how to overcome structural unemployment
as a society there are several ways an economy can prioritize overcoming structural unemployment as a result of industry shifts or technological advancements in 1933 the united states experienced its highest rate of unemployment during the great depression unemployment peaked at 24 7 1structural unemployment vs other types of unemploymentstructural unemployment and cyclical unemployment are both referred to as involuntary forms of unemployment this means individuals are unwillingly without a job though they may be looking for employment they simply haven t found a role the difference between the two often resides in the depth length and severity of unemployment cyclical unemployment occurs in large part due to spending habits recessions and government monetary or fiscal policy as many industries ebb and flow with success so does the labor market cyclical unemployment is often marked by shorter term unemployment that rises and falls with economic cycles certain industries may be more exposed to cyclical unemployment rather than structural unemployment for example consider long standing industries such as real estate while the real estate sector does undergo innovation it is more prone to cyclical unemployment as a result of economic recessions or contractionary monetary policy frictional unemployment is defined as a voluntary form of unemployment individuals often leave their jobs to develop other skillsets return to school or prioritize work life balance by taking on less demanding roles individuals who are frictionally unemployed are usually actively seeking roles or simply between jobs these individuals can often return to their old form of work but choose not to this is in strong contrast to structural employment in which people do not have a say in being unemployed in addition frictional unemployment is often marked by the election to learn something new as opposed to being forced out of a market via structural changes frictional unemployment is often on a case by case basis though the pandemic might have prioritized work life balance for many whereas structural unemployment is more heavily rooted in entire industries or markets while structural unemployment is deeply rooted in the economy seasonal unemployment is caused by temporary fluctuations in the market often spurred by the holidays or the seasons some jobs simply come and go each year snow plow operators or tax return preparers may not work the entire year in their roles due to changing demand throughout the year like frictional unemployment seasonal unemployment is usually considered voluntary as it is implied that a role will not be for the full year when it is awarded it is also different from structural unemployment in that it usually lasts a short period of time often less than a full calendar year disadvantages of structural unemploymentwhile the 2007 2009 global recession caused cyclical unemployment it also increased structural unemployment in the united states as the jobless rate peaked over 10 in october 2009 the average unemployment period for millions of workers rose significantly 2 these workers skills deteriorated during this time of prolonged unemployment causing structural unemployment this has the severe downside of making it even harder for workers to find and retain jobs the depressed housing market also affected the job prospects of the unemployed and therefore increased structural unemployment relocating to a new job in another city would have meant selling a home at a substantial loss which not many people were willing to do creating a mismatch of skills and job availability therefore structural has the distinct disadvantage of being solved by potentially incurring major personal financial losses the same can be said about education or training if a company is unable or unwilling to invest in either for their employee it may be the employee s burden to seek opportunities on their own not only does this mean the employee will have to pay for the learning opportunities the employee will likely be burdened with developing their skillset while working at their potentially full time job the bureau of labor statistics releases unemployment numbers each month on the first friday at 8 30am est 3structural unemployment and covid 19during the covid 19 pandemic the united states economy underwent unprecedented changes in structural unemployment and cyclical unemployment at its peak the united states unemployment rate more than quadrupled at the start of the pandemic reaching 14 0 in april 2020 4 it s important to note that many of these job losses were temporary however consider the following examples of roles that were structurally impacted by covid 19 also as a result of covid 19 many individuals voluntarily left the workforce though total unemployment has dropped to 3 5 as of the end of 2022 jerome powell suggested this number may be understated due to those who are not looking for work 56 as a result it is implied that true unemployment may be higher as a result of deeper more structural changes to the economy stemming from the pandemic real world exampleover the past decade france has also been hit hard by structural unemployment thise often arises from the fact that a large portion of france s workforce is participating in temporary second level jobs with little chance of being promoted to long term contracts forcing them to strike this results in a lack of job flexibility and little job mobility sidelining many french workers who have not adapted to new tasks and skills president emmanuel macron came into office in may 2017 when the unemployment rate stood at 9 5 7 he vowed to address the country s strict labor laws and make it more business friendly labor unions and the macron government began negotiating to help reduce the ranks of the structurally unemployed and the trends have been encouraging as of the end of 2019 france s unemployment stood at 8 1 down from 8 7 at the start of the year and the lowest since 2009 macron s stated goal was to get to 7 by the year 2022 8 for most of the year unemployment remained stable fairly close to this level reaching 7 3 in q3 2022 in the q3 2022 unemployment report france s long term unemployment rate those without work for at least one year stood at 2 0 4 less than its lowest level hit in q2 2009 9