Industries that have too many workers cannot employ all of them, thus, some will always be unemployed because they cannot differentiate themselves effectively in the market.
Structural unemployment (Us) is long-term unemployment, typically by excess workers in a given industry.
How to calculate structural unemployment percentage (Uf%)
Scenario: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
We can calculate structural unemployment with the following formula:
Us% = Total # of Long-term Unemployed / Labor Force
In Crammerville, we can see 2 people have been long-term unemployed...
Situation: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
...which we can plug in like so:
Us% = Total # of Long-term Unemployed / Labor Force
Us% = 2 / Labor Force
In Crammerville, we have 100 workers in the labor force...
Situation: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
...which can be plugged in like so:
Us% = Total # of Long-term Unemployed / Labor Force
Us% = 2 / 100
Us% = Total # of Long-term Unemployed / Labor Force
Us% = 2 / 100
When we solve, this results in a structural unemployment percentage of 2%!
Us% = Total # of Long-term Unemployed / Labor Force
Us% = 2 / 100
Us% = 2%
