Understanding Cyclical Unemployment: Navigating the Ups and Downs of the Job Market

As scary as it may seem, unemployment is and has been part of what happens in the real world. There are several reasons behind it, such as lack of experience or skills, voluntarily leaving one to find another that’s better, and, most importantly, economic downturn. When there’s a sudden big shift in a nation’s economy, the employment rate will certainly be enormously affected. Businesses eliminate staff when economic activity is weak, which results in higher unemployment.

When COVID-19 hit us hard, many employees were laid off from their respective jobs. By and by, we were slowly settling into the new normal and getting back on track. We are again entering expansion, and more jobs are available. Did you know that this type of unemployment that we are dealing with during the pandemic period is cyclical unemployment?

Cyclical unemployment takes us to a new level and makes us realize why being unemployed is also a consequence of the economic cycle. Without further ado, let’s get through it. This article covers what cyclical unemployment is, the difference between structural and cyclical unemployment, solutions to cyclical unemployment, and how to get back in your career after a long time of being unemployed. Let’s delve in.

What is Cyclical Unemployment?

Cyclical unemployment is an instance of unemployment where labor force participation rates decline as a result of economic downturns or volatility. If you experience cyclical unemployment, it means that your employer laid you off in an effort to avoid spending money at a time when business isn’t as brisk.

Cyclical Unemployment Examples

As markets rise and fall, cyclical unemployment has frequently happened throughout history. Four instances of cyclical unemployment are provided below:

Severe Recession

During the 2007-2008 financial crisis, the housing market crashed. Borrowers were unable to repay their mortgage bills, and fewer people were able to obtain loans for new homes as a result. Builders stopped making new homes as a result. Real estate agents, architects, appraisers, loan agents, and approximately two million construction workers lost their jobs as a result of cyclical unemployment, contributing to the continuous rise in unemployment rates. Real estate prices did, however, rise as the economy improved and mortgages became more accessible to buyers.

Automobile Sector

Whenever there is a recession, including the financial crisis of 2008, the auto industry typically suffers. Most people spend a lot of money on vehicles; therefore, when the economy is bad, fewer people buy cars. Automobile dealers and manufacturers lay off personnel as consumer demand declines because they require fewer staff members.

Second World War

Mining and manufacturing jobs were in high demand and experienced high employment rates during World War II. However, as the need for equipment and supplies used during the conflict declined, production slowed after the war. Moreover, lots of people seeking employment returned from military service. Due to these circumstances, there was a brief recession and high unemployment rate.


The COVID-19 pandemic caused a significant slowdown in the economy in 2020. Due to consumers self-quarantining or following stay-at-home orders, a lot of businesses were compelled to temporarily close their doors. Numerous businesses cut staff as a result of business closures, declining sales, and dwindling consumer demand.

A Female Employee Losing Her Job Because Of Cyclical Unemployment
Understanding Cyclical Unemployment: Navigating the Ups and Downs of the Job Market 4

Structural Unemployment vs. Cyclical Unemployment: An Overview

Workers who lose their jobs during economic downturns experience cyclical unemployment. However, if unemployment lasts for an extended period of time, then it can result in structural unemployment.

Structural unemployment can be caused by a variety of circumstances, including economic changes, technological developments, and workers who lack the appropriate job skills. On the other hand, fluctuations in business cycles and a period of slow economic growth, known as a recession, can result in cyclical unemployment. In other words, low demand for products and services is typically what causes cyclical unemployment.

Types of Unemployment

Cyclical unemployment is just one of the many types of joblessness. To fully grasp the aspects of unemployment, below are its types:

Cyclical Unemployment

Cyclical unemployment is the variance in the labor force’s unemployment rate over the course of economic ups and downs, such as those resulting from shifts in the price of oil. Unemployment rises during recessions while falling during periods of economic expansion.

Structural Unemployment

Structural unemployment occurs when there is an imbalance between the number of open positions and the number of job seekers. This mismatch may exist because the accessible jobs are far away from the job seekers or because the available jobs require different talents and skills than the ones the job seekers possess.

In addition, structured unemployment generally lasts longer than other types of unemployment. This is due to the fact that it may take workers a number of years to gain new skills or move to a different area in order to find a job that fits their qualifications.

