The term "underemployment" has three distinct related meanings. In one sense, it refers to a situation in which someone with excellent job qualifications is working in a position which requires lesser qualifications, as for instance in the case of a lawyer driving a school bus. In the second sense, underemployment means working part time when one would prefer to be working full time. In the third sense, underemployment is a form of overstaffing in which employees are not being fully utilized.
All forms of underemployment have repercussions for the economy and the health of the business community. By not allowing people to work to their full potential, underemployment can generate worker frustration, leading to a dissatisfaction with a job or employer. For employers, overstaffing can be problematic, because it requires paying people who are not producing, potentially leading to a decline in income.
Chronic underemployment can also conceal the truth behind the employment situations. When nations compile employment statistics, they usually come up with a base number of "unemployed" individuals, using that number to gauge the health of the job market. This number does not include part-time workers looking for full-time jobs, as they are considered employed, and it also doesn't reflect workers who are underpaid, considering their qualifications. This means that competition for jobs may actually be more fierce than employment statistics would suggest.
In the first sense, underemployment is a common problem in much of the developed world. Many people with college degrees are working in low-level or service industry jobs because the job market is saturated. In addition, very qualified individuals from the developing world who immigrate to the developed world in search of work may find themselves working in positions for which they are grossly overqualified; accountants, lawyers, and doctors, for example, may work as nannies, janitors, or cab drivers.
The issue of part-time employment when full-time employment is desired is also very serious. Some people are forced into part-time jobs through cuts of their hours, while others find themselves taking a part-time job because nothing else is available, even though they really need to work full time. This problem is especially common in areas with seasonal employment, where employers find it cheaper to maintain and lay off part-time staffs, rather than keeping a full staff at all times.
In the sense of understaffing, underemployment appears in a variety of situations. Some companies, for example, maintain a full staff to be prepared for seasonal work, or to retain well-trained, qualified workers so that they will be available when needed. Labor laws and union pressures may also prevent a company from cutting down on staff or working hours, leading to a situation in which people report to work, but have nothing to do. In addition to being bad for the company, this can also be very frustrating for employees.