Underemployment
in Alabama
Labor force data are often limited to what is
routinely available from government sources.
Existing data provide information on the employed and the unemployed. While valuable,
such information may not be complete from
the perspective of employers. New or expanding businesses are interested in “underemployment” as well, because incumbent workers are
also potential employees. In fact, the quality
worker that many prospective employers want
is not unemployed.
Workers in occupations that do not fully utilize
their experience, training, and skills are considered underemployed. These workers might
be receiving salaries below what they believe
they can earn; they might also not be satisfied
with their jobs. Underemployment occurs for
various reasons including productivity growth,
spousal employment and income, and family
constraints or personal preferences. Productivity growth creates underemployment as
workers learn to do their jobs better and more
efficiently. Spousal employment and income
and extended family relationships or responsibilities may limit workers’ ability to be in jobs
that make full use of the value of their education, training, skills, and experience. Geographic immobility due to family constraints or
personal preferences can also be a factor. The
various contributing factors combined with
economic, social, and geographic characteristics of an area make underemployment very
different among communities.
Underemployment provides opportunities for
selective job creation and economic growth.
For example, a firm with needs for skills
prevalent among the underemployed could
locate in an area with underemployed workers,
regardless of the area’s unemployment rate.
Low unemployment, suggesting limited labor
availability, is not a hindrance to such a firm.
The underemployed present a significant pool
of labor because they will respond to job
opportunities that better match their skills,
training, and experience. The underemployed
also create opportunities for entry level workers
as they leave lower-paying jobs and move into
better-paying ones. Even if their previously
held positions are lost or not filled (perhaps
due to low unemployment), there is economic
growth for the area in gaining higher-paying
jobs.
Underemployment Survey
Recently The University of Alabama conducted
a study of underemployment in the state. The
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Alabama Business
study involved a telephone survey of about
9,000 respondents. Slightly more than half
were employed, of which 1,141 were underemployed. To probe for underemployment, the
survey asked questions about employment
status, nature of employment, willingness of
part-time workers to work full-time, number of
jobs, commute time and distance, occupation
and industry, job tenure, income, job fitness,
income incentive to leave current job for a
better one, incremental commute time and
distance, and job search activity. Respondents
were also asked their opinions about whether
or not they were underemployed as well as the
reasons for that status.
Survey Results
Findings of the study are provided in the table
and map. In 2006 underemployment in the
state stood at 25.2 percent. This means that
about 542,000 employed Alabama residents
are underemployed. Adding the unemployed
gives a total available labor pool of about
615,000 for the state. This pool is more than
eight times the number of unemployed and is a
more realistic measure of the available labor in
the state.
Underemployment ranged from 18.5 percent
for Workforce Investment Advisory Area
(WIAA) Region 4 to 29.3 percent for WIAA
Mobile. Among counties, Coffee had the
highest rate of underemployment, at 38.6
percent, and Franklin reported the lowest rate
with 14.3 percent. Underemployment rates
in 32 counties were above the state’s 25.2
percent.
At the state level, 82 percent of the employed
are full-time workers. A tenth of workers hold
more than one job and just over 25 percent of
part-time workers wish to work full-time. The
one-way commute is less than 20 minutes for
55 percent of workers. But 12 percent spend
more than 40 minutes traveling to work,
including 2.3 percent taking more than an
hour. The commute is less than 10 miles for
47 percent of the employed, while almost 20
percent travel more than 25 miles. Nearly half
Underemployment by Workforce Investment Advisory Area in 2006
Labor force
Employed
Underemployment rate
Underemployed workers
Unemployed
Available labor pool
Labor force
Employed
Underemployment rate
Underemployed workers
Unemployed
Available labor pool
Alabama
Region 1
Region 2
Region 3
Region 4
Region 5
Region 6
2,223,774
2,151,381
25.2%
542,148
72,393
614,541
109,530
105,650
22.3%
23,560
3,880
27,440
446,560
433,863
24.1%
104,561
12,697
117,258
133,040
128,855
26.4%
34,018
4,185
38,203
183,992
179,266
18.5%
33,164
4,726
37,890
183,380
176,285
25.7%
45,305
7,095
52,400
42,173
39,859
25.1%
10,005
2,314
12,319
Region 7
Region 8
Region 9
Region 10
Jefferson
Mobile
191,030
184,814
25.6%
47,312
6,216
53,528
136,267
131,032
24.3%
31,841
5,235
37,076
128,170
123,802
24.9%
30,827
4,368
35,195
153,970
148,928
27.0%
40,211
5,042
45,253
327,433
316,909
28.6%
90,636
10,524
101,160
188,226
182,116
29.3%
53,360
6,110
59,470
Note: Rounding errors may be present. Based on December 2006 labor force data.
