second quarter — had been easing down since spring but rose again in August. The figure is double the pre-recession level and the highest since record-keeping began in 1955.
The problem is even bigger than the official numbers suggest. Another group of underemployed is not tracked by the government but may be almost as large: workers shunted into full-time jobs that pay far less than their old jobs.
These workers' new paychecks offer only a shadow of the middle-class lifestyles that their skills, education and experience once helped them secure.
Full time or part time, many of the underemployed are young adults with college degrees. Sum estimated that half of the college-educated workers 25 and younger who started work this year landed in jobs that didn't require bachelor's degrees — jobs such as waiting tables, bartending and retail sales.
Only a few years ago, he said, that figure was closer to 25%.
Research suggests that underemployment is particularly menacing and long-lasting for new workers. They typically don't get the employer-supported training that can advance careers. And starting out at lower-level jobs and pay usually stunts earnings for years to come.
Also, "higher-skilled workers can push out lower-skilled workers who could do the job," said Susan Houseman, senior economist at the Upjohn Institute for Employment Research in Kalamazoo, Mich. That may partly explain the difference in jobless rates — 4.6% for college graduates in August and 10.3% in the same month for those with only high school diplomas.
But serious as underemployment can be for the young, experts and government statistics indicate that older workers have been hit even harder.
Among those 55 and older, the ranks of involuntary part-timers reached 1.3 million this spring, a 122% increase from three years earlier. By comparison, the number of part-timers ages 20 to 24 rose 90% over the same period, to 1.5 million.
The job market is showing signs of slight improvement, but the private sector still isn't creating many new full-time jobs. And the high unemployment rate has allowed employers to hold down wages and, in many cases, choose to hire overqualified workers.
At the same time, plunges in home values and sharp drops in the value of 401(k) accounts and other retirement investments have caused many older workers to stay in the workforce longer than they had planned — and to need income more urgently if they lose their jobs.
Jean Coyle of Alexandria, Va., opted last year to begin collecting Social Security payments, two years before the current full retirement age of 66. That will mean smaller monthly checks over her lifetime, but Coyle was desperate.
In 2007, she was let go as an associate pastor at a Presbyterian church, along with two other full-time staff members. Coyle then went from unemployment to underemployment, finding nothing but temporary, part-time jobs in such work as data entry, "none of which paid anything," she said.
Coyle, who is single and has a doctorate in gerontology, taught at Eastern Illinois University, among other institutions, before going into the ministry. Now she works as a sort of freelance preacher, giving sermons at churches in the region.
"I don't want to be supported," she said. "I would be happy to be employed full time, part time, any time, and be thrilled to pay into the Social Security system" instead of drawing from it.
John Moser, who lives near Allentown, Pa., is also battling financial demons.
In June last year, he lost his $50,000-a-year job when his employer, a private high school, erased his development and marketing position. At 59, Moser learned quickly that it wasn't easy for someone his age and with his experience and education — a master's degree in public relations from Boston University — to find something comparable.
So last September he took a job selling club memberships for a retail warehouse chain. He said he earns $19,000 to $25,000 — less than he made some 30 years ago when he worked for a San Diego advertising firm.
Moser's wife works as a teacher, and the couple have a 17-year-old daughter. Back when Moser was pulling down a good salary, he bought his daughter a handsome horse named Sweetie. Nowadays a gift like that is out of the question, and the come-down adds to Moser's pain.
"Do you know what it's like to come home and your daughter just passed her driver's license and you can't get her even an old pickup?" he said.
Were it not for his Christian faith, he said, he might have been overwhelmed by fear or hopelessness.
Recently, after putting in another long day on the road knocking on doors at insurance offices, pizza shops and tattoo parlors trying to sell $35 annual memberships, Moser sat down for a heart-to-heart with his wife:
"I said, 'Honey, maybe I need to come to the recognition that the job market is saying, 'John, we don't want you.' ''
His wife told him to hang on, insisting he was getting close to landing something better. "But I just don't know," he said.