Unemployment in the US remains a huge problem until now, four years into the recession that hit the country back in late 2007. Official government statistics show that, as of August 2011, the unemployment rate remains at a high 9.1% and that there are 14 million unemployed Americans, almost double the number of unemployed when the recession started in December 2007. Moreover, there were only 3.1 million job openings as of August 2011, which, while higher compared to the same period a year or two ago, is still 30% below pre-recession levels.
So, how do we explain the continuing unemployment problem in the country? Will the rest of the year be characterized by the same grim economic outlook? What about the next year or so?
While the economic outlook is improving, and the number of job openings is increasing, the ranks of the unemployed have only been trimmed down a little. Why? The answer lies in structural unemployment.
According to Wikipedia, structural unemployment is:
“a form of unemployment resulting from a mismatch between demand in the labour market and the skills and locations of the workers seeking employment. Even though the number of vacancies may be equal to, or greater than, the number of the unemployed, the unemployed workers may lack the skills needed for the jobs; or they may not live in the part of the country or world where the jobs are available.”
Structural unemployment in the country is caused by:
An education system that focuses on useless and/or obsolete degrees.
In “The Connection between Education, Employment and Entrepreneurship,” Jon Bischke writes that:
“the vast majority of the unemployment we’re seeing, and will likely continue to see, is structural unemployment. We’re training people for jobs that don’t exist while at the same time we’re not training enough people for high-demand jobs.”
Not enough supply of science, technology, engineering and mathematics graduates.
In the same article cited above, Jon Bischke continues:
“Technology companies can’t hire fast enough. But step outside of technology and other tech-focused industries and it quickly becomes a wasteland. Compensation is rising for engineers, designers and pretty much anyone who is tech-savvy. But are we seeing an accompanying increase in demand for computer science degrees? No, actually it’s just the opposite.”
Lack of basic skills needed to pursue science, technology, engineering and mathematics courses.
Bischke goes on to say that:
“people are simply preferring to not work in technology. But that doesn’t really make sense. After all, people are spending more and more time with technology (e.g., Facebook, gaming, etc.). Why wouldn’t they want to pursue careers in the space as well. Well one reason would be that our education system is not providing them with the foundational knowledge to go after more advanced careers in technology.”
Wrong perception of the job market, with people thinking that there are too few jobs in science, technology, engineering or math-related courses.
Andrew Nusca, in “DARPA: ‘Significant decline’ in U.S. science and tech degrees, ‘harming national security,’ says:
“Why the decline? DARPA concedes that public perception is partly to blame, and a high awareness of the “dot-com bust” and “international outsourcing” trends have people thinking there are fewer computer science jobs. But it’s the complete opposite: “Computer Software Engineers, Applications” is the fourth fastest growing occupation in the country in November 2007, according to the U.S. Department of Labor.”
So, how do we solve the structural unemployment problem?
- Offer more relevant courses and encourage students to stay on track
We should redouble our efforts to keep these young people on track and finish their courses. Citing a Georgetown University study on the number of Americans enrolled in STEM courses, Motoko Rich, in The Rising Value of a Science Degree, writes:
“According to the study, people with talent in science, technology, engineering or math don’t often major in such disciplines during college in the first place. And even if they start out doing so, many switch majors. Of those graduating with such degrees, only 10 percent go into related fields such as engineering, physical science or architecture.”
- Reeducate existing workforce
In “Creating the Next Generation of US Employees. My Investment in Treehouse,” Mark Suster writes that:
“the goal for today’s business is to educate broad groups of people in the existing workforce to improve their skills, broaden their knowledge and get ahead.”
- Correct the wrong perception of the realities behind the current job market
We should do everything to correct the misperception that there is weak demand for technology workers. In The Rising Value of a Science Degree, Motoko Rich writes:
“While traditional fields like computer engineering and laboratory research make up about 5 percent of the work force, demand for science, technology, engineering and math skills is spreading far beyond, to occupations in manufacturing, utilities, transportation and mining, as well as to sales and management. As a result, the study… argues that there is a shortage of so-called STEM workers.”
A strong technology sector will help continue to boost the American economy in the years to come. Writes Jon Bischke, in A Tale of Two Countries: The Growing Divide Between Silicon Valley and Unemployed America, :
“…a thriving tech sector is a beacon of hope for America and perhaps one of a shrinking number of things keeping the country from slipping from its perch as the world’s foremost economic superpower.”
Thus, it is imperative that we put all our efforts to stopping structural unemployment in its tracks. We can do this by bridging the gap between the demand for and supply of STEM workers.