Structural Unemployment Is Here to Stay

(Cross-post from my Posterous)

From Wikipedia: 

Structural unemployment is a form of unemployment resulting from a mismatch between the sufficiently skilled workers seeking employment and demand in the labour market. Even though the number of vacancies may be equal to the number of the unemployed, the unemployed workers may lack the skills needed for the jobs.

The problem that we now face in the US is one of structural unemployment. Due to globalization, those jobs that require lower-skilled workers are being shipped overseas. It is much cheaper to manufacture a product in China than it is to manufacture one here (a result of minimum wage laws).

To be clear, higher-skilled professions are not the ones being exported. However, these higher-paying careers are reserved for the educated.

The education and skill level of the population in the United States is falling behind other countries. According to the National Center for Education Statistics, 74.9% of students who were freshmen in the fall of 2004 graduated from high school on time in 2008. That means 25% of the incoming work force does not have a high school education.

25% of the incoming work force is doomed to seek lower-paying, lower-skilled jobs. In the past this wasn’t an issue as they could seek out careers in manufacturing, such as that of a Detroit auto manufacturer. That is, unfortunately, no longer the case as these “careers” have been exported.

So what is a lower-skilled worker to do? Seek out the few remaining lower-skilled positions that cannot be exported (food service industry, transportation industry, etc.), but a problem arises. There are simply not enough of these positions to accomodate 25% of the US population.

Workers who don’t posses the necessary skills may find it difficult to nag a job with a future. Constant unemployment and struggling to get by will be their future. With 25% of the population without the necessary education to get a good job, it is no wonder unemployment is predicted to remain high.

Click through to read an interesting post that sheds some light on this subject.