According to the dictionary, UNDERemployment is defined in 3 ways:
- Employment of individuals with greater skills than the job requires
- Involuntary part-time works—workers who would work full-time if they could but can’t find it
- Overstaffing—businesses hiring workers who aren’t fully occupied when at work
Unemployment occurs when a person is available to work and seeking work but currently without work. The currently unemployment rate is at 12%, but nobody knows what the UNDERemployment rate is and that the biggest problem the economy has right now. When I speak of UNDERemployment, I am referring to first definition above—the employment of individuals with greater skills than the job requires. It is impossible to sustain an economy when the cost of the worker exceeds the value they are creating and that is usually the case with UNDERemployment.
Lets say that there are 100 employees in the economy. If 12% of them are unemployed, then that means 12 people are without work. Now, if the UNDERemployment rate is 50%—meaning that 88 of the employees are only working at half of their capacity—then essentially, the value of those employees is only 44 (88 x 50%) and the other half is left on the table as wasted potential. Therefore, whereas unemployment leads to a loss of 12 employees, UNDERemployment is 3.5 times greater. UNDERemployment is worst than unemployment if it is above 14% (because 14% of 88 = 12.32).
The first version of UNDERemployment is primarily caused by two things:
- RESTRICTION: Risk-averse companies managing employees too tightly and lot allowing them to create the most value they can
- REPRESSION: Risk-averse employees pursuing careers that aren’t aligned with their greatest strengths and passions
The way companies can combat RESTRICTION is to open dialogues with employees who interact with the customers on a daily basis and find out where they see opportunities to add more value for customers, their teammates, or the company at large. The way to decrease REPRESSION is to help prospective employees find their purpose and passions in a safe environment and then recruit based on their intrinsic motivations rather than using extrinsic things like salary to attract (the wrong talent).
If an employee makes $0.10/minute in profit for their company for one year, they would create $52,560 (=$0.10 x 60 minutes x 24 hours x 365 days) in value for the company. It doesn’t sound like a lot, but the reason the economy has tanked is because most employees aren’t meeting this plateau. The average American earns about $40,000/year, so we have to figure out how to support each other in creating more value than we take through innovation (or educated risk-taking) and better recruiting practices.
