'undercompensation' originates from the prefix 'under-' meaning 'below' or 'less than' and the word 'compensation' from Latin 'compensatio', where 'com-' meant 'together' and 'pensare' meant 'to weigh'.

'undercompensation' evolved from the combination of 'under-' and 'compensation', which was used in Middle English as 'compensacioun'.

Initially, it meant 'less than adequate compensation', and this meaning has largely remained the same in modern usage.