First They Came for the Data, and I Said Nothing…

February 25th, 2014 at 1:09 pm

See this seemingly innocuous notice over at the Bureau of Labor Statistics website:

On Friday, January 17, 2014, President Obama signed into law the Consolidated Appropriations Act, 2014.  The Act provides $592.2 million in funding to the Bureau of Labor Statistics (BLS) for the fiscal year (FY) 2014 that began October 1, 2013.  This funding level is $21.6 million below the FY 2014 President’s Budget. In order to achieve the necessary savings for this funding level and protect core programs, the BLS is taking the steps listed below:

  1. Curtail the Quarterly Census of Employment and Wages (QCEW). The QCEW program provides national, State, metropolitan statistical area, and county data on monthly employment and quarterly total wages and the number of establishments, by 6-digit North American Industry Classification System (NAICS) code and by size of establishment. The BLS will achieve savings largely by reducing the scope and frequency of collection for select units in the QCEW survey that is used to validate and update the NAICS code of business establishments. This will result in a small degradation in the quality of QCEW data and make the QCEW slightly less accurate as a sampling frame.
  2. Curtail the International Price Program (IPP). IPP Export Price Indexes measure the price change of goods and services sold to foreign buyers.  The BLS will discontinue production and publication of its Export Price Indexes.  These indexes currently are used in the production of National Income and Product Accounts and in the calculation of real Gross Domestic Product.  In addition, these indexes are used to help understand trends in U.S. real trade balances and competitiveness and issues such as the impact of exchange rate movements.

The QCEW provides critical benchmarking data to the monthly payroll survey so an even slightly “degraded” sampling frame will potentially reduce the accuracy of the payroll survey as well.  And in a world were inputs are increasingly globalized/outsourced, we need more, not less information about import pricing.

Furthermore, I know of no agency that’s better, more efficient, more insulated from the ugly politics of this benighted town than the BLS.  Double furthermore,  $22 million is 0.0006% of current outlays, so…um…it ain’t exactly the problem.  The whole damn agency budget, as per above, amounts to just 0.02% out 2013 outlays ($3.45 trillion).

Yes, today’s political economy debate is not anywhere close to data driven, though it should be.  And I don’t want to be alarmist–BLS will still produce highly useful information.  But even a scratch to the integrity of our data system should not go unnoticed.  It is foolish and counterproductive, unless, that is, facts make you uncomfortable.

(H/T: DH)

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11 comments in reply to "First They Came for the Data, and I Said Nothing…"

  1. Dave says:

    These seemingly small moves, when followed back to their original source, provide a very clear indication of the largest enemies of freedom.

    The Kochs have turned this into an information game, aided by a bunch of other power-hungary wealthy people. It is impossible to know precisely how this kind of change makes it into an agreement signed by the president, but it should be clear that small changes like this are easy for a busy person to ignore.

    The president needs a team of personal investigators to trace back the source of these small changes. I know a lot of people think they know the cause of this stuff, but the data showing specifically who originates this stuff is vital to get the picture.

    We can see it from out here. I’m sure it is hard to see it from inside the white house. Lew seems like a good guy, doesn’t he? Hugh!

  2. smith says:

    $20,000,000 I’m guessing at around $100,000 a job is 20 people and 3% of the over 1/2 billion dollar budget. Over a three year period this could be done with attrition, but I’m guessing probably not the way it’s be done. Also what are the productivity gains that could be used going forward to make up for the loss of funds without actually cutting programs? Again, I’m guessing that’s not be considered, a cut in funds means a cut in budgeted programs, you can’t budget productivity gains in advance. So I was going to guess 5,000 people must work there based on the $600 million budget, but the wiki article says 2,500. What I’d like to know is the average salary, I’m guessing it must be north of $100,000. Either that or there overhead is way to high. Also, do they use contractors? Do they outsource their IT? How much do they spend each year on new IT systems which should reduce costs.

    Cutting the BLS during an economic crisis is like cutting the Army during wartime. It’s crazy and no one does it, just the opposite of course.

    • Adam says:

      I used to work at BLS. Most staff are GS-12 ($75k), first-line supervisors are GS-13 ($90k). I’m not sure what you mean by too much overhead – the BLS mainly conducts surveys and surveys are very, very expensive. There are contractors but certain positions can never be contracted because of privacy regulations for survey respondents’ data.

      • smith says:

