It comprises both the “frictional” unemployment of people who are temporarily between jobs or searching as they have reentered the labor force and the more “structural” unemployment of people whose skills or physical location are not a good match for the jobs available.
For more discussion, see Janet L. Yellen (2017), “The Goals of Monetary Policy and How We Pursue Them,” speech delivered at the Commonwealth Club, San Francisco, January 18, https://www.federalreserve.gov/newsevents/speech/yellen20170118a.htm. 5 Contemporaneous estimates of the natural rate (or “full employment”) from the late 1960s were lower than current estimates for that period.