Chevron of the Three Types of Unemployment

Chevron

Of the three types of unemployment that exist, both structural and cyclical unemployment are likely to be major problems for Chevron. Cyclical unemployment and its effects on the auto manufacturing industry can perhaps be understood in the simplest and most direct manner; when a recession hits and GDP growth is slow (or even negative), unemployment rates rise -- there are less consumer dollars to support the continuing growth of products and services being offered. In the energy industry, recessions tend mean a slow down in business and consumer activities and thus a decrease in the demand for energy. This also leads to a decrease in the demand for energy technologies, though perhaps not as directly. Structural unemployment occurs when there is simply a decrease in demand for employees in a given industry. This has also occurred for Chevron to some degree, as technological advancements and the automation of many procedures has made the use of computerized and robotic tools rather than human resources more cost effective in many instances. This, combined with the outsourcing of much research and production, has reduced the demand for employment for this company especially in many Western countries.

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Outsourcing is without a doubt something that Chevron both can benefit from and has benefited from, with labor far cheaper in the developing world and communications technology as well as educational opportunities making this cheap labor far more effective than it was in previous decades and generations. Given the company's incredibly wide range of operations and its need for employees with all sorts and levels of knowledge and expertise, it is not surprising that the company has outsourced many of its departments especially when quantified data and analysis rather than decision making are needed. There is an enormous amount of tracking, procurement, information technology development, and other routine cubicle work that needs to be accomplished in order to maintain effective and growing operations at Chevron, and it is far more cost effective for the company to hire workers in developing countries to handle this type of work than it is for the company to maintain large quantities of employees in the United States or Europe for this type of task. If the company did not outsource, it would have far less to spend on ongoing research and development or to spread the breadth and scope of its operations, and so would be a far less profitable company that would be less able to employ individuals in any country or capacity.

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