Labor Underutilization Problems in the U.S. in 2013–2014

The three labor market problems of unemployment, underemployment, and hidden unemployment can now be combined to form a pool of “underutilized labor.” [1] The estimated average monthly number of unemployed in 2013–2014 was 10.6 million (see Fig. 7.11). That number, however, was exceeded by the combined total of underemployed and hidden unemployed (7.6 million underemployed and 5.8 million hidden unemployed, or 13.4 million altogether). The joint pool of underutilized labor was equal to 24.1 million, or 14.9 % of the adjusted resident labor force of the nation in 2013–2014. [2] Thus, approximately one of every six members of the resident labor force experienced some type of labor underutilization problem.

Fig. 7.12 Labor force underutilization rates among workers (16 and over) by educational attainment, 2013–2014 annual averages (in %)

Labor Underutilization Rates Among Workers

By Educational Attainment Group The rates of labor force underutilization among workers in 2013–2014 varied widely by educational attainment. Given our previous findings on each individual labor market problem, it should come as no surprise to discover that the highest rate of underutilization was found among the least educated workers and declined as educational attainment increased (see Fig. 7.12). Those workers who did not possess either a high school diploma or GED had an underutilization rate of 29.4 %, which dropped to 18.1 % for those with a high school diploma. Four-year college graduates had an underutilization rate of just under 9 %, while those workers holding a master's or higher degree had only a rate of 6.5 %. The least educated workers were between three and four times more likely to be part of the underutilized labor force than the best educated workers in the 2013–2014 time period.

Comparisons of the labor underutilization rates of workers by educational attainment in 1999–2000 with those for 2013–2014 are presented in Table 7.3. These underutilization rates increased over time in every educational group, but the percentage point sizes of these increases were substantially greater at the bottom of the education distribution than at the top. The size of these increases was highest among

Table 7.3 Labor force underutilization rates of workers 16 and older by educational attainment,

1999–2000 and 2013–2014 (in %)

Educational attainment

(A)

1999–2000

(B) 2013–2014

(C) Percentage point

change

<12 or 12, no diploma or GED

20.4

29.4

+9.0

H.S. diploma or GED

9.7

18.1

+8.4

13–15 years, no degree

7.9

16.1

+8.2

Associate's degree

5.8

11.8

+6.0

Bachelor's degree

4.5

8.9

+4.4

Master's degree

3.5

6.5

+3.0

All (16 and over)

9.1

14.9

+5.8

Source: Monthly CPS household surveys, public use files, 1999–2000 and 2013–2014, tabulations

by authors

those lacking a high school diploma/GED (9 %), stayed at 8 % for high school graduates and those with some college but no degree, and rose by only 4.4 and three percentage points for bachelor's degree holders and those with a master's or higher degree, respectively. In 1999–2000, there was only a five-point gap between the underutilization rates of high school graduates and those workers with a bachelor's degree. By 2013–2014, this gap had widened to nine points.

By Household Income Group Labor force underutilization problems among workers during the 2013–2014 time period also were strongly associated with household income. The rate of labor force underutilization was greatest for low-income workers (under $20,000), with rates falling sharply and steadily as household income grew (see Fig. 7.13). The labor underutilization rate for workers in households with an annual income below $20,000 was 37 %, with the rate falling to 20 % and 13 % for low-middle and middle-income workers and finally dropping to 6 % for members of the highest income households ($150,000 or more per year). Workers in low-income households were roughly six times more likely than the most affluent to experience a labor underutilization problem in 2013–2014. Their labor market problems are clearly massively different from one another, with a gap of 31 percentage points.

