Assessing Changes in the Labor Market

Brandon Sheridan, Elon University,
Author Profile

Summary

This exercise allows students to collect real data on a topic that is usually one of the most popular in a Macroeconomics course -- the labor market! Students will go beyond rote calculation and definitions to apply concepts and theories they have learned.


Context for Use

This activity can be used in Principles of Economics, Macroeconomic Principles, and Intermediate Macroeconomics courses. Simply adjust the difficulty level for your specific class and students. The exercise takes about 20 minutes and there are no class size limitations.

Overview

This exercise helps students improve their data fluency and analysis skills. Specifically, they will learn to work with original sources to find data and then make inferences about the economy based on that data. This particular exercise looks at the labor market, which is often one of the most popular topics amongst students. Students will be entering the labor market soon if they are not already working, and most of them usually have personal experiences with part-time employment, job loss, or job search that make them invested in this topic. This is an opportunity to add depth and nuance to their current understanding of the labor market using real data.

Expected Student Learning Outcomes

Students will seek out data on their own and learn how to properly analyze and interpret it. Students will move beyond a surface understanding of the unemployment rate to a more complete conceptual knowledge of the labor market.

Information Given to Students

Go to the Bureau of Labor Statistics website and find the following data (use seasonally adjusted numbers) for ______ and ______ (Hint: Start here):
- Previous = _________, Current = _________ Civilian, non-institutionalized population (in thousands)
- Previous = _________, Current = _________ Civilian Labor Force (in thousands)
- Previous = _________, Current = _________ Civilian Labor Force Participation Rate
- Previous = _________, Current = _________ Employed (in thousands)
- Previous = _________, Current = _________ Unemployed (in thousands)
- Previous = _________, Current = _________ Unemployment Rate
- Previous = _________, Current = _________ Employment-Population Ratio
- Previous = _________, Current = _________ Not in Labor Force (in thousands)
Next, describe what happens to the number of people unemployed and employed. Based strictly on this information, did the labor market improve or worsen during this period? Now, assume you have to present your outlook for the labor market to your boss – s/he wants to be able digest the main points quickly, so you are limited to selecting only two measures from the above data you collected. Consider how each measure has changed during the time period. Which measures would you choose to provide the most complete picture of the labor market to your boss? Rank the two most important measures, with 1 being the most important. Be able to defend your answer.
Follow-up: If you were allowed to use other data about the labor market to help support your argument, what data would you like to have? Why?


Student Instructions for Assessing Changes in the Labor Market (Microsoft Word 2007 (.docx) 14kB Aug24 19)

Teaching Notes and Tips

You can have students collect the data individually outside of class or as a group during class, as there are many variables here. This depends on how much instruction you want to give beforehand on how to find the data and how much class time you want to dedicate to the activity, inclusive of finding the data. I find it easier to have students collect the numbers outside of class. You can even divide the total number of variables to be collected evenly among the team members. Then, the first couple minutes of the activity can be teams checking that everyone found the same numbers and remedying any differences. In either case, I check to make sure everyone has the correct data before proceeding with the activity.
Plan ahead and choose time periods where changes in the labor market are ambiguous (time periods around recessions are a good place to start). Changes in the unemployment rate are not universally good or bad – this is not immediately obvious to students. It depends on what happens to cause the change. For example, the number of people unemployed can decrease while the number of people who are employed also decreases. Based on this, it's not readily apparent whether the labor market is improving or worsening. Less people unemployed is good, unless they are discouraged and dropped out of the labor force altogether. Less people employed does not sound good, but it could represent demographic change in which people feel comfortable retiring. This would be good for the retirees, but it presents challenges for the economy as a whole. It is also important to emphasize that while your key indicators are likely to persist from month to month, the supporting data may need to change. The context of the current state of the economy is important when choosing which data to focus on. It is also worth emphasizing a long-run vs. short-run perspective of the labor market.
The answers to the question will vary depending on what time period you choose. You may also decide to have them rank more than 2 indicators, particularly for an advanced class. For the follow-up question, you can either force students to choose from the measures they collected, or you can allow them to use data not included here. For example, the Job Openings and Labor Turnover Survey (JOLTS) often has a wealth of useful information about the current state of the labor market.

Assessment

I use the numbers from the April 2019 jobs report, which makes March 2019 the "previous" period and April 2019 the "current period." In a follow-up quiz or exam, provide students with a different set of numbers and ask a similar, if not the exact same, question. You can also change the mix of labor market measures that are allowed to use as justification. Explanations should make clear that the students understand the various measures of the labor market, why they are important, and what they mean within the context of the current economy.

References and Resources

1. NPR has a good article (or audio if you prefer) that specifically discusses the jobs report from April 2019.
2. BLS FAQ regarding how the government measures unemployment and other definitions.