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Unemployment, underemployment and interest rates

August 17, 2010

By Barbara Marquand | Money Rates Columnist

If you think unemployment is bad, consider the number of people who are underemployed.

By Gallup's reckoning almost one in five people -- 18.3 percent of Americans -- either don't have jobs or are working part-time and want full-time employment as of mid-August. The research outfit's numbers are based on on more than 15,000 phone interviews with adults in the workforce collected over a 30-day period. They tend to be a precursor of government reports by about two weeks.

The share of part-time workers who want full-time jobs fell slightly in mid-August to 9.2 percent from 9.5 percent at the end of July, but that drop was offset by an increase in the unemployment rate measured by Gallup, which rose to 9.1 percent.

Young people are facing the toughest job prospects. Among Americans ages 18 to 29, 27.6 percent were underemployed in mid-August -- including almost 12 percent who didn't have a job at all and almost 16 percent who were working part-time but wanted full-time jobs.

Who's more likely to be underemployed?

More women then men are underemployed, and people without any college education are having a tougher time finding jobs than those with higher education levels.

There is one bright spot: Forty-five percent of underemployed Americans said they were "hopeful" in mid-August -- the highest level so far in 2010, Gallup reports.

Meanwhile, those who have jobs aren't all that happy either. About a quarter are afraid of being laid off, and a quarter are worried about pay reductions, according to Gallup. No wonder consumer spending -- which accounts for 70 percent of the economy -- remains stalled.

The employment picture must brighten for interest rates on money market accounts, savings accounts and CDs to turn around. Now best CD rates are as dismal as underemployment and will remain so until the economy turns a corner.

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