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Putting Americans to Work: The Essential Role of Federal Labor Market Statistics

1 March 2011 2,882 views No Comment
In one of two science policy columns this month relating to jobs and economic growth, Andrew Reamer discusses why a strong federal statistics system is needed to enable labor market participants and policymakers to make well-informed decisions in today’s difficult job market. Reamer provides practical steps to address disconnections between labor market demand and supply that add to unemployment, underemployment, and unfilled jobs.
~ Steve Pierson, ASA Director of Science Policy

Contributing Editor
Andrew Reamer is research professor at the George Washington Institute of Public Policy, The George Washington University. He focuses on policies that promote U.S. competitiveness—areas of interest include innovation, regional economic and work force development, and economic statistics. He is chair of the Bureau of Labor Statistics Data Users Advisory Committee and past president of the Association of Public Data Users.

Since the onset of the Great Recession, the American labor market has struggled to regain its footing. Between late 2007 and late 2009, the national unemployment rate more than doubled to 10%, remained close to that level throughout 2010, and recently has begun to decline only because a significant number of people have stopped looking for work. While the civilian noninstitutionalized population aged 16 years and older grew 13% between January 2000 and December 2010, total jobs fell slightly. Private-sector employment is at a level last seen in mid-1999.

Large U.S. businesses have rebounded from the recession far more quickly. The Wall Street Journal reports that “fourth-quarter profits for the biggest U.S. corporations have been exceptionally strong and 2010 is poised to deliver the third-best full-year gain since 1998.” Major businesses have been buoyed by access to low-priced capital, a capacity to take advantage of workers and markets across borders, and technology-driven increases in productivity (and equivalent reductions in work force needs). They also report difficulties in finding certain types of high-skilled workers.

While supporters of the recent tech and housing booms promoted “new normals” that never came to be, the real “new normal” is the increasing disconnection between the fate of the nation’s work force and that of its major corporations.

For U.S. workers to gain and sustain decent jobs, it’s become clear they must have skills and knowledge attractive to U.S. and foreign businesses and not easily obtained in lower-wage nations. To a substantial extent, gaining an occupation and a job that provide a middle-class income now requires workers to have at least one postsecondary credential (e.g., a certificate from a community college) and to regularly upgrade their skills in response to changing products, processes, and markets.

This means that the nation’s 140 million job-holders, 39 million working-age students, and 14.5 million unemployed must regularly make intelligent choices about occupations, career path, education and training, and jobs. It means that 24,000 education and training organizations need to figure out the programs, curricula, and number of seats to offer. It means that the nation’s 6 million businesses, to be competitive enough to offer decent jobs, need to make good decisions about business location, hiring, and training. And it means that federal, state, and local work force policymakers need to wisely invest public funds.

Intelligent decisionmaking, in turn, requires access to accurate statistics on labor market conditions and characteristics. In particular, good data show the occupational, employment, and educational trends and projections that allow labor market participants and policymakers to see truths and understand the likely consequences of irreversible expenditures of time and money.

Unfortunately, labor market participants and policymakers do not have access to the statistics they need. The lack of current, accurate, detailed data enables disconnections between labor market demand and supply, which adds to unemployment, underemployment, and unfilled jobs.

Limitations of the Existing Federal Statistical System

The federal government has a major role in providing labor market information, including statistics, to facilitate decisionmaking. Only the federal government has the capability to offer current, accurate, objective, relevant data at all levels of geography, consistent over time and space, and available to labor market participants regardless of ability to pay.

The federal labor market statistics system is decentralized and idiosyncratic. There are six sets of actors—the Bureau of Labor Statistics (BLS), the Employment and Training Administration, the National Center for Education Statistics, the U.S. Census Bureau, the state labor market information (LMI) agencies, and the state education agencies.

While offering a large volume of valuable data sets, the federal statistical system does not meet labor market participant and policymaker needs with regard to the availability of current, accurate, geographically detailed data on education and training, occupations and skills, employment, and population; easy accessibility and usability of data sets; availability of web-based data analysis tools; and adequate access to technical assistance for data analysis.

The system does not meet user needs for the following reasons:

  • Appropriations requested by departments and OMB and approved by Congress have been inadequate. Top federal funding decisionmakers do not sufficiently appreciate that the return on a small investment in federal labor market data (under $1 billion annually) is nearly infinite.
  • To varying degrees, individual statistical agencies are not sufficiently responsive to the data needs of labor market participants and state and local policymakers, despite the mandate of the Wagner-Peyser Act for a “national employment statistics system” that addresses such needs.
  • A common vision is lacking among federal and state agencies for a more effective federal labor market statistics system. The Workforce Information Council (WIC) created to fulfill the requirements of Wagner-Peyser has served primarily to manage the BLS-LMI portion of the system and not provided the inclusive planning and coordination process needed.

At the same time, the following elements are present around which to build a strong labor market data system:

  • Wagner-Peyser provides the legal basis for creating a data system that serves labor market participant and policymaker needs.
  • Early-stage innovative data efforts that rely on administrative records and analysis of web-based job ads have the capacity to transform understanding of national and regional labor markets.
  • The WIC is taking first steps toward wider participation and the development of a common vision for the labor market statistics system.

A New Federal Approach

In light of persistently high unemployment, the need for postsecondary training and continuing education to sustain a decent income, and ever-changing technologies and markets, the mission of the federal labor market statistics system should be to provide the data needed by labor market participants and policymakers to make well-informed decisions. Fulfilling this mission requires that the administration request and Congress approve adequate appropriations for the statistical system, that the system be responsive to data user needs, and that the system have mechanisms to coordinate among its federal and state participants.

Consistent with these principles, the federal government should embark on a major effort to improve the effectiveness of its labor markets statistics system. Priority actions include the following:

1. White House commitment to a strong federal labor market statistics system that meets labor market participant and policymaker needs

2. Expansion of federal funding for labor market information—in this time of budget constraints, the commerce, education, and labor departmental budget offices, the Office of Management and Budget, and Congress should recognize that better statistics are a low-cost, highly effective means for reducing “labor market frictions” and unemployment

3. Assessment of the economic and fiscal impacts of labor market statistics—determining the value of labor market statistics to the economy and the public purse should provide evidence that supports investment in the statistical system

4. Determination by the secretary of labor that the provision of labor market information is a priority—to achieve well-functioning labor markets, it is imperative that the secretary fulfill responsibilities mandated by Wagner-Peyser

5. Establishment of an interagency forum for coordinating the labor market statistics system, one in which all federal and state participants are represented—the White House should see that the WIC is either reorganized or replaced

Editor’s Note: This article was adapted from “Putting America to Work: The Essential Role of Federal Labor Market Statistics,” Brookings Institution, October 2010.

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