If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.- Winston Churchill
These troubling times give a whole new meaning to the term dismal science, but all this despair brings lots of opportunities for teaching. Aside from the obvious moral lesson in the person of Bernie Madoff, as with most economic catastrophes, this one brings a lot of data, and in that data can be some great lessons for your kids. Here is a recent post from Flowing Data, an infographics blog. It originated at The Big Picture. While Flowing Data is suitable for students, The Big Picture is run by a Wall Street type, whose language can be blue in keeping with his milieu, so be forewarned.
The post features four different line graphs about unemployment in this, and past, recessions. Looking at them there can be a great lesson in critical thinking. I’m going to show the graphics, and share some thoughts of my own about each at the bottom. I would NOT teach based on the notes at the bottom, but instead, see what your students can dig out of it. You may notice things of interest in this that I’ve missed, I only provide commentary to get your thinking rolling.This first one from Time Magazine shows job losses in recent recessions.
Graph number 1 has only recent recessions on it, so it’s missing some of the context that some of the next graphs have. It is also comparing based on numbers, rather than the percentage of the population. Since it is only looking at recent recessions (1990, 2001, now), the population figures have some growth (~13% between 1990 and 2000) this can cause some problems in comparing the numbers, but we’ll see in some of the other graphs with older data, this is a big difference.
Graph number 2 looks at percentages, and goes back to all recessions in the post-WWII era. this gives context, and by using a percentage, makes it a comparison of apples to apples (as opposed to apples to kumquats). Two things stand out — the job loss is still not as severe today as in 1940s and 50s recessions, but there is also a trend towards recent recessions lasting longer, so we may not even be at the mid-point yet.
Graph number 3 is similar to number 2, but it looks at job loss numbers like graph number 1, and you can see how that skews things quite a bit when you compare historic data
And finally, g
raph number 4 uses 100 as a baseline for peak employment, so it’s like it’s looking at percent of employment rather than percent of unemployment, but it can go above 100 because employment can be higher than it was at the peak. This was very confusing for Bill, my editor, so here is how I explained it to him:
Let’s say you are a sales person paid on commission, and your salary is one line. Your salary hits a peak of $100,000, then drops at the recession starts. 100 is equal to your peak salary. Your salary begins to free fall for about 12 months, so that it ends up at $50,000. You would then be at 50 on a 100 point scale. Then it starts going back up, at 18 months, you’re back to $75,000 (or 75 on the scale). There is a recovery and at 24 months, you are exceeding your old salary, and you are up to $125,000 or 125 points on the scale.
Then let’s say another line is your smarter, but less well-paid older brother. He has a PhD, but he’s an adjunct professor (lecturer) at local community college. He manages to take home $50,000 before the recession hits state education budgets. So that month his salary is 100 points. It drops rapidly too, hitting $25,000 in six months which will put him at 50 points (half his peak salary), and then drops to $10,000 which is 20 points at 12 months. Stimulus money to the state arrives just as the food stamps do for old bro, and he shoots back up to $50,000, or 100 points at 18 months, when the local university goes on a hiring spree for retraining. The lines would looks similar (with some differences) for both of you, even though the “real” dollars earned is not the same. This is good for comparing numbers that are not apples and apples, like the number of people employed in 2007 versus those in 1981, but unlike percent of employment, you can exceed 100, if your employment level goes above where it was at the start of the recession which is what you want to happen. The other graphs show something like this by showing the job losses as negative percentages, and job gains as positives. This is a sophisticated way to represent things, but can be confusing, right Bill? Let’s hope that helps us get our thinking caps on. Please let us know if this helps explain things to your students! -ALICE MERCER
4 Different Looks at Job Losses During Recessions via FlowingData
Related stuff:
Marketplace explains the credit crisis as an Antarctic expedition
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