number Publish Interpreting Unemployment Statistics Unemployment may be ified using a number of different classifications including structural unemployment and cyclical unemployment. Structural unemployment comes about as the skills of the available labor do not match the skills required for the available jobs. Essentially in such a case labor is available but it is unable to fulfill the requirements of the available job positions. In contrast, cyclical unemployment results from the Keynesian stand point that economies tend to vary between high and low points. In such situations, when the economic equilibrium is disturbed such that the demand for labor is lower than the available labor, a cyclical unemployment situation is created.
There is the possibility that structural unemployment may come about as a result of prolonged cyclical unemployment (OSullivan and Sheffrin). Following the recent global economic crisis, various economists in the United States are blaming structural and cyclical unemployment for current economic woes. Calabrese suggests that unemployment is still out of control in the United States even though the gross domestic product (GDP) is picking up. Unemployment is proposed as being structural in nature though the data presented by Calabrese is not consistent with this proposition. Figure 1 - Unemployment and Labor Trends sourced from (Calabrese) In order to classify the labor and unemployment situation as being structural in nature, it is essential that available labor and demand for labor are segregated into occupational specialties before comparison.
Structural comparisons require that demand and supply of labor be looked into detail to see the actual gap between demand and supply. In contrast, the graph above presented by Calabrese to support his proposition does not provide such classifications.
Instead, Calabrese’s work merely provides the demand and supply gap for general labor in the United States which fails to prove anything. Cyclical unemployment can turn into structural unemployment over a sizable amount of time such as during the seventies and eighties under Margaret Thatcher’s government in Great Britain (OSullivan and Sheffrin). If Calabrese’s assumption was tested in this regard, it would become clear that there are large gaps in labor supply and demand. Gaps in labor demand and supply are amplified in the post 2002 period to reach a localized peak in late 2003.
The gap tends to shrink up to 2007. This gap emerges sharply in the post 2008 period and persists well into 2010 where some slowdown occurs. The total data presented by Calabrese is for around a decade with localized peaks and troughs which fail to meet the criteria for cyclical unemployment to transform into structural unemployment. In the case presented above, if cyclical unemployment were to transform into structural unemployment, it would require the labor demand and supply gap to widen consistently over the entire period of time being presented.
The presence of little data (between 2008 and 2010) signifies that cyclical unemployment is in its infancy as yet and cannot be classified for transformation into structural unemployment as yet. Overall, the data presented by Calabrese to support his argument is irrelevant to the overall argument being made. References Calabrese, Anthony. Data Show Wide Gap Between Numbers of Jobs and the Jobless. 12 August 2010. 26 October 2012 . OSullivan, Arthur and Steven M. Sheffrin. Economics: Principles in Action. Upper Saddle River, New Jersey: Pearson Prentice Hall, 2003.