        What I mean by too much overhead is this. Labor is the most expensive cost so lets do some back of envelope calculations.
        Why did say I was surprised to see wikipedia list 2,500 employees instead of the expected 5,000 based on $600,000 budget?
        If you make a spreadsheet and start with 2,000 employees making $75,000
        Figure actual cost of benefits and overhead is 1.5 times that amount, $112,500
        Multiply that out, it comes to $225,000,000 ($225 million)
        To supervise them, give them a boss making $25,000 more for every 5 workers.
        Use the same 1.5 multiplier, and give every 5 bosses a boss, with $25,000 increased pay.
        You get the top guy making $200,000, with only 3 direct reports, then 16, 80, 400, 2000.
        That’s the 2,500 employees. Multiplied out, it comes to $305 million/year.
        Where’s the other half going?
        I’m guessing contractors to conduct surveys, and contractors and consultants to handle heavy data demands. Perhaps it’s the surveys and it might be true sometimes you need a whole lot in a hurry, but not continuously, set up in call centers, economies of scale, the government can’t go into the survey business and sell down time to marketing customers, unlike private industry. However, anytime contractors are involved, and the dollar amount is so large there must already be economies of scale within the government entity, and knowing there has been political bias and pressure to privatize, shed government employees, questions are raised. The other black hole of budgeting is often I.T. and unlike survey personnel, they are hugely more costly when contractors. I’ve had personal experience in both areas, both at once (IT for surveys for Fortune 500 companies).
        (using rule of thumb 1.5 multiplier probably overestimates total cost for high wage employees even including items like office space )
        Especially true if the expensive surveys are done in house by government employees (which I’d favor), makes me ask, where is the rest of the money going?

  3. rjs says:

    saw that earlier…my first thought is how do they figure real GDP without that? BEA doesnt do its own price surveys, they source from BLS..

  4. Steve Bannister says:

    This is utter idiocy. They should not mess with the data.

  5. Tammy says:

    I laughed reading your title. I know the implication but appreciate your wit.

  6. readerOfTeaLeaves says:

    Tragically myopic.

    I think anyone reading here could check the Google App Store, as well as the Apple App Store, to see what a phenomenal benefit a simple, well-made smartphone data app can provide. But data has to be collected before it can provide value.
    No data = no value.
    More data, clearly presented = more value.

    I’m pretty sure that my iPhone US Census ‘America’s Economy’ app was free.**
    Ditto my iPhone UN Country Stats app.
    And that doesn’t mention the benefits of data apps for my tablet, among which Wolfram Alpha’s US States Reference app only cost about $5 US, and has plenty of value for me.
    Data apps work smoothly, save me time, are cheap, and handy.

    IOW, in an era when stats are extremely useful and delivered literally ‘in the palm of your hand’, cutting out programs that generate quality data is myopic. The Chamber of Commerce would gain credibility with me if they were hopping mad about cuts like these.

    (As a digression, I’d add that the US Census is doing a terrific job of developing apps and making them available for mobiles. They really are to be commended. I don’t find BLS in my App Store search; if they offer apps for iPhone, I can’t find them. In an era when so much business is driven by ‘metrics’, it’s a symptom of failed leadership if the public side lags by failing to collect, make available, and archive data.)

    ** (In my case, I use iPhone -partly because AT&T is pricey but it works, but also because Apple’s App Store is extremely useful, whereas the Android stores seem more ‘iffy’. However, my point is that smartphones now simplify locating and using data. This is a tragically bad moment to cut data collection.)

  7. Perplexed says:

    “The Act provides $592.2 million in funding to the Bureau of Labor Statistics (BLS) for the fiscal year (FY) 2014 that began October 1, 2013”

    So who gains by our having less and lower quality data to save so little?

    But, maybe more importantly, how, and why, do we spend almost $600 million every year just at the BLS and still not have a clue what portion of our economy is made up of rents and how they are distributed? The integrity of the data is important but having the right information to make good decisions is much more important.

  8. Dave says:

    Just a summary of things I’ve said before on the capital/debt imbalance with regard to the trade imbalance:

    1) We have a bad trade deficit, largely caused by trade with China, which causes them to buy up our treasury bonds
    2) At the time the housing bubble began to form, we had a large amount of savings in the US in the money markets looking for a place to go. If the Chinese hadn’t bought our treasures, more of it could have flowed into there directly, but it isn’t clear that this would have solved the problem, because of 3.
    3) Shadow banking, AAA-rated MBS securities combined with using foreign banks as middle men allowed those excess savings from money markets to flow into housing, creating the bubble.
    4) MBS securities always yield better than long-term treasuries, so once they got a AAA rating, they were preferred to treasuries anyway. The question is, what would have happened if we didn’t have the huge trade deficit?
    5) The answer to 4, I believe, is that treasury yields would have demanded a premium to equal the yield compared to the AAA MBS securities. When Greenspan lowered rates to the floor, mortgage rates didn’t follow directly as they have historically done. Why? Because nobody believed rates could stay zero forever, but also, MBS securities aren’t usually 30 years in term. People payout early, so you get a good rate without risking as much long-term as you do with treasuries (from future rate increases) and long-term bond yields factored in the belief that eventually they would be raised. Without increased spending and borrowing by the government, combined with a premium rate over MBS securities, the money would have continued flowing through foreign banks and into housing anyway.

    So while the trade deficit exacerbates things enormously by creating a shortage of legal investments for money market accounts, and this same effect holds when the Fed buys too many treasuries, the money either just sits idle with no return or it searches for foreign, guaranteed investments that travel through the international banking system and sovereign borrowing agents.

    The cure? Fix shadow banking, eliminate all government guarantees on MBS securities (except perhaps a tiny, non-distorting bit for poor people). Also, fix the trade deficit.

    Once China becomes an international finance rival, we’ll have no choice but to raise taxes significantly on the rich and to tone down private and public pension promises.