How is structural unemployment measured?

Question

In light of today's Presidential Speech on jobs, I was reminded of something that I read in Bloomberg Businessweek.

With the jobless rate still above 9 percent, the untapped labor pool is deep. Yet some companies struggle to find qualified applicants.

How accurate is it to say that some companies are having a great deal of difficulty finding applicants who are actually qualified for the jobs they have available? Is there any sort of statistic that not only tracks unemployed, but the unemployable (due to lack of training/skill)?

Answer 1

According to this paper from 2002, the OECD measures structural unemployment using the NAWRU

In recent years, the OECD has measured the structural rate of unemployment using a specific indicator, the non-accelerating wage rate of unemployment (NAWRU) indicator, first suggested by Elmeskov and MacFarland (1993) and Elmeskov (1994). Crudely, this indicator measures the structural rate of unemployment as the rate of unemployment at which wage growth is stable.

However, the paper also concludes that the NAWRU is not stable and does not accurately reflect real-world unemployment.

This is evident from its poor predictive power; as shown in Section II, the NAWRU indicator has virtually no explanatory power even within sample.

This paper from the Canadian International Labor Network talks about differing definitions of 'unemployed'

For example, Australia and the United States require “active job search” for classification as unemployed, while Canada and most other OECD countries include both “active” and “passive” searchers among the unemployed. The difficulties are also illustrated by the fact that within the same country there have been changes over time in key procedures. For example, “discouraged workers” were classified as unemployed prior to 1975 in Canada and prior to 1967 in the United States, but are now treated as being out-of-the-labour force in both countries.

The paper isn't long (conclusions are on page 9) but they do conclude the US and Australia should include passive seekers in unemployment numbers.

To try to give you a more satisfying answer than 'structural unemployment is measured badly,' I'm going to mention something I heard on this podcast by NPR's Planet Money team. Basically, they said that the unemployment rate among skilled, college-educated professionals is so low at around 2.2% it's not theoretically supposed to be possible. This could account for the lack of "qualified applicants" in many jobs that require a good deal of investment in education and training. Hopefully it's OK to cite a recording with no transcript.

Answer 2

To be a qualified applicant you must meet all of the qualifications of the job.
Must be willing to work hard Must be willing to show up on time and work a full shift Job pays $10/hour. Job is 25 hours a week, no benefits.

If you are not willing to work part time, for $10/hour with no benefits then you are not a qualified applicant even if you will work hard and show up on time.

You are bringing in 350 per week in Unemployment benefits. If you took this job your benefit would be reduced to $100. You have additional costs from working. Plus you will lose about 24% to taxes including SSI and Unemployment. So your total weekly bring home after taking this job is now $290.

The Unemployment rate is basically the percentage of people who used to have a job, but lost it, and qualify for unemployment benefits, who are still seeking work, and are still receiving unemployment benefits. So if you do not fit in this category, you are not qualified for being counted in the Unemployment rate. So ~9% are counted but it was reported that ~16% is the actual number.

The unofficial number starts with the official rate and then adds in everyone else who should be working full time but is not, including those whose hours have been reduced from full time to part time, those who have become so discouraged they have given up looking for work and others who are "marginally attached to the labor force."