Underemployment affects millions of Americans as job quality slips

Why more workers are stuck in jobs that fall short

Underemployment is becoming one of the most overlooked challenges in today’s U.S. job market. Millions of Americans technically have jobs, yet many still struggle with reduced hours, low pay, or roles that don’t match their skills.

What’s driving this upward trend, and why does it matter for workers, families, and the economy? Let’s take a closer look at the realities behind underemployment in America today.

How many Americans experience underemployment

Millions of Americans experience underemployment, though totals vary depending on definitions and surveys.

Official measures, such as the BLS U-6 rate, include part-time workers seeking more hours and marginally attached workers. This broader rate is consistently higher than the headline unemployment figure.

The official government measures of underemployment

The Bureau of Labor Statistics publishes multiple labor underutilization measures beyond the standard unemployment rate. U-6 includes unemployed workers, involuntary part-time workers, and marginally attached individuals.

Because it captures more forms of labor slack, the U-6 rate is always higher than the U-3 rate. These measures help economists understand hidden weaknesses in employment conditions.

Involuntary part-time work and job quality

Underemployment is closely tied to involuntary part-time work, where people want more hours but cannot find them. This issue is common in low-wage industries like retail and food service.

CLASP research shows these workers face unstable schedules and limited earnings. Many remain excluded from full benefits despite being counted as employed.

Part-time work trends in the U.S. economy

In some industries, employers rely heavily on variable scheduling and part-time staffing, which can leave workers short on hours, especially when demand softens.

Because the definition of full-time work in official surveys is 35 or more hours per week, many workers below that threshold are counted as part-time. These workers may need multiple jobs to reach desired income levels.

How underemployment affects income stability

Underemployment often reduces income because workers may lack full-time hours or fair wages for their skills. Involuntary part-time workers earn less weekly than full-time employees.

Financial instability stemming from underemployment can also affect household budgets for essentials such as rent, food, and healthcare. Workers with unpredictable hours or low pay may have difficulty planning for emergencies.

Underemployment’s impact on job satisfaction and mental health

Research commonly finds that underemployment and hours mismatch are associated with lower job satisfaction and higher stress for some workers, especially when finances feel unstable.

Part-time workers who want more hours may feel additional pressure to balance multiple jobs or cope with income uncertainty. This added workload can contribute to burnout or stress outside of work.

Underemployment differences by race and gender

Research highlighted by CLASP finds that involuntary part-time work and underemployment are more common among workers of color and are also elevated among women in many datasets.

These differences appear in industries that have a high proportion of contingent or part-time roles. Workers in sectors like retail or service, where job schedules are less predictable, are more likely to experience underemployment.

Recent labor market shifts affecting underemployment

In November 2025, the number of people working part-time while wanting full-time work hit an eight-year high, alongside an increase in multiple jobholding, both of which signal that underemployment pressures were rising.

Economic slowdowns can push employers to limit hours rather than hire additional full-time staff. When employers hesitate to expand payrolls, underemployment can rise even if headline unemployment remains modest.

Underemployment and workers new to the labor force

Recent graduates and young workers often experience higher underemployment because entry-level roles can be scarce or lower paying. Surveys show that many college graduates take jobs that do not require a college degree.

This trend can slow income growth for a generation entering the workforce in a challenging job market. It also affects long-term financial planning, such as saving for a home or retirement.

How policy can address underemployment

Policymakers can address underemployment through programs that help workers gain the skills for in-demand jobs. Workforce training and apprenticeship initiatives have been shown to improve labor mobility.

Public investments in sectors that traditionally offer stable, full-time employment, such as healthcare and infrastructure, also help. Supporting small and medium businesses with incentives to hire full-time staff can reduce reliance on contingent jobs.

Measuring underemployment over time

Historical analysis shows that underemployment tends to rise during economic downturns and fall during expansions.

Federal Reserve analysis shows underemployment measures spiked sharply in April 2020 during the COVID-era shutdowns before easing as the labor market recovered.

Although official data for recent years is still being evaluated, alternative measures, such as the U-6 rate, have remained higher than the headline jobless rate.

In other news, Maryland’s unemployment system faces scrutiny over billions in losses and failures.

Why underemployment matters for the economy

Underemployment affects not only individual workers but also the broader economy, as it reduces household income and consumer spending. Workers with insufficient hours or low pay have less money to spend on goods and services.

Addressing underemployment can increase economic output by ensuring workers are fully engaged in the workforce. This, in turn, can improve tax revenues and reduce social welfare costs.

The internet is also talking about a whistleblower who alleges an LA city official secured a $150,000 raise in a closed-door deal.

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This slideshow was made with AI assistance and human editing.

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