Political Calculations
January 12, 2009

The Economic Detective The December 2008 Employment Situation report from the Bureau of Labor Statistics did a lot more than just record big jobs losses between November and December 2008, it also revised virtually every employment figure going back to January 2004.

Because it did, we went back and revised our previous analysis of the employment situation for teens, or as the government defines them, those individuals counted as being employed between the ages of 16 and 19.

We'll begin by applying our statistical dating technique to the revised teen employment figures. Here, our goal is to first identify a period of relative equilibrium in teen employment numbers. Our measure of that relative equilibrium is the percentage representation of Age 16-19 employed individuals within the total number of employed individuals of all ages in the U.S.

When such a relative equilibrium exists, the percentage of working teens with respect to the whole U.S. workforce will be generally stable over time and the percentage of employed teens in any given month will bounce around a mean value as the result of natural variation.

We assume that those natural variations are random and will therefore fall into a normal distribution, for which 99.7% of all recorded values will be within three standard deviations of the mean value.

Magnifying Glass This gives us a tool that we can use to identify when that state of relative equilibrium is holding or has been broken. That tool is called a "control chart," which was invented in 1924 by Walter Shewhart of Bell Labs.

Today, Shewhart's innovation is in widespread use throughout the industrial world to measure and adjust production processes to ensure that manufactured products are produced to desired levels of quality. While control charts are used specifically where processes are controlled, the same methodology they provide for establishing whether observed changes in measured data over time are the result of natural variation (those that have common, or chance-driven causes) or are caused by determinable factors (those that have special or assignable causes) can be applied to non-controlled processes.

So, in our case, even though the percentage of teens within the U.S. workforce is very much not something that's the result of a controlled process, we can still get a lot of insight from using a tool very much like a control chart!

Age 16-19 Percentage of Total Employed, January 2005 through December 2008 Had enough discussion? Let's get to the chart showing the percentage of teens within the U.S. workforce from January 2005 through December 2008.

In considering this chart, we find a period of relative equilibrium in the percentage of teens with the U.S. workforce running from January 2005 through December 2006. During these two years, the percentage of teens within the total employment of the U.S. averaged 4.24%. Using the three standard deviation measure of the data, we can then define the normal distribution in which 99.7% of all observations would be expected to fall: between 4.10% and 4.38%.

We next note that the recorded data falls below this expected range in May 2007 with a value of 4.07%, and also that it stays below the lower end of the expected range thereafter, continuing in a largely downward trend. This observation tells us that something "broke." More than that, it tells us that the cause is not the result of natural variation, but instead, something not-natural caused the equilibrium to break. But when?

From that point in May 2007, we next go backwards in time to identify if we can clearly determine when that downward trend began. Doing so, we find the last peak in the data occurred in November 2006, at 4.27%. The data prior to this point is all within the expected range.

With the peak being above the average for the baseline equilibrium period, we next identify the first point to break below the mean, which we find to be January 2007's value of 4.21%. This tells us that whatever caused the previous equilibrium to break most likely did so between November 2006 and January 2007.

From here, the next step is to identify the potential suspects involved in causing to narrow down just what caused the percentage of teens within the U.S. workforce to begin plummeting from bouncing around an average value of 4.24% over a two year period all the way down to the most recent data for December 2008, where we find that the percentage of teens within the U.S. workforce has declined to 3.62%.

But before we can do that, we'll need to autopsy the victim....

Labels:



<< Home
Unexpectedly Intriguing!

About Political Calculations



blog advertising
is good for you

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations.com

Thanks in advance!

Recent Posts

OMM - The Best Blogs We Found in 2008

The Quants: Now, Then and Tomorrow

A Year of Disorder, With More to Come

Who Should You Invite To Your Wedding?

Stock Prices After Hitting Bottom

On the Moneyed Midways - January 2, 2009

Your 2009 Paycheck

The New Physics of Santa and His Reindeer

2007 US vs EU GDP-PPP Cage Match Contest

How to Pay for Stuff Without Working or Going Into...

Elsewhere on the Web

This year, we'll be experimenting with a number of apps to bring more of a current events focus to Political Calculations - we're test driving the app(s) below!

Most Popular Posts

The S&P 500 at Your Fingertips

The Distribution of Income for 2010: Individuals

Should You Trade in Your Gas Guzzler?

What Are the Chances Your Marriage Will Last?

Tipping Around the World

What's Your Body Fat Percentage?

The Odds of Dying, Again!

Gas Prices, the Unemployment Rate, and Desperation

Hauser's Law

The Real Story Behind "Rising" U.S. Income Inequality

Quick Index

First Time Visitor to Political Calculations?

