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For Many Part-Timers, Underemployment Is a Full-Time Concern

BY Jason M. Breslow  March 5, 2010 at 11:00 AM EST

Job seekers and employers come together at a February job fair in California/ David McNew/Getty

Katie Volin’s job hunt has not exactly gone according to plan. She wants to be a writer, but now, more than 18 months into her search, she finds herself struggling to get by on a part-time salary.

Volin works 25 hours a week as an assistant in the horticultural therapy program at the Chicago Botanic Garden. Although it’s not the job in journalism she would prefer – she holds a bachelors in English and has more than three years of reporting experience — she likes the work. “It’s kind of like arts and crafts with plants,” she says. At $15 an hour, though, the position leaves her scrimping. “My amenities budget is almost zero,” Volin says, and most months, “groceries are basically in question.”

Volin, 27, is only at the botanic garden because a friend who was leaving the job recommended her, she says. “I’m still looking and I’ve been applying for jobs, but I think the competition is just insane.”

Volin is hardly alone. Since the start of the recession in December 2007, more and more Americans have been thrust into part-time work either due to economic reasons or because they are unable to find full-time employment. In that time, so-called underemployment — defined as the number of people either involuntarily working part-time or in jobs that don’t match their skills — has surged from a level of 8.8 percent to a seasonally adjusted rate of 16.8 percent in February, according to data out Friday from the Bureau of Labor Statistics. The jobless rate, by comparison, has jumped from 5 percent at the start of the recession to 9.7 percent last month.

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To be sure, underemployment measures a much broader swath of the labor force, thus it always exceeds the jobless rate. But what’s most important to remember about underemployment is the extent to which it disproportionately affects those at the bottom of the income ladder, says Andrew Sum, a labor economist at Northeastern University.

In a recent study, Sum, director of the university’s Center for Labor Market Studies, found that based on payroll data from 2008, the lowest paid workers were more than 13 times as likely to be underemployed in 2009 than were those earning the most. So while just 1.6 of workers making $150,000 or more in 2008 were underemployed as of the end of last year, underemployment hit as high as 20.6 percent for those earning less than $12,500.

The costs of underemployment are paid by everyone, Sums says. For individuals, less pay is just one consequence. At an average hourly wage of $12.80, Sum calculates the underemployed are losing out on about $14,500 in income per year. On top of that, they receive less skills training from employers unwilling to invest in part-time staff.

All of which translates into more income inequality, along with a less productive workforce in the future, according to Sum. “So they lose and we lose,” Sum says. “And it’s kind of hard to get a general consensus that we ought to be doing things about this,” he adds. “Many of these individuals who are suffering the most are not only the lowest income, but they also tend to have the least political power [of] anybody.”

Whether it’s due to an apparent lack of influence, or some other factor, a growing number of Americans who count themselves as underemployed feel less optimistic about their job prospects. According to a February Gallup poll, 6 in 10 underemployed were “not hopeful” about finding a job in “the next four weeks.”

Part of the explanation for the pessimism may be ever-toughening competition in the job market. As data from the Bureau of Labor Statistics shows, for every available job opening in December, there were 6.1 unemployed workers. That’s up from 3.4 unemployed workers per job opening a year earlier.

“Americans tend to be a very optimistic lot,” says Dennis Jacobe, chief economist at Gallup. “The idea that 6 in 10 of the Americans who are underemployed don’t believe, don’t have hope that they’ll get a job in the next 30 days is pretty bleak,” he says.

In the same poll, underemployed Americans reported spending 36 percent less than those fully employed. The underemployed were also far less likely to have health insurance, with fewer than 6 in 10 possessing coverage, compared to nearly 9 out of 10 fully employed workers.

Despite such grim figures, Heidi Shierholz, an economist at the Economic Policy Institute, sees some positive signs in the economic outlook. For starters, she notes, layoffs are slowing. The length of the average workweek is up too — in February, it reached 33.8 hours, after hitting a record low of 33 hours in June.

“Just restoring the hours of the existing workforce back to its pre-recession level is equivalent to 2.5 million jobs,” says Shierholz.

She also called the $15 billion jobs bill approved by the Senate in February, and the House on Thursday, a small step in the right direction. “It’s going to save and create jobs, but not on the order of what we need,” she says. “We need something that’s more like $400 billion.”

Gallup’s Jacobe won’t put a price tag on how large he thinks any additional stimulus should be. However, he suggests lawmakers “look at this as a crisis — that people do whatever can be done to lower that underemployment rate as soon as can be done.”

For her part, Volin says she still feels “pretty hopeful” about the job search. Nevertheless, she says she is expanding her search into the non-profit world, and even considering another part-time job to help ease her bank account. “I’m staying open,” she says, “because I can’t afford to not [be open].”