Thursday, September 9, 2010

Nice graph showing the Natural Rate of Unemployment vs Actual Unemployment overtime...Yes, it IS important!!

Below you will find a graph showing the Natural Rate of Unemployment vs the Actual Rate of Unemployment over time.  The Natural Rate of Unemployment (aka NRU) is the sum or Frictional Unemployment and Structural Unemployment the economy.  These two categories of unemployment are always present and the goal is to minimize them, especially Structural.  Structural unemployment is serious and poses many problems. Workers are unemployed because their skills have been rendered obsolete, primarily through advancements in technology and production process.  These workers tend to be unemployed for longer periods of time and need to undergo re-training to acquire relevant skills.  It is feared that the Natural Rate of Unemployment is going to increase because of an increase in the number of workers who fall into the Structurally unemployed category.  This could describe between 2 and 3 million people!! How do we solve THAT problem?? Ideas?
Cleveland Federal Reserve
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