Shortsighted Cuts to the Bureau of Labor Statistics Inhibit Meaningful Policy
In his recently released memoir, The Courage to Act, former Federal Reserve Chairman Ben Bernanke describes a moment in the fall of 2013 when he had enough. The House and Senate were on the precipice of shutting down the government, which would result in—among many other things—a delayed release of the U.S. Bureau of Labor Statistics, or BLS, monthly jobs report. The Fed was deliberating when to begin reducing monthly bond purchases, and the chairman knew that having accurate jobs data would be integral to making the right decision. Concerned by the delay, he reached out to Labor Secretary Tom Perez to see if the Fed could cover the report’s costs and ensure its timely release while the government was shut down. Secretary Perez confirmed that this would not be viable.
The Fed’s willingness to front the money for data collection during the 2013 government shutdown provides an acute reminder of just how essential good labor market data are. As Bernanke writes in his book, “formulating effective monetary policy requires timely information.” Sadly, this lesson continues to be lost on Congress: In recent years, legislators have routinely underfunded the BLS.
As the government’s principal data collection agency, the BLS gathers data on wide-ranging topics, including employment, inflation, prices, production, and workplace safety. These data help policymakers and economists assess trends and analyze business cycles at the federal, state, and local levels and guide economic policymaking. The Federal Reserve, for example, uses BLS data collection to inform its interest rate policy, which can have an outsized effect that lasts years, if not decades. Good data collection, therefore, is invaluable for effective policy execution.
Unfortunately, as has been well documented, the BLS’s inflation-adjusted budget has been cut 11 percent, or nearly $67 million, over the past five years. Since 2010, the bureau’s funding shrunk an average of 2.3 percent per year. These budget cuts have continued even though the Obama administration has consistently requested expanded BLS funds in its annual budgets. The BLS received $154 million less than what the administration requested from 2011 through 2015, an average cut of more than $30 million per year.
Congress is now poised to scale back the BLS’s appropriation even more during the next fiscal year. The Senate could cut funding even further below the 2015 levels; the House, while not imposing additional cuts from the previous year, has announced a funding level far below both the agency’s inflation-adjusted 2010 budget and the administration’s request.
The cumulative effect of these cuts has already forced the BLS to trim its existing and planned work. In 2014, for example, the BLS was forced to narrow the scope of the Quarterly Census of Employment and Wages, or QCEW, in order to “protect other, more critical programs.” The bureau also had to find a one-time payment to cover the International Price Program Export Price Indexes—a key metric for determining national trade imbalances and gross domestic product that requires a consistent funding stream. These examples demonstrate that under existing funding constraints, the BLS will not be able to sustain its core competencies.
Even worse, the appropriation bills that are presently on the floor of Congress would almost certainly reduce the scope and ambition of the BLS’s more recent objectives.
For example, the BLS wants to create an annual Current Population Survey supplement on pressing economic issues. The agency plans to restore and revamp surveys examining contingent work—also known as temporary employment—as well as flexible scheduling. Scholars across the political spectrum have called for more data on the “gig economy.” These supplements would allow policymakers and economists to further explore alternative work structures and workers’ schedules. In addition to growing our understanding of the changing nature of work, accurate data on these types of employment would also help policymakers ensure that workers’ benefits are properly structured and their rights are respected.
Additionally, the BLS intends to expand data collection on job vacancies through the Job Openings and Labor Turnover Survey, or JOLTS. The expanded data would give policymakers a better sense of the pace at which workers enter and exit the workforce, which economists refer to as churn. The BLS aims to use additional funding to deepen JOLTS in order to provide a richer and timelier picture of what is going on in states and industry. More comprehensive and granular JOLTS data would prove enormously beneficial, allowing policymakers at the state and federal levels to see the sectors in which demand is growing or labor needs are not being met. It might even be able to predict potential market downturns.
The BLS also hopes to enact a series of technological advancements to improve data interoperability and specificity. Much of the information that the bureau has collected to date is not broadly interchangeable with other surveys. The BLS wants to change this by establishing statistical record linkages, allowing the bureau to combine multiple data sources. The BLS is also working on text analysis technologies that can review surveys and field notes and identify variables across data files, such as new emerging occupations or skills in the labor force. A fully funded bureau might also be able to integrate data files from other federal agencies, such as the U.S. Census Bureau. Implementing these technologies would enhance BLS collection efforts, resulting in more real-time data on labor market dynamics. Moreover, it could reduce the redundancies that currently exist in massive data collection efforts, while simultaneously improving data quality.
More sophisticated data collection could help policymakers improve the accuracy of wage and employment metrics, expand data on American competitiveness and trade, and offer a more comprehensive look at job vacancies. Continued BLS budget cuts endanger the public’s access to important economic information. In an age when data is becoming more valuable and important for policymaking and business operations, as well as consumer choice, these cuts are difficult to justify.
Evidence-based policy and strong data collection efforts are objectives that reach beyond ideological boundaries. Americans should demand more data, not less. With enhanced data, public officials can more accurately tailor their economic policies to spur stronger and more sustainable outcomes for job seekers, employers, and other stakeholders. Even if members of Congress disagree on how to create jobs, they should at least agree that they cannot debate their plans without comprehensive data on labor market conditions.
Ethan Gurwitz and Alex Rowell are Research Assistants with the Economic Policy team at the Center for American Progress.