Structural Unemployment

To quote an earlier chapter, "Economists often use the term 'structural unemployment' for employment problems that arise because of a mismatch between the needs of employers and the skills and training of the labor force. For example, if music schools were to educate many more oboe players than could get positions playing the oboe, we might find that many of them would have to get jobs in other fields. Lacking training for other skilled fields, some oboe players might be unable to get any jobs at all. This would be an instance of structural unemployment."

And as we saw in that earlier chapter, this concept doesn't fit very well with our basic concepts of unemployment, either Keynesian or New Classical. In Keynesian terms, there is quite a difference between an excess supply of labor in general and an excess supply in a particular category, such as oboe player. And "searching for a job as an oboe player" is not the same thing as "searching for a job."

Yet, if we think in more historical than logical terms, it is hard to avoid the feeling that something like "structural unemployment" is a very fundamental problem for industrialized economies. One of the great economic landmarks of the twentieth century has been the decline of agricultural employment, resulting from much more rapid growth of agricultural productivity than of demand. This has forced a large number of people out of farm jobs. These people may have had great skills for agriculture -- I think of a man my father once employed, whose remarkable skill was his ability to build a perfect haystack -- but they had little in the way of skills relevant to a post-agricultural economy, and, with minimal literacy, little ability to get the skills. When jobs on the assembly lines of manufacturing industry were available, that wasn't so much of a problem, as those jobs didn't need much skill, and they paid pretty well. But since manufacturing industry has stopped expanding, in the developed countries, there are few jobs for people in this category.

People who cannot find jobs because they lack relevant skills of any kind best fit the definition of "structural unemployment." It seems pretty clear that neither policies that change job search behavior nor policies that expand spending in general are very suited to this group.

The Problem of Structural Unemployment