Frictional Unemployment

People are leaving their jobs voluntarily, which leads to frictional unemployment. Since it takes some time for those who have departed their jobs and recent graduates seeking their first jobs to find work, they are unemployed during that period. Nevertheless, this kind of unemployment is typically transient and occurs even in a strong economy as a result of people quitting their jobs in search of better chances.

Natural Unemployment

When frictional and structural unemployment combine, we have natural unemployment. This refers to the lowest degree of unemployment that a sound economy may maintain without sparking inflation. This kind of unemployment is perpetual because people are constantly actively seeking new employment (which results in frictional unemployment), and because job skill needs are constantly changing (which results in structural unemployment). The natural unemployment rate is influenced by factors like people leaving their jobs voluntarily and positions moving to other countries.

Cyclical Unemployment Solutions

Governments are responsible for the high unemployment rates in their nations. It appears that the government’s primary responsibility is to give every willing citizen of the nation a job rather than to exercise effective government. In restoring this, governments use a strategy called government spending.

Governments are typically the sole largest customers in each nation. In many developed nations today, the government sector accounts for approximately 30% to 40% of GDP. Governments can therefore change expenditure patterns and have a significant impact on them. They have the capacity to counteract these negative feelings with their own spending when consumer spending starts to decline and market negativity increases. Because of the scale of the government, any spending reductions made by individuals will be more than offset.

Therefore, the government increases expenditure in response to personal spending decreases, maintaining current levels of output and consumption and preventing job losses.

A Line Of Job Applicants Waiting For An Interview
Understanding Cyclical Unemployment: Navigating the Ups and Downs of the Job Market 5

How to Get Back on Track to Your Career?

Getting back on track after a long period of unemployment is not easy, so we have prepared a practical list to guide you:

1. Upgrade your skills.

It is necessary to demonstrate to your potential employer that you are knowledgeable about emerging technology or industry trends. Spend some time updating or acquiring new skills by enrolling in in-person or online courses. Additionally, you might volunteer or go to seminars. Another excellent way to keep up with the most recent trends in your field is to attend networking events. Utilize each of these chances to sharpen your talents and learn more about your field.

2. Revisit your resume.

Always make sure your job application tools are up to date. Add your most recent experience to your resume. Any new credentials, degrees, or abilities you have acquired since your last interview should be listed. All these need to be checked before applying for new opportunities.

3. Be adaptable.

Remember that you might not land the same job with the same responsibilities that you held before. For instance, even if the job descriptions don’t match the one you had in mind, be sure to thoroughly review them. Always be open to fresh opportunities when searching for new employment.

4. Let your message out.

Make sure everyone knows you’re seeking work. Inform your personal and professional networks, as well as your friends and family. You can share the news on social media or on your profile on a social networking site. Mention that you are looking for new possibilities and provide a succinct summary of your qualifications. Don’t be afraid to get in touch with former coworkers directly. They may be aware of an opportunity in their network.

5. Utilize job-search platforms.

To find available positions you’re qualified for, use online and local job boards, as well as employment agencies in your area. Make an appointment to discuss your application with recruiters. Increasing your exposure can improve your employment prospects.

6. Speak with social workers.

Social workers can assist you in comprehending the underlying causes of the challenges you are having in your job hunt. You can search more efficiently and perform better during interviews if your head is clear. They can help you with your unemployment benefit application. This can aid in reducing some of the stress associated with being jobless so that you can concentrate on your job search.

A Male Job Applicant Celebrating After Getting Hired
Understanding Cyclical Unemployment: Navigating the Ups and Downs of the Job Market 6

Get Back on the Job Market with the Help of Resume Professional Writers

Indeed, unemployment could happen to anyone; it might be due to economic development if you are aiming for a higher salary, or if you want to experience career growth. You do not need to let the day pass without doing anything.

Take this time to grab the opportunity and find your dream job by employing Resume Professional Writers’ resume writing and job posting services! Once you take ahold of your job-winning resume, our team of experts will post your document on more than 50 job board posting websites. To prevent data loss and theft, we treat all data with the utmost security. To discover more, get in touch with us today.

Leave a Comment

Seraphinite AcceleratorBannerText_Seraphinite Accelerator
Turns on site high speed to be attractive for people and search engines.