Unemployment

Checkpoint: Unemployment

Three types of unemployment exist: structural, frictional, and cyclical. Structural unemployment is when workers are unemployed due to there being a mismatch of workers available with skills other than the skills needed for the job openings. An example of this is computer technicians needed for hardware in a place where there are many computer software programmers looking for jobs. Frictional unemployment is when a person is in-between jobs and looking for a new job, or when new workers are entering the workforce and looking for a job. An example of this is when a person goes through trade school and has their degree, but it on the market looking for a job. They are not technically out of a job, but unemployed beginning to get into the job market. Cyclical unemployment is when there are more jobs than there are workers for those jobs. An example of this would be computer technicians, there are many more technicians trained to work for these jobs than actual jobs available.

The natural rate of unemployment depends upon where the economy is along with the jobs available. In today’s society unemployment is high due to cyclical unemployment; there are simply more workers than jobs available. Some of the unemployment can be chalked up to structural as there may be some mismatch of skills, not to mention frictional unemployment as new workers are always entering the job market. The natural rate of unemployment is determined by the inflation rate. If the inflation rate remains stable, the economy grows and unemployment will drop. As more people get into a job and begin making a living, the inflation rate will rise.