Category Archives: Employment

Some thoughts on data visualization and Oregon’s unemployment

Economists often have something interesting to say.  However, they often do a terrible job of making their points in a way that those outside of economics can understand.

For some time, I’ve developed an admiration for the approach preached by Edward Tufte. He is widely considered a pioneer in the field of data visualization—also know as making-tables-and-graphs.

I won’t go into Tufte’s approach here, but I thought I’d show how using his approach can radically improve the presentation of economic data.  In this example, I’m trying to show Oregon’s unemployment record relative to the rest of the U.S.

This first figure, below, shows unemployment for Oregon and the U.S. as a whole.  The chart was made in Excel by highlighting the three relevant columns (month, Oregon unemployment, and U.S. unemployment) and clicking the line chart button.

The result is a standard ugly Excel chart.  Even worse, it does not tell an especially interesting story about Oregon’s unemployment.  Oregon seems to have slightly higher unemployment than the U.S. as whole, but also seems to track U.S. unemployment fairly closely. Big whoop.

The problem with the figure above is that it does not say anything about unemployment in the other states individually.

The next set of figures use a much bigger dataset.  It reflects the unemployment rate for each state in each month from January 1976 through October 2012. That’s more than 22,500 observations.

The figure below is better, but not much better.  Oregon’s unemployment is the heavy black line.  The gray background represents the range between the state with the highest unemployment and the state with the lowest unemployment.

Notice that the graph removes much of what Tufte calls “chart junk”—a frame around the graph, ugly and unnecessary gridlines,  a legend, and the month of “Jan” in the x-axis.

While the graph above is much cleaner and better looking, it is fatally flawed.  With a few exceptions, Oregon looks to be in the middle of the range of unemployment rates across the states.

I know this is not true.

In fact in 213 out of 442 months (48 percent of the time), Oregon has been in the top 10 for high unemployment among the states.  The figure above does not adequately show this fact.

The figure below is a major improvement.  It shows the percent unemployment for each state represented by tiny gray dots, with Oregon represented by the red dots. (I would have preferred a red line for Oregon, but Excel layers dots over lines. Thus a red line would be “under” gray dots and looks amateurish.)

With the figure below, it is easier to see the point that I am trying to make: Oregon’s unemployment tends to be among the worst in the country for many points in time.  This can be seen pretty easily in the years 2001 through 2005.  But the point is not as well made in 1981 and 1981 when Oregon’s unemployment was the fourth or fifth highest in the U.S.

The figure below is another improvement.  The black line is Oregon’s unemployment (the black line is darker than the gray dots, so Excel’s layering problem goes away.)  The red dots represent months in which Oregon’s unemployment is in the top 10.

While the graph is much better and makes the point I was looking to make, something about it bothers me and I feel it is cluttered.

The fact that Excel does some weird thing that makes it look like there are white gridlines really bugs me.

Here we go. One last improvement.

In the figure below, I went back to the gray background representing the range between the state with the highest unemployment and the state with the lowest unemployment. The black line is Oregon’s unemployment and the red dots represent months in which Oregon’s unemployment is in the top 10.

The final figure seems to best make the point I was trying to make.  We see Oregon’s unemployment, we see the range of unemployment among the states, and we see how often (and when) Oregon’s unemployment was among the worst in the U.S.

The exploitation of economists

I came across this job posting today:

0.5 cents per word. Localizing Small Business and Economic Reporting
Job Description
Or submit your best offer to write for local businesses. Be relevant to independent entrepreneurs to fire up the engines of small business owners. Write series and collections. $5 per 1000 word articles; 5 topics minimum. Magazine style content writing. You pick the category that interests you the most.

Yes, that’s right—one-half of one cent per word!

By way of comparison, L. Ron Hubbard started Scientology because he said, “Writing for a penny a word is ridiculous.” That was in 1948, when a penny was worth almost ten times what it’s worth now …

Don’t break out the bubbly over Oregon’s income growth

There seems to be a bit of back slapping here and there about last year’s personal income growth in Oregon. Oregon was ranked 15th in personal income growth among the United States and the District of Columbia. That ranking just barely puts the state in the top third in terms of personal income growth last year. As shown in the table below, Oregon’s personal income growth per person was 4.4 percent while the US as a whole saw growth of 4.3 percent.

On the one hand, it’s easy to laugh at those who get overly excited about one-tenth of one percentage point.  On the other hand, as Robert Barro points out, “increases in growth rates by a few tenths of a percentage point matter a lot in the long run and are surely worth the trouble.”

The key qualifier is “in the long run.”

Over the long run, Oregon’s personal income growth per person has lagged the rest of the US by two to four tenths of a percentage point.  It’s not enough to notice from year-to-year, but the impacts compound over time.

At the end of World War II, Oregon’s per capita personal income was 8.5 percent higher than the US as a whole.

In the 1950s, Oregon’s personal income growth could not keep pace with the rest of the US and by 1960, the state’s per capital personal income was the same as the US as a whole.  The recession of the early 1980s hit Oregon particularly hard, and income growth never seemed to recover.  Even during the dot-com boom, Oregon’s personal income did not keep pace with the rest of the US.

Last year—even with the one-tenth of one percentage point advantage—Oregon’s personal income per person was 9.0 percent lower than the US as a whole.

Even the tiniest drags on the economy can compound over time such that a state that begins almost nine percent richer than the rest of the country can end up decades later being nine percent poorer than the rest of the country.

