Cyclical unemployment is typically a direct result of the economy being bad. In other words, when the total output (Y) of the economy is less than its total potential output (Yp).
Cyclical unemployment (Uc) is the unemployment that results from negative changes in the economic environment.
How to calculate cyclical unemployment percentage (Uf%)
Scenario: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
To solve for Uc%, we are going to use the following formula:
Uc% = Total # Laid-Off Because Bad Economy / Labor Force
In the example, we can see 4 people were laid off because of the economy...
Situation: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
...which we can plug in like so:
Uc% = Total # Laid-Off Because Bad Economy / Labor Force
Uc% = 4 / Labor Force
In Crammerville, we have 100 workers in the labor force...
Situation: Crammerville's population is 120, containing 5 children. The labor force 100 has workers: 90 of which are working, 2 just quit their jobs, 1 was just fired, 1 recently entered the labor market, 4 were laid off because the economy was bad, and 2 have been unemployed for 5 years because they have no marketable skills. The remaining people of Crammerville who are not in the labor force wish they had a job, but have given up looking.
...which can be plugged in like so:
Uc% = Total # Laid-Off Because Bad Economy / Labor Force
Uc% = 4 / 100
Uc% = Total # Laid-Off Because Bad Economy / Labor Force
Uc% = 4 / 100
When we solve, this results in a cyclical unemployment percentage of 4%!
Uc% = Total # Laid-Off Because Bad Economy / Labor Force
Uc% = 4 / 100
Uc% = 4%
