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October 7 2016

Rachael Ray: Americans are Tired of Underemployment

Patrice J. Lee

Rachael Ray is one of America’s favorite celebrity chefs. She hosts or stars in a variety of food and cooking shows. She also has cookbooks and a magazine under her belt and now she’s even added a home furniture company to her portfolio of entrepreneurial endeavors.

Celebrities are known for their talent, but not always for their insights. However, Rachael Ray hit the nail on the head recently when calling out the frustration that Americans have with the economy. 

During a recent event she noted:

The American public is fed up with being underemployed," Ray said to CNBC. "I think our employment rate keeps rising, but we have skilled people that are doing jobs that are not skilled. I think we've been frustrated as a country to bring jobs back, and I think we're on a good path. More and more you see 'made in America.' We certainly try as a company to do our part to get it made here and bring jobs back here."

She’s not overstating, but accurately highlighting that underemployment is a common issue that American workers face.

Underemployment reflects the situation for workers who want a full-time job, but for economic reasons have to settle for a part-time schedule. This rate has been stuck at 9.7 percent for months and hasn’t fallen much from even a year ago when it was over 10 percent.

According to today’s monthly jobs report, the national unemployment rate is at 5.0 percent. However, 5.9 million workers were underemployed last month either because they couldn’t find full-time work or their hours had been cut.

The youth demographic is affected particularly hit by underemployment. Generation Opportunity analyzes BLS unemployment data and finds that the rate of underemployment for 18-29 year olds is 12.7 percent. (In full disclosure I work for GenOpp.)

You might think that underemployed youth are uneducated and unskilled, but research suggests otherwise. The Federal Reserve of New York found that college grads struggle most with underemployment as 44.5 percent of recent college graduates settle for jobs that typically don’t require a college education. Women, in particular, landed the lowest skill and low wage jobs because young men could take more physically demanding and higher paying jobs.

College majors don’t fare evenly either. Your major matters:

"They are far less likely to be underemployed in the early stages of their careers," the researchers wrote. "Those with majors in Liberal Arts and General Business are two to three times more likely to be underemployed than those with engineering and nursing majors." The five majors most destined to underemployment: criminal justice, performing arts, leisure and hospitality, anthropology, and art history.

Woe to the liberal arts majors suggests the Atlantic.

What drives underemployment? Companies make business decisions in light of higher wage costs because of regulation. From minimum wage to ObamaCare mandates, regulations that may have been meant to help workers have the unintended consequences of driving hours for many workers down. Take for example the reported 29ers, whose hours were cut to below to federally mandated threshold as employers sought to avoid the cost of providing healthcare to workers. Policies have consequences and in this economy its hours of work.

Rachael Ray hits the nail on the head with her comments about the economy. Let’s hope Washington was listening.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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