Per Capita Personal Income Growth, Oregon vs. US

(Average Annual Growth Rate)

Oregon

US
1 Year

4.4%

4.3%
5 Years

1.8%

2.0%
10 Years

2.6%

3.0%
20 Years

3.7%

3.8%
30 Years

4.3%

4.5%
50 Years

5.7%

5.9%
Since End of WW II

5.2%

5.5%

 

New study: Job opportunities have dried up for young men with a modest education

Males with no more than a high school degree represent about 25 percent of workers aged 20 to 29. At the same time, female workers with the same level of education comprise only 15 percent of workers aged 20 to 29.

Even so, it is the male workers in this age range who are responsible for most of the increase in the unemployment rates of younger workers.  Much of the increase in unemployment seems to come from the decline in construction employment opportunities.

The complete study is available from the Federal Reserve Bank of Cleveland.

 

New study: A right-to-work law in Oregon would give a big boost to employment and incomes

In Oregon, employers can have an agreement with unions that make union membership—and the payment of union dues—an employment requirement.  Refusal to stay in the union or to pay dues can result in termination.

Right-to-work laws provide job seekers the right to work for an employer whether or not they choose to join the union. Twenty-three states have right-to-work laws, with Indiana enacting its legislation yesterday. Research has found that as a group, right-to-work states have enjoyed more rapid employment growth, better job preservation, and faster recoveries from recession.

A recently released study from Cascade Policy Institute examines the impacts right-to-work legislation would have on Oregon. The study is consistent with the vast majority of peer-reviewed research in finding that if Oregon were a right-to-work state, we would see improved employment and income growth. For example, if Oregon enacted right-to-work legislation this year, in five years, the state would have 50,000 more people working than if it maintained the status quo. Similarly, in five years, Oregonians would have $2.7 billion more in wage and salary income by enacting right-to-work legislation.

The study is Fruits, E. and Pozdena, R. J. (2012). Right-to-Work is Right for Oregon: A Comprehensive Analysis of the Economics Benefits From Enacting a Right-to-Work Law. Cascade Policy Institute.

Economists enter the solar wars: Estimates of big job losses associated with steep tariffs on Chinese solar products

An economic analysis prepared by The Brattle Group and released today finds that a 100 percent tariff on imported solar PV cells and modules from China would result in the loss of tens of thousands of US jobs three years.

According to The Brattle Group’s analysis, the imposition of tariffs will “slow the growth in domestic demand for photovoltaic systems by homeowners, commercial establishments and power producers, resulting in substantial job losses.”

The study, commissioned by the Coalition for Affordable Solar Energy (CASE), examined the impacts that imposing a 50% tariff or a 100% tariff would have on the U.S. solar industry through 2014.

According to the study, a tariff of 100% would result in:

  • Consumer losses between $698 million and $2,620 million.
  • The elimination of 16,917 to 49,589 American jobs over the next three years.

 

Oregon Employment Department’s forecast of employment through 2020

The Oregon Employment Department’s 2010 to 2020 industry employment forecast predicts:

  • Total payroll employment will grow by 18 percent over the decade, adding 298,000 jobs to Oregon’s economy.
  • Oregon’s private sector will grow by 20 percent between 2010 to 2020. Oregon’s private-sector employers are expected to increase their payrolls by 275,600 jobs over the next 10 years, accounting for 92 percent of all new jobs in the state.
  • Government payrolls will expand by only 7 percent over the decade.

Oregon and Washington minimum wage increases in New Year may hurt more than they help

2 Replies

Eight states will begin the New Year with a higher minimum wage under state laws that mandate minimum wages increase with inflation. Washington State will become the first state in the nation to set its minimum wage above $9 an hour. Oregon’s minimum wage will follow closely behind with an increase to $8.80 an hour.

The minimum wage is a textbook example of a price floor resulting in too many workers chasing too few jobs, especially among those applicants with the fewest skills.  The result is higher wages for those who get a job, but no jobs for many who are seeking employment.

Statistical research on Oregon and Washington’s minimum wage increases finds that the states’ higher minimum wages have, on net, a negative impact on employment and wages.

Higher minimum wages in Oregon and Washington are associated with reduced employment: Oregon and Washington’s higher minimum wages are associated with a statistically significant reduced probability of being employed.

Younger members of the labor force are more likely to be adversely affected by increases in the minimum wage: Oregon and Washington indexing policies produce annual increases in the minimum wage that, in turn, are likely to increase unemployment, especially among the young. The table below shows the impacts of higher minimum wages on youth unemployment over time. As Oregon and Washington’s minimum wages increased over time relative to the federal minimum, the states’ youth unemployment increased relative to what it would have been otherwise.

Higher minimum wages have no statistically significant impact on wages of Oregon and Washington hourly wage earners: Some proponents of higher minimum wages argue that the increases have a “ripple effect” for employees just above them on the pay scale.  However, statistical analysis of Oregon and Washington does not find any “ripple effect.” Indeed, controlling for employment impacts, increasing minimum wages has no statistically or economically significant impact on incomes.

Bottom line: Minimum wage indexing seems to impose employment costs with no measurable income benefits.

For more information on data and statistics, please see Fruits, E. (2009). The Impact of Minimum Wage Indexing: Employment and Wage Evidence from Oregon and Washington. Employment Policies Institute.