Understanding Structural Unemployment

As a college student studying business and finance, you may have come across the term “structural unemployment,” but what does it actually mean? Structural unemployment is a type of unemployment that results from a mismatch between the skills that workers can offer and the skills employers need. This mismatch can occur when job requirements change or when the demands of the job market change, even if the businesses will offer the same or similar jobs as before.

In other words, it means that even if there are open jobs, the workers’ skills may not match what employers are searching for, so the workers cannot be hired even though there is an unfilled job position. This is something that can happen fairly quickly, like when technology advances and a company is looking for someone with new skills that others may not have.

A quick example of this is IT support jobs. In the past, many IT support positions required an associate degree in computer science or related fields. Nowadays, more and more businesses are looking for applicants with a bachelor’s degree or higher in similar fields, which means that many of the workers who applied with an associate degree may not qualify any longer.

Structural unemployment can also result from changes in the demand for certain goods and services. For example, if there is a new tax on luxury items, then companies that produce and sell those items may not need as many workers as they used to because fewer people are buying them. The workers who used to produce and sell those luxury items may now be left without a job, even though there is no available work at their former employer.

Understanding structural unemployment is important for college students like us to stay up to date on developments in the job market and to ensure that our skills are up to date with what employers are looking for. It’s also important to be aware of potential changes in the job market that could impact our current or future career prospects.