US & World Economies US Economy Unemployment Structural Unemployment: Causes and Examples Why it's harder to find a job now in some industries By Kimberly Amadeo Updated on March 13, 2022 Reviewed by Erika Rasure Reviewed by Erika Rasure Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. learn about our financial review board In This Article View All In This Article What Causes It? Industries Impacted Impact of the Financial Crisis How It Affects You Frequently Asked Questions (FAQs) Structural unemployment is usually caused by a mis-match between jobs available and the skills of the unemployed. Photo: Credit:Chris Hondros/Getty Images Structural unemployment refers to a mismatch between the jobs available and the skill levels of the unemployed. Unlike cyclical unemployment, it’s caused by forces other than the business cycle. It occurs when an underlying shift in the economy makes it difficult for some people to find jobs. It is harder to correct than other types of unemployment. Structural unemployment can keep the unemployment rate high long after a recession is over. If ignored by policymakers, it creates a higher natural unemployment rate. By looking into the U.S. unemployment rate throughout the years, one can track the health of the country’s economy and get a clearer picture of how structural unemployment can occur. The chart below tracks the U.S. structural unemployment throughout the years. Key Takeaways Structural unemployment happens when the skills unemployed workers have don’t match the skills needed by employers. Older people are affected by structural unemployment more than their younger counterparts. It’s hard to address structural unemployment because, while jobs can be added, typically they are low quality. The Great Recession made structural unemployment worse. What Causes Structural Unemployment? One cause of structural unemployment is technological advances in an industry. That often happens in manufacturing. Robots have been replacing unskilled workers. These workers often must get training in computer operations if they want to keep working in the same industry. A second cause is trade agreements, such as the North American Free Trade Agreement. When NAFTA first lifted trade restrictions, many factories relocated to Mexico. They left their former employees without a place to work. The agreement proved to be one of the nation’s underlying causes of unemployment. Industries Impacted by Structural Unemployment Technological advances have created structural unemployment in the newspaper industry. Web-based advertising has drawn advertisers away from newspaper ads. Online news media has drawn customers away from physical newspapers. Newspaper employees, such as journalists, printers, and delivery route workers, have been laid off. Note Farmers in emerging market economies are another example of structural unemployment. Free trade allowed global food corporations access to their markets. That put small-scale farmers out of business. They couldn't compete with the lower prices of global firms. This structural unemployment existed until they were retrained, perhaps in factory work. How the Financial Crisis Made Structural Unemployment Worse The financial crisis of 2008 created record levels of unemployment. Over 8.7 million jobs were lost. By October 2009, the unemployment rate had risen to 10.2%. Housing, which usually drives the expansion phase of the business cycle, was suppressed by a wave of foreclosures. As a result, almost half the unemployed were out of a job for six months or more. As their skills and experience became outdated, cyclical unemployment led to structural unemployment. Note Structural unemployment hit the older jobless person the most. Although younger workers were more likely to be unemployed, they weren't that way for long. They either found a low-paying job or went back to school, dropping out of the labor force altogether. Their unemployment duration was bad, at 19.9 weeks, but less than the older unemployed. Those aged 55 to 64 were out of work for 44.6 weeks—almost one year. Those over age 65 looked for work 43.9 weeks before finding a job. Many just gave up. That forced them into early retirement. Why were older workers more affected than younger ones by structural unemployment? There were five reasons: Older workers were more likely to have jobs in industries like newspapers that were replaced by new technology.They were less likely to go back to school.They were less able to move to find a new job because they owned their home. The depressed housing market meant they'd be more likely to lose money or default on an upside-down mortgage if they did try to sell.Many were not willing to take a lower-paying job.Older workers faced unacknowledged age discrimination. How Structural Unemployment Affects You Structural unemployment increases U.S. income inequality. That's because the older, long-term unemployed worker doesn't have the necessary technical skills. While unemployed, industries evolve. This creates a mismatch between the unemployed and the jobs being created. Many older unemployed people often rely heavily on getting Social Security and Medicare than they might if they still had a job. Many might start collecting Social Security at age 62, rather than waiting to collect their payouts at 65 or older. This could weigh heavily on the federal budget and its already record levels of debt. Frequently Asked Questions (FAQs) What are the different types of unemployment? There are several different types of unemployment, but the main three types are cyclical, structural, and frictional unemployment. What kind of unemployment occurred as a result of COVID-19? COVID-19-related unemployment was most likely cyclical employment, since it occurred with an economic recession. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Congressional Research Service. "Introduction to U.S. Economy: Unemployment." The U.S. National Archives and Records Administration. "Message to the Congress Transmitting Proposed Employment Legislation." Bureau of Labor Statistics. "Full employment: An Assumption Within BLS Projections." Federal Register. "North American Free Trade Agreement (NAFTA)," Public Citizen. "NAFTA’s Legacy: Lost Jobs, Lower Wages, Increased Inequality." Pew Research Center. "Newspapers Fact Sheet." Pew Research Center. "U.S. Newsroom Employment Has Dropped by a Quarter Since 2008, With Greatest Decline at Newspapers." Council on Foreign Relations. "NAFTA’s Economic Impact." Center on Budget and Policy Priorities. "Chart Book: The Legacy of the Great Recession." Bureau of Labor Statistics. "TED: The Economics Daily." Bureau of Labor Statistics. "Great Recession, Great Recovery? Trends from the Current Population Survey." The New York Times. "Older Workers Without Jobs Face Longest Time Out of Work." Intuit. "Understanding the Main Types of Unemployment."