The media report that the Lane County unemployment rate is 8.4 percent of the workforce actively seeking jobs. The question I want to address is, what type of unemployment is it and what can be done to reduce it?
Based on my experience teaching, I remember that economics divides unemployment into four categories, which are frictional, seasonal, cyclical and structural. Frictional and seasonal unemployment are the reasons why the unemployment rate cannot be reduced to zero, because frictional unemployment is simply people changing jobs, while seasonal is simply a situation where the unemployment is a result of the time of the year and is common in Oregon.
Cyclical unemployment occurs when the economy is in the recessionary cycle and may be reduced by expansionary fiscal policy of the type being discussed at the federal and state levels, such as investing in repairing our infrastructure. Put the unemployed back to work, and their new income will be spent on consumer goods, which in turn will motivate businesses to hire more people and produce more goods and services.
However, there is a fourth type of unemployment called structural, and it occurs when the unemployed lack the marketable skills demanded by employers. There has been little discussion of this type of unemployment in the media and of the solution needed to reduce it. One of the best ways to reduce structural unemployment is to train people so they have these marketable skills and in Lane County, no organization does this better than Lane Community College.
The governor’s budget did NOT provide adequate funds for community colleges to do this training and now this is up to Lane County’s elected representatives in Salem to allocate the money needed to reduce structural unemployment here in Lane County.