What Kind Of Unemployment Might Be The Problem In The Labor Market?

See Employers struggling to find workers with needed skills by Ty-Eshia Johnson of The Ranger, the San Antonio College newspaper. Excerpts:

"Employers are struggling to find skilled workers, the head of Bexar County Economic Development said while giving an in-depth analysis of the 10 Metrocom cities and what the future will bring to Northeast Bexar County.

Executive Director David Marquez delivered the forecast Sept. 18 at Northeast Lakeview College.

Metrocom cities are suburban municipalities surrounding Northeast Lakeview College. Each contributed representatives to an oversight committee during planning for the college.

“We’ve got some challenges in our community on the horizon for workforce, and we’re feeling already the early stages of it,” Marquez said. “It’s not too late to fix it."

"The challenge is a shortage and mismatch in job skills that employers are looking for, Marquez said. Applicants and employees lack basic skills essential for future training in higher paying jobs. “These topics are timely and important,” he said. “If we don’t resolve these issues, our goal to recruit high-paying jobs here is severely unreasonable.”

The jobs are available, but people are having difficulty finding work, he said. “We need to work with those of you who provide those skills to make sure that we’re meeting the needs of the employers, not only the ones that are here, but those we hope to attract,” Marquez said."

"Marquez said the community depends on a high-skilled and high-quality workforce. Middle skilled workers, for jobs requiring an education beyond high school, but less than a bachelor’s, are in high demand.

Professional and technical certifications are also acceptable. However, employers are becoming frustrated with the shortage of skilled workers, which is their primary complaint."

This is what we call Structural unemployment since it deals with the "mismatch between the skills of job seekers and the requirements of available jobs."

Below are the four types or causes of unemployment:

1. Seasonal-Unemployment due to seasonal changes in employment or labor supply.

People who work in amusement parks, lifeguards, farm workers, etc. only work during certain seasons. In the off-season, they are unemployed.

2. Frictional-brief periods of unemployment experienced by people moving between jobs or into the labor market.

An example of this is when you move to a new city with your spouse because they got a better job. For a period of time you will be looking and that period without a job you will be unemployed. Another example is the period of time when you are looking for your first job after you graduate from college.

3. Structural-unemployment caused by a mismatch between the skills of job seekers and the requirements of available jobs.

One example of this is when you are replaced by a machine. We don’t have as many bank tellers any more because people use ATMs. Another example is when there is a fall in demand for your product, so you get laid off, like with typewriters since people now use computers. A third example is geographical, when the jobs are not in your region of the country.

4. Cyclical-unemployment caused by a fall in GDP. This comes from the idea of the business cycle. We assume that when GDP falls, the unemployment rate goes up (companies need fewer workers since their sales have fallen). And that when the GDP rises, the unemployment rate goes down.