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Difference between Unemployment and Underemployment

Difference between Unemployment and Underemployment

When looking at unemployment and underemployment statistics, it can be difficult to understand the differences between the two. In this blog post, we will break down the differences between unemployment and underemployment, as well as discuss some of the most recent trends in each category. By understanding these differences, you will be able to better understand your job prospects and make more informed career choices. Thank you for reading!

What is Unemployment?

  • Unemployment is a term used to describe when people are out of work and actively looking for employment. Unemployment can be the result of layoffs, cutbacks, or the ending of a contract or project.
  • The official unemployment rate is calculated by the Bureau of Labor Statistics and measures the number of unemployed people as a percentage of the labor force. Unemployment can have a ripple effect on the economy, as it can lead to a decrease in spending and an increase in borrowing.
  • It can also cause an increase in crime rates. Unemployment can be a difficult time for people, as they may struggle to make ends meet. However, there are government programs and services available to help people during this time. Unemployment can also offer people the opportunity to explore new career options or to learn new skills.

What is Underemployment?

  • Underemployment is a term used to describe the situation of someone who is working, but not in the way that they want to be. This could mean that they are working fewer hours than they would like, are not using their skills adequately, or are not being paid enough.
  • Underemployment can have a number of negative consequences, both for the individual and for the economy as a whole. Individuals who are underemployed may suffer from low morale and poor mental health, while the economy may miss out on their skills and experience.
  • In addition, underemployment can lead to an increased dependency on government benefits, which can put a strain on public finances. As a result, it is important to try to reduce underemployment where possible.

Difference between Unemployment and Underemployment

Unemployment and underemployment are often used interchangeably, but there is a big difference between the two concepts. Unemployment is when someone is without a job, but is looking for work. Underemployment, on the other hand, is when someone has a job but it doesn’t offer enough hours or it doesn’t match their skill set. There are many people who are underemployed in the current economy. For example, college graduates who can only find part-time work or manual laborers who can only find temporary jobs. While both unemployment and underemployment are detrimental to the economy, underemployment can be especially frustrating because it means that people are working but not reaching their full potential.


The U.S. Bureau of Labor Statistics (BLS) defines unemployment as a situation in which people are without jobs and have actively looked for work within the past four weeks. Underemployment, on the other hand, is defined as a situation in which someone works fewer hours than they would like or is qualified to do. In other words, underemployment can be either voluntary or involuntary. As you can see, there is a big difference between unemployment and underemployment.

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