By Separate Educational Attainment/Household Income Groups

Labor underutilization rates also were calculated for 36 educational attainment/ household income groups. There was tremendous variability in these rates across these 36 separate groups of workers. Underutilization problems were most severe by far for the lowest income and least educated workers, easing as both household income and educational attainment increased (see Fig. 7.14). Workers without a high school diploma or a GED and from families with incomes under $20,000 had an underutilization rate of nearly 44 %. This rate fell to 20 % for low-middleincome, high school graduates and to 13 % for those with some college and in a middle-income household, dropping to only 3 % for workers that held a master's or higher degree in a household with annual earnings of $150,000 or more. The least

Fig. 7.13 Labor force underutilization rates among workers (16 and over) by household income,2013–2014 annual averages (in %)

Fig. 7.14 Labor underutilization rates among workers (16 and over) by educational attainment and household income, 2013–2014 annual averages (in %)

Table 7.4 Comparisons of the labor underutilization rates of adults 16 and older by educational attainment and household income groups, by gender and race-ethnic group, 2013–2014 annual averages (in %)

Group

(A)

Men

(B)

Women

(C)

Black

(D)

Hispanic

(E) White, not Hispanic

No diploma or GED, under

$20,000

41.3

48.3

59.7

36.8

47.0

H.S. diploma under $20,000

38.1

38.0

45.5

34.3

35.6

H.S. diploma or GED,

$20,000–$40,000

20.0

20.4

24.1

20.9

18.8

13–15 years,

$40,000–$60,000

13.0

13.7

16.4

14.5

12.0

Associate's degree,

$60,000–$75,000

8.0

8.7

10.5

9.2

7.8

Bachelor's degree,

$100,000–$150,000

4.6

5.8

6.8

5.7

5.0

Master's or higher $150,000

and over

2.4

4.2

4.1

3.6

3.2

All

14.3

15.5

23.3

19.3

12.2

Source: Monthly CPS household surveys, public use files, 2013 and 2014, tabulations by authors

educated and lowest income workers were nearly 14 times more likely to suffer labor underutilization problems than the most affluent and best educated workers were in 2013–2014.

We also identified the degree to which these patterns of labor force underutilization across educational attainment and household income groups may have varied across gender and race-ethnic group, estimating such rates for both men and women and for Blacks, Hispanics, and White non-Hispanics separately (see Table 7.4). The overall underutilization rates of men and women followed similar patterns to the overall numbers.

But across the three major race-ethnic groups, the overall labor underutilization rates varied widely from a low of under 12 % for White non-Hispanics to 19 % for Hispanics to 23 % for Blacks. The patterns of these findings across educational attainment and household income groups are quite similar. All three groups experienced substantial drops in labor underutilization rates as their household income and educational attainment improved. In Fig. 7.15, we present findings for two groups at both extreme portions of the distribution for each race-ethnic group. Hispanic and Black low-income high school dropouts faced underutilization rates of 37 % and nearly 60 %, respectively. [3] In contrast, those with a master's or higher

Fig. 7.15 Comparisons of the labor underutilization rates of low-income, high school dropouts and affluent adults with a master's degree or higher by race-ethnic group, 2013–2014 annual averages (in %)

degree in the highest income group had underutilization rates of only 3–4 % for each race-ethnic group. The large disparities in labor underutilization rates across socioeconomic groups are, thus, common to both men and women as well as across Blacks, Hispanics, and Whites, with Blacks facing the highest underutilization rates overall. (Appendix 7A contains a number of tables regarding labor underutilization rates by gender and race-ethnic groups, illustrating the depth of family income inadequacy problems. For detail about associations between educational attainment/ household income groups by gender and race-ethnicity, see Appendix 7B).

  • [1] The U.S. Bureau of Labor Statistics U-1 through U-6 framework for estimating labor problems includes a measure (U-6) that is somewhat similar to ours. It counts in the numerator the sum of the unemployed, the underemployed, and the marginally attached, which are a subset of the hidden unemployed. See U.S. Bureau of Labor Statistics 2008, 2014.
  • [2] In 2009–2010, representing the labor market trough of the Great Recession, 29.1 million persons were members of the labor force underutilized pool (14.7 million unemployed, 8.9 million underemployed, and 5.5 million hidden unemployed).
  • [3] The labor force underutilization rate among native-born Hispanics without a high school diploma or a GED was much higher than their foreign-born peers. In 2013–2014, the underutilization rate among native-born Hispanics was 36 % compared to 22 % among their foreign-born peers.
 
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