Employment Rates Need a Careful Analysis

The unemployment rate is dropping and jobs are becoming more plentiful, but that doesn’t mean workers are in their ideal jobs.

Some people who are working are “underemployed.”

The Bureau of Labor Statistics officially defines underemployment as someone who wants to work full-time and can only find part-time work.

Arizona and California had the highest number of underemployment among states for the four quarters that ended in March, BLS data shows.

Underemployment can be measured at the state level by looking at the difference between two different jobless rates that the BLS compiles.

Arizona and California had the largest gap between the two rates, having a difference of 6.2 percentage points each. Nevada followed with 6.1 percentage point difference.

The state with the least amount of underemployment, because workers are employed part time for economic reasons, was North Dakota with a 1.8 percentage point gap.

For the U.S., the difference between the two rates that the BLS compiles was 4.4 percentage points for the four quarters that ended in March.

Virginia ranked with the 32nd gap in the nation at 3.8 percentage points.

However, BLS’s definition does not capture those who are working in an occupation below their level of qualifications. For example, it doesn’t count someone with a master’s degree who is working as a retail salesperson.

There is no official measure of such underemployment by occupation.

But it can be estimated by comparing the educational skills of residents in a region to the education achievements required by occupations employed by industries in the same region.

Looking at all 381 metropolitan statistical areas, the three MSAs with the largest surpluses of high-skilled workers are Barnstable, Mass., with a 13.2 percentage point surplus; Washington, D.C. with a 12.5 percentage point surplus; and San Francisco, with an 11.5 percentage point surplus.

Some of those are desirable areas to live that attract many high-skilled residents. Some of those are college towns where a lot of graduates choose to stay.

The three MSAs with the largest deficits of high-skilled workers are Hanford-Corcoran, Calif., with a 16.3 percentage point deficit; Hinesville, Ga., with a 14.7 percentage point deficit; and Cumberland, Md., with a 14.6 percentage point deficit.

In Virginia, the Richmond MSA is ranked 78th nationally with a 1.3 percentage point surplus of high-skilled workers, indicating that underemployment here is not as much of an issue as it is in other regions.

The Hampton Roads MSA has a 3.4 percentage point deficit of high-skilled workers (ranked 177th), indicating a less severe issue of underemployment by occupation.

Viewing underemployment across the nation shows that even as the unemployment rate continues to drop, underemployment will vary by metropolitan area.

(This column first ran in the Richmond Times Dispatch on July 13. 2015)

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