Underemployment generally refers to one of several situations that result in employment in an economically inadequate position. In this context the underemployment rate refers to the fraction of those employed who are “underemployed.” Some scholars utilize an alternative version of this definition by considering some nonemployed individuals as underemployed. Regardless of the definition of underemployment, the concept evolved from inadequacies in the unemployment rate in capturing work-related hardships.
Rubb, Stephen, "Underemployment Rate" (2008). WCOB Faculty Publications. 224.