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November 2010, Vol. 133, No. 11
The Nation’s underemployed in the "Great Recession" of 2007–09
Andrew Sum and Ishwar Khatiwada
Andrew Sum is the director of, and Ishwar Khatiwada is a senior research associate at, the Center for Labor Market Studies, Northeastern University, Boston, MA. Email: a.sum@neu.edu or i.khatiwada@neu.edu
Data from the Current Population Survey show that the less educated, those in low-skilled occupations, and those in low-paying occupations had a higher incidence of underemployment during the 2007-09 recession; an examination of the U.S. income distribution reveals that underemployment is more concentrated among workers from lower income households.
The Nation’s labor markets were deeply affected by the deteriorating economic conditions that began in December 2007 and continued for the next 2 years. Some analysts have referred to this period as the "Great Recession" of 2007–09. Despite what appears to have been a technical end to the recession in the summer of 2009,1 in the second half of that year labor market problems of workers continued to worsen. Both formal payroll and civilian employment levels continued to fall through the end of 2009, and the unemployment rate remained at or slightly above 10 percent in the last 3 months of the year.2 Besides the high unemployment rate, underemployment has increased markedly over the past 2 years, driving up the Nation’s overall labor underutilization rate, especially among teens and young adults, the less educated, Black and Hispanic men, and blue-collar workers.3
This article identifies and assesses changes in the size and demographic and socioeconomic composition of the Nation’s underemployed workers during the course of the recession of 2007–09. Comparing recent trends in the numbers of underemployed workers with those in the previous three recessions (2001, 1990–91, and 1981–82) and over the entire 1994–2009 period, the article goes on to identify the magnitude of the losses in hours worked, weekly earnings, and aggregate annual earnings due to the rise in underemployment during the recession (through the fourth quarter of 2009). Although the growth in the national pool of underemployed workers has received some attention from labor market analysts and from the national and local media, little attention has been paid to who these underemployed workers are, what types of jobs they hold, and the size of their weekly hours and earnings losses. The analysis that follows seeks to overcome this absence of detailed information, because at no time over the past 30 years has underemployment been so big a problem. It begins with a review of the existing monthly measures of underemployment in the United States from the Current Population Survey (CPS), a national household survey conducted by the U.S. Bureau of the Census for the U.S. Bureau of Labor Statistics (BLS).
2 For an overview of the labor market impacts of the Great Recession of 2007–09, especially on blue-collar workers and men, see "The Trap," The Economist, Jan. 16, 2010, p. 32; Katherine Klemmer, "Job availability during a recession: an examination of the number of unemployed persons per job opening," Issues in Labor Statistics, Summary 10–03 (U.S. Bureau of Labor Statistics, March 2010); Andrew Sum, Paul Harrington, Ishwar Khatiwada, Joseph McLaughlin, and Sheila Palma, The Deep Depression in Blue Collar Labor Markets in the U.S.: Their Implications for Future Economic Stimulus and Workforce Development Policies (Boston, Northeastern University, Center for Labor Market Studies, December 2009); and Andrew Sum, Allison Beard, Joseph McLaughlin, and Ishwar Khatiwada, The Labor Market Impacts of the Great Recession of 2007–2009: Impacts on Unemployment and Labor Underutilization (Boston, Northeastern University, Center for Labor Market Studies, 2009).
3 The term "labor underutilization" refers to a combination of problems associated with open unemployment, hidden unemployment, and underemployment. (The open unemployed are those who meet the official BLS definition of unemployment; the hidden unemployed are those persons who, at the time of the CPS, are not active in the labor force and who express a desire for immediate employment.) For a review of labor underutilization problems among teens, young adults, and older adults in the United States in recent years, see Andrew Sum, Ishwar Khatiwada, Joseph McLaughlin, and Sheila Palma, The Lost Decade for Teen and Young Adult Employment in Illinois: The Current Depression in the Labor Market for 16–24 Year Olds in the Nation and State, report prepared for the Chicago Alternative Schools Network (Boston, Northeastern University, Center for Labor Market Studies, January 2010); and Sum, Beard, McLaughlin, and Khatiwada, The Labor Market Impacts.
U.S. labor market in 2008: economy in recession.—Mar. 2009.
Comparing benefit costs for full- and part-time workers.—Mar. 1999.
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