In Defense of the BLS

Episode Summary

Executive Summary: Former BLS Commissioner Erica Groshen explains how the agency works, why revisions are normal and informative, and why the recent firing of Commissioner McEntarfer risks undermining trust in federal statistics. The discussion stresses that staffing cuts, lower response rates, and political attacks threaten data quality, while better modernization and public support are needed to preserve an essential public good.

Main Topics: How the BLS operates and what a commissioner does (Priority: 5/5): Groshen describes the BLS as a mission-driven statistical agency where commissioners do not see or alter monthly release data, but oversee long-run priorities, modernization, and transparency. Why labor-market revisions happen (Priority: 5/5): The panel explains that revisions reflect late responses and seasonal-adjustment updates, and are especially large at turning points when the economy is changing direction. BLS modernization, funding, and response rates (Priority: 4/5): Groshen argues the agency faces structural and budget constraints that limit its ability to modernize surveys, use digital data, and stabilize falling response rates. Interpreting the weak jobs data (Priority: 5/5): The conversation treats the July jobs report and downward revisions as evidence the economy may be at an inflection point or even heading toward recession. Firing of BLS Commissioner McEntarfer (Priority: 5/5): Groshen says the firing is unprecedented for a term-appointed statistical agency leader and could chill agency independence and public confidence. Role of private-sector data and public advocacy (Priority: 4/5): Private data can help temporarily, but Groshen insists federal statistics remain the benchmark public good and companies should lobby to protect the statistical system.

Key Arguments: Monthly BLS revisions are a feature, not a bug: they exist to balance timeliness with accuracy, and are expected to change as more respondents report. Large revisions are more likely at economic turning points because late reporters often capture the new direction of the labor market before it is visible in early samples. Declining response rates and insufficient modernization funding are the main long-run threats to BLS quality, not commissioner discretion over monthly numbers. Political attacks on statistics can reduce trust, worsen response rates, and create a self-reinforcing decline in data quality. The firing of a term-appointed BLS commissioner could weaken the perceived independence of all federal statistical agencies. Private-sector data providers can supplement official statistics short term, but they rely on federal benchmarks and lack incentives to provide fully transparent, long-run public data. Companies and lobbying organizations should actively support statistical agencies because high-quality data function like critical infrastructure for the economy.

Data Points: BLS establishment year: about 150 years ago - Groshen notes BLS was the first independent statistical agency in the federal government. BLS staff size during Groshen's tenure: about 2,500 people - Size of the agency when she was commissioner. Current BLS staff size: less than 2,000 - Groshen says staffing is now down from prior levels. Washington-based BLS staff: about 1,500 - Headquarters personnel in Washington, D.C. Field/regional BLS staff: about 1,000 - Staff scattered across the country in regional operations. BLS programs: about 25 - Groshen cites the breadth of statistical programs run by the agency. Groshen's BLS term: January 2013 to January 2017 - She served under President Obama. BLS confirmation delay: almost a year - She was nominated in February and sworn in in January. Monthly payroll release sample response rate: roughly 60% to 70% initially - Early release of CES payroll data is based on incomplete responses. Later payroll response rate: about 93% to 94% - By the second/third month, most responses are in. Prior CPI imputed-price share: about 10% - Estimate before recent staffing cuts, as discussed by the hosts. Current CPI imputed-price share: about 30% to 35% - Hosts cite higher imputation due to fewer price collectors. Social Security CPI sensitivity: a 0.1% error can equal about $1 billion - Groshen gives an example of how small CPI errors scale into large budget impacts. Jobs growth range before July revisions: 100,000 to 150,000 per month - Hosts describe the prior consensus view of labor-market momentum. Jobs growth range after July revisions: no higher than 50,000; possibly 25,000 to 50,000 - Revised picture after weak July report and downward revisions. Diffusion index mentioned: about 46% - Hosts cite the three-month diffusion measure as being below 50, indicating breadth weakness.

Pivotal Quotes: "“Revisions are a feature, not a bug.”" — Erica Groshen: Explaining why BLS payroll numbers are first released as preliminary estimates and later revised with more complete data. "“These are the world’s most dedicated data nerds.”" — Erica Groshen: Describing the BLS culture of professionalism, humility, and mission focus. "“We’re at an inflection point for the statistical system, too.”" — Erica Groshen: Her closing appeal for companies and lobbyists to defend federal statistical agencies.

Implications: Listeners should expect more labor-market uncertainty, potentially larger revisions, and heightened scrutiny of federal data. The bigger risk is institutional: weakened trust, lower response rates, and poorer statistics unless Congress, business groups, and agencies invest in modernization and independence.