On the Moneyed Midways

A Lot, But Not All, of Our Tools

U.S. GDP Temperature Gauge

Political Calculations' GDP Temperature Gauge, 2013Q1 First Estimate Political Calculations' U.S. GDP Temperature Gauge provides a means to quickly evaluate the growth rate of the U.S. economy against the backdrop of how the economy has performed since 1980, with the "temperature" color spectrum ranging from a recessionary "cold" (purple) through an expansionary "hot" (red).

The GDP Temperature Gauge presents both the annualized GDP growth rate as reported by the U.S. Bureau of Economic Analysis reports for a one-quarter period and also as averaged over a two quarter period, which smooths out the volatility seen in the one-quarter data and provides a better indication of the relative strength of the U.S. economy over time.

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

Visitors since December 6, 2004:

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

ZunZun - Exceptional regression analysis tool.
Wolfram Integrator - Solve integrals. Do calculus!
Create a Graph - Easy-to-use basic graph-making tool.
Many Eyes - Data visualization extraordinaire!
Wolfram Alpha - Computational knowledge engine.
Khan Academy - Math & science video mini-lectures!
Picasion - Animate images.


Archives
December 2004
January 2005
February 2005
March 2005
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
April 2006
May 2006
June 2006
July 2006
August 2006
September 2006
October 2006
November 2006
December 2006
January 2007
February 2007
March 2007
April 2007
May 2007
June 2007
July 2007
August 2007
September 2007
October 2007
November 2007
December 2007
January 2008
February 2008
March 2008
April 2008
May 2008
June 2008
July 2008
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
April 2009
May 2009
June 2009
July 2009
August 2009
September 2009
October 2009
November 2009
December 2009
January 2010
February 2010
March 2010
April 2010
May 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
April 2011
May 2011
June 2011
July 2011
August 2011
September 2011
October 2011
November 2011
December 2011
January 2012
February 2012
March 2012
April 2012
May 2012
June 2012
July 2012
August 2012
September 2012
October 2012
November 2012
December 2012
January 2013
February 2013
March 2013
April 2013
May 2013

Blog Roll

Bloodhoundblog
Budgets Are Sexy
Cafe Hayek
Carpe Diem
Core77
Coyote Blog
Craig Harper
Darwin's Finance
Digerati Life, The
Division of Labour
Dough Roller, The
Eclectecon
Econlog
Economics Roundtable
EconomicsUK
Environmental Economics
Escape from Cubicle Nation
Execupundit
FiscalGeek
Get Rich Slowly
Gongol
Good Financial Cents
HR Bartender
Hot Air
i4cp Productivity
Innocent Bystanders
Innovation and Growth
Instapundit
Intangible Economy
I've Paid Twice for This Already
Joanne Jacobs
Kaus Files
Len Penzo dot Com
Making Ripples
Market Power
Mechonomics
Mighty Bargain Hunter
Monevator
My Dollar Plan
New Economist
Newmark's Door
Nina Simosko
Physorg
Private Sector Development
Real Clear Politics
Richard Fernandez
Roger L. Simon
Rowan Manahan
Sound Politics
SOX First
Sports Economist, The
squawkfox
Three Star Leadership
Tim Worstall
Townhall
Trusted Advisor
Uncommon Misperceptions
voluntaryXchange
WILLisms
Winterspeak

Market Links

Big Picture, The
Crackerjack Finance
CXO Advisory Group
Disciplined Approach to Investing
Dividend Guy, The
Doug Short
Evidence Investing
Fat Pitch Financials
FX Investment Strategies
Oilprice

Charities We Support

American Red Cross
Children's Heart Foundation
Salvation Army
SMA Foundation

Recommended Reading

Kindle Paperwhite 3G - Best e-reader!
Angel in the Whirlwind
Bailout Nation
Cartoon Guide to Statistics
A Comprehensive Guide to the Peloponnesian War
The Complete Personal Memoirs of Ulysses S. Grant
The Count of Monte Cristo
Ender's Game
Gardner's Art Through the Ages
Empire of Wealth
How to Make Presentations to Councils and Boards
Juran's Quality Handbook
Marks' Standard Handbook
The Second World War
Stocks for the Long Run
Why Smart Executives Fail

Recommended Viewing

The Tudors: The Complete Series

Recently Shopped

Kindle Fire HD 8.9" 4G LTE Wireless 32 GB
Snap Circuits Jr. SC-100
Nerf Vortex Praxis
Sony BRAVIA 40" LED HDTV
2540 Series Docking Station
New Balance MX623
Dunham Men's Waterproof Oxford
TN360 Black Toner Cartridge
The Dangerous Book for Boys
Air Swimmer Remote Control Inflatable Flying Shark
Fisher-Price Little People Lil Pirate Ship

Seeking Alpha Certified