Focus on Education May Reduce Underemployment

by Dennis Jacobe, Chief Economist

Right now, better-educated Americans are more likely to get full-time work

PRINCETON, NJ -- Although U.S. underemployment hit 20.4% on March 23 and 24 -- up from 20.0% earlier in the month -- the underemployment picture for those without a high school diploma is even bleaker. They currently face a 36.2% underemployment rate, and are 50% more likely than high school graduates to be underemployed, three times more likely than those having a college degree, and four times more likely than those who have done postgraduate work. High school graduates are twice as likely as college graduates to be underemployed.

U.S. Underemployment and Component Measures, by Education, 30 Days Ending March 24, 2010

Further reflecting the difficulties facing those without a high school diploma, their high rate of underemployment tends to result more from being without a job than from doing part-time work and wanting full-time work.

Time to Focus on Education

In part, the extremely high rate of underemployment among Americans not finishing high school may result from the disproportionate effect the economic downturn has had on housing, autos, and manufacturing. Traditionally, these sectors provide good jobs to those willing to work hard but who may not have much formal education. Of course, the recessionary impact took place on top of the continuous outsourcing over the past decade of other jobs that these Americans have typically done, and therefore has added to an already serious situation.

At the same time, the duration of the current downturn -- dating to late 2007 -- may have significantly altered the job market in other ways. For example, the long period of job losses and little new hiring may have created something of a cram-down effect. That is, better-educated workers may now be willing to accept lower-paying jobs for which they are usually educationally overqualified, because no better jobs have been available for a considerable period of time. This may then leave fewer jobs available for the less educated.

If this is happening, it could mean that the length and depth of the current jobs recession may be creating other serious distortions in the workplace, including issues concerning job "fit." In turn, these could lead to major turnover issues for many companies once the job market begins to recover and good jobs become abundant.

Regardless, the existence of such a large pool of less-educated workers who are underemployed presents the U.S. with both a challenge and an opportunity. The challenge is to find a way to re-create job opportunities more rapidly than now projected so the nation doesn't create a permanent underclass of willing, but less-educated workers who can't find a job. The opportunity is for government and industry to find a way to use this lack of job options to help Americans become better educated now -- when the opportunity cost is low -- so better-educated workers are available when the economy needs them going forward. Perhaps the best jobs program would be an educational opportunity program.

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Survey Methods

Gallup classifies Americans as underemployed if they are unemployed or working part-time but wanting full-time work.

For Gallup Daily tracking, Gallup interviews approximately 1,000 national adults, aged 18 and older, each day. Gallup's underemployment results reported here are based on 18,454 telephone interviews completed on a 30-day period ending March 24, 2010. For these results, one can say with 95% confidence that the maximum margin of sampling error is ±1 percentage point.

Interviews are conducted with respondents on land-line telephones and cellular phones.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

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