Types of Unemployment and How to Beat Them

But others have lost work due to factors that won’t make the news, like workplace injuries or technological “efficiencies.” They may need very different strategies to protect themselves.

Here’s a guide to the three main types of unemployment and the steps you can take to get back on your feet.

Structural unemployment

Structural unemployment happens when a particular skill or trade is no longer in demand.

This can be seasonal; farms need fewer laborers outside the planting and harvesting months. But often this happens when technological advancement, most notably automation, replaces the work done by people.

While new tech can make things more efficient or convenient — Can you imagine still having to buy ice from a door-to-door iceman? — it comes at a cost. You may not think about the cashiers being replaced when you use the self-checkout lanes at the grocery stores.

Employees now deemed obsolete may need to go back to school to learn new skills or ask their employer for training for a new position. This prospect might be devastating if you’ve been on the same path for years or decades and have to make a late career switch.

How to adapt

1. Do your research

Take a peek at data from the Bureau of Labor Statistics to see which industries are expected to hire the most people over the coming decade. You don’t want to switch to another job that might fall out of demand.

You won’t have to start over at square one. Chances are high that many of the skills you possess can be translated into a new career path.

For example, if you’ve got skills in hospitality and working with the public, you could be a great fit for home health care work — an industry expected to grow 36% between 2018 and 2028.

Depending on the job you want, you may already have what you need to get hired and trained. You just have to make a convincing case.

2. Get matched with an eager employer

When it comes time to apply for a new job, make sure you go about it in a sensible way. Filling out an application a hundred times on a hundred different company websites is just going to eat up valuable time.

If you haven’t needed to look for work in a while, you should know online job boards are getting way more advanced. Job hunting is always scary, but it’s not as onerous as it used to be.

Take ZipRecruiter, for instance. Once you upload your resume, the website scans it for your unique skills, education and experience. Then it tracks down all kinds of jobs that are a good fit for you — even if you didn’t know they existed.

You can even see when employers have looked at your application, so you know whether you’re on the right track.

Cyclical unemployment

Economies go through cycles: rising and falling, boom and bust.

When the demand for goods and services decreases — maybe a market crash has spooked consumers into holding on to their money — fewer workers are needed to supply those goods and services. Companies lay off their excess employees, who no longer have the income to spend, decreasing demand even further.

This downward spiral continues until a new equilibrium is reached, consumers start spending again, and workers get rehired. An upward spiral begins.

It’s a natural process, though that’s not very comforting to the people who get the pink slip.

How to adapt

1. Create an emergency fund

If you’re still employed, it’s time to take a hard look at your rainy day fund. Experts recommend having enough money on hand for three to six months of expenses, but the Federal Reserve says more than half of Americans are just $400 away from financial ruin.

Squirrel away whatever you can until you hit a safe threshold. A great place to stash your emergency money is a high-yield savings account, because you’ll actually earn decent interest while your cash is sitting around unused.

If you’re already out of a job, you’ll have to look at ways to cut your expenses. Thankfully, companies and governments are giving people a break on certain bills during the pandemic, so you have more support than usual.

2. Apply for government benefits

Unemployment insurance (UI) helps replace a portion of your wages in the event of a layoff, but some states don’t offer nearly as much as others.

Thankfully, UI has been expanded in the wake of coronavirus to help people weather this difficult time.

In addition to the federal government’s $1,200 stimulus payments, folks who’ve been laid off are eligible for an extra $600 a week in unemployment until the end of July 2020.

If you’re in a serious jam, you can also tap into your retirement funds.

Those dealing with financial hardship caused by the coronavirus can take up to $100,000 from a 401(k) or traditional IRA without having to pay the usual 10% penalty. You’ll have to pay it back within three years to avoid taxes, so it’s a good thing cyclical unemployment is, for the most part, temporary.

Frictional unemployment

Sometimes called transitional unemployment, frictional unemployment is caused by quitting your job, getting fired or being forced out by illness or injury.

Maybe you were a victim of some harsh budget cuts. Maybe you had a baby and decided to leave the workforce for a couple years. Or you got sick and needed to focus on your health.