Confusion about today’s labor market, anxiety about the future of jobs, a rapidly evolving economy and so many other reasons make now exactly the wrong time to diminish the government’s ability to collect and construct labor market data. But that is exactly what is happening, and may continue to happen.
Jonathan Schwabish at the Urban Institute catalogues the damage: In 2013, the Bureau of Labor Statistics (BLS), the principal agency charged with producing information on the labor market, received $41 million less from Congress than the president requested. Statistics on mass layoffs — an important source of information about the behavior of businesses facing sharp reductions in demand — were eliminated. In 2014, facing a gap of nearly $22 million, BLS pulled back on the Quarterly Census of Employment and Wages, a vital pillar supporting our ability to know detailed information on how many jobs and businesses the economy is supporting and how much workers are earning. The same year, BLS continued to produce information on import and export prices — from which we know how the United States is performing in international markets — by the skin of its teeth.
For fiscal 2016, which begins in October, the Senate wants to cut BLS’s budget. In a letter sent last month to the chairman of the Senate Appropriates Committee, the director of the Office of Management and Budget laid out the consequences: “Under the bill BLS would have difficulty continuing to operate its core programs and would need to permanently eliminate surveys as a result.”
“Permanently eliminate surveys.” That’s a big step in the wrong direction. Instead of cutting funding and cutting surveys, Congress should appropriate funds sufficient for BLS to expand its existing operations.
Why? The Federal Reserve needs high-quality information on prices, jobs and wages to set interest rates, which affect the decisions of businesses and households throughout the economy. (For example, I bought a house not too long ago, in part because interest rates were so low.) The Fed has to make economy-influencing decisions regardless of the quality of the labor market information it receives, so let’s err on the side of high-quality statistics.
Are we becoming a nation of freelancers, living in a new “gig economy?” Data on the share of workers who are self-employed and who hold multiple jobs suggests no, but those of us in major cities see Uber-type businesses springing up all around us. We need better information on all the ways workers earn a buck. Such information would help policymakers decide whether it’s really necessary to create new safety net structures that don’t run through employers for health care, retirement and unemployment. And if you’re deciding whether to turn your car into a cab for the weekend, being able to log on to BLS.gov and see why, when, where and how others have done that — and how much money they made doing it — would be very helpful.
Should you be worried that a robot might take your job? Adding more detailed information on job tasks, work hours and occupation to BLS’s existing suite of information would help answer that question and would help policymakers figure out how to mitigate the damage from the rise of the machines. Creating new data products that follow the same workers over the course of their careers would be even better.
BLS’s index of consumer prices is used to make changes in the federal income tax structure, directly affecting American taxpayers. Private charities and community service organizations use BLS data to study volunteering in the hope of increasing civic engagement. Businesses need information to understand local labor markets as they decide where to open new stores, where to expand operations, how to hire workers. Citizens should make better use of job-market information in deciding where to live, what subject to major in in college and when to make career changes. The “new data journalism” makes lots of beautiful charts about the job market — from where do you think all those data come? The charts on Twitter and Facebook aren’t plucked from the data tree.
Do you think government policy is hurting Americans and generating multiple unintended consequences? Or do you think policy is effective and efficient? You can’t demonstrate either without good data. If better policy is your destination, then better data is your map. I’m sure I don’t have to convince you that there are many policy questions facing government and business enveloped in fog. One thing they all have in common is their thirst for data, the beam of light that penetrates the clouds.
Yes, yes, I know: If these data are so valuable, then why won’t the private sector provide them? Far fewer private citizens and firms would disclose sensitive information to a private organization than to BLS, so privatization would make the price of collecting these data soar and their quality plummet. And even if firms would pay the price, the government still needs data, and it would end up purchasing a vastly inferior product at great expense with taxpayers’ hard-earned dollars. The Founding Fathers knew that government would require information, and they authorized such collection in the Constitution. This ain’t new.
The BLS commissioner, a former colleague of mine, plans to use the president’s budget request, should it be appropriated by Congress, to improve monthly data on labor market dynamics — how many workers were hired and fired, the number of job openings and the like — and to add questions to a monthly survey about alternative work arrangements, flexible schedules and work-life balance. Important stuff. In addition, the commissioner would like to use some of the funds to increase our understanding of poverty, an undeniably important use of funding on a topic about which we simply need more information.
This Washington battle over data isn’t new: A few years ago, House Republicans tried to eliminate two vital Census Bureau products. And those who want to cut back have reasonable arguments: Privacy concerns should be taken seriously, and conservatives should be looking for areas to cut federal spending. But conservatives should rest assured that the federal statistical system takes privacy protection extremely seriously — too seriously, in the opinion of many economists — and that the current protections are working.
Saving money by reducing information is penny wise and pound foolish. Large, global forces and the quick march of technology and culture are making the economy and the labor market increasingly more difficult to understand. More information is needed, not less. Providing that information is one of government’s key functions. It should receive funding commensurate with its critical mission.
CORRECTION: This post initially stated the wrong month as the start of the federal fiscal year. It is October, not November.