Source: Center for Business and Economic Research, The University of Alabama; Alabama Department of Industrial Relations; and
U.S. Bureau of Labor Statistics.
of all workers have 10 or more years on the job
and a quarter have worked at the same job for
more than 20 years.
The participation of the employed and underemployed in occupations and industries is
similar at the state level. Some differences
exist in the WIAAs and those may be due to
variations in economic structure.
Among all employed workers, 87 percent
claim their jobs fit well with their education,
training, skills, and experience, but 61 percent
believe they are qualified for a better job. One
in five workers had looked for a job in the three
months prior to the survey. If offered jobs
paying up to 15 percent higher wages, about
602,000 workers across the state (28 percent
of total employment) say they would leave
their current jobs; 155,000 of this group would
accept just 5 percent higher income. This
suggests that it would not take much to keep
these workers happy and loyal to their present
establishments, especially when hiring and
training costs are considered. It takes a much
bigger paycheck to get most workers away
from their current jobs. About 43 percent of
workers would consider leaving only if the
increase in income is greater than 15 percent.
An estimated 164,000 Alabama workers will
only consider offers that raise their income by
more than 50 percent. And about 26 percent
claim that no amount of money will lure them
away from their current jobs.
Workers are prepared to make some sacrifices
to obtain a higher paying job. They are prepared to commute longer and farther. Twothirds are willing to commute over 10 more
miles each way, but a third of workers will only
consider a maximum of 10 additional miles.
Slightly less than half are prepared to spend an
extra 20 or more minutes commuting one way.
The underemployed represent about 25 percent
of the state’s workers. They cite lack of job
opportunities and low wages at available
jobs as the primary reasons for being underemployed. Nonworkers note disability or other
health concerns and retirement or social
security limitations as their primary reasons
for not working. Among the underemployed,
75 percent work full-time, 12 percent hold
more than one job, and 41 percent of those
who work part-time want full-time jobs.
More than half of underemployed workers now
have less than a 20-minute one-way commute,
but a tenth drive for over 40 minutes, and
about 2 percent take more than an hour. The
commute is less than 10 miles for slightly
under half of the underemployed, but 27
percent travel more than 25 miles. The
underemployed have less job tenure and also
earn less than the state average. While 42
percent of all employed workers earn $2,000 or
less a month, 59 percent of the underemployed
fall into this wage category. Over 40 percent
have had 10 or more years on the job.
Although about 75 percent of the underemployed say their jobs fit well with their
education, training, skills, and experience,
83 percent believe they are qualified for a
better job. A third of the state’s underemployed had sought better jobs in the three
months preceding the survey. Higher wages
are more likely to entice an underemployed
worker to leave a current job at every level of
wage increase, except when more than a 50
percent wage increase is offered. About 37
percent of the underemployed will leave their
current jobs for up to 15 percent higher wages,
compared to 28 percent of all employed. Over
10 percent of the underemployed will accept a
5 percent higher income to change jobs, while
almost half want more than 15 percent higher
earnings. Fewer underemployed workers would
remain loyal to their jobs no matter what the
wage offer—13 percent compared to 26
percent of all employed. And the underemployed are willing to commute farther
and longer for what they see as a better
opportunity. In short, these people are very
active in the labor market.
Michaël Bonnal
[email protected]
The underemployment survey report, as well
as other reports on the Alabama workforce,
is available on the Alabama Department of
Industrial Relations website at
http://www2.dir.state.al.us/workforcedev/
workforcedevelopment.aspx.
Alabama Business
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