Economic thermometer: Bureau of Labor Statistics reports

WHAT DATA do businesses need from the government to supplement the figures they gather for themselves?

Much of the most useful information has been coming from the Labor Department's Bureau of Labor Statistics, which is celebrating its centennial this year. BLS reports on how many of us are working or jobless, how much prices and costs are going up or down, how much we are being paid, how productive we are and what the economy will look like in the years ahead.

Such data are the crucial raw material used by the administration, Congress and the Federal Reserve Board to make decisions that determine our economic well-being.

In recent years BLS commissioners have veered between collecting statistics and analyzing them, between emphasizing economic trends and playing up social concerns.

The current commissioner, Janet Norwood, is trying to blend those viewpoints. "A statistical agency has a responsibility to keep its data relevant to the conditions of the world as they occur," she says. "We need to be changing our data so that they really represent what's happening in the country."

As the bureau enters its second century, she foresees a larger and older labor force, a strong participation by women and a larger proportion of minorities, and further shifting to service industries.

"We at the bureau should be identifying and explaining these changes," she points out. "I see a much greater use of data by Congress in legislation, but that can be worrying because Congress sometimes uses data in ways they were not intended to be used."

Foremost among BLS' priorities is keeping tabs on employment and unemployment. Its business establishment survey, in which BLS questions 200,000 nonagricultural establishments, produces one estimate of employment. A household survey, conducted by the Census Bureau under contract to BLS, generally brings a higher figure because it covers additional categories, the largest being the self-employed.

BLS puts together two estimates of unemployment, both derived from the household survey. The civilian estimate is the figure most often quoted; the total unemployment rate, which BLS introduced in January, 1983, is lower because it takes the military into account. Both have been criticized as inaccurate. Some call the estimates too high and question why BLS counts people with only a marginal interest in working, such as students. Others contend the figures are too low because they fail to include all who wants a job--even if they are not actively seeking work--as well as part-timers who would rather have full-time jobs.

To address those problems, since the mid-'70s BLS has published one quarterly and six monthly alternative measures of unemployment, each with a different definition.

One such alterantive measure involves discouraged workers. They are now defined as those available for work but not actively seeking work, and they are therefore omitted from the main unemployment count. BLS has agreed to limit the category to those who, though not currently seeking work, have looked for a job during the previous six months.

Another change in the offing--for the household survey--concerns people attending school either full- or part-time and also working or looking for work.

Employment and unemployment figures are helpful to business as measures of potential labor supply and as economic indicators for local areas.

The consumer price index is a big factor in collective bargaining and wage and pension adjustments. Since 1978 two indexes have been issued--the CPI-U for urban consumers, which measures the market basket for 80 percent of the population, and the CPI-W, an older index for urban wage earners and clerical workers, covering some 40 percent.

In January, 1983, a major revision was made in the CPI-U: The homeowner cost component was changed to a rental equivalence measure to eliminate the investment aspect of homeownership. This change will be incorporated in the CPI-W next January.

HISTORICALLY, the CPI has been revised about once every decade, and the next such revision is set for January, 1987. Revisions are planned to update the contents and relative weights of the market basket, to reflect population shifts indicated by the 1980 census and to improve estimates of price movements.

The revised index will be based on 1981-83 expenditures. It will cover new products and services, like home computers and day care, and will reflect how consumers have adjusted to such factors as the run-up in energy prices.

BLS will also attempt to account for price increases that reflect higher quality, and it hopes to keep better tabs on medical insurance and other insurance and finance charges.

In 1980 BLS began a consumer expenditure survey that will eventually be used to determine new CPI weights. The data from this continuing survey are expected to be widely used in market research.

JUST AS CRITICAL for business as the CPI is the producer price index, formerly the wholesale price index: Billions of dollars in purchase and sales contracts depend on it. The PPI measures price movements in various commodities and is often combined with BLS' monthly index of hourly earnings to develop payment levels under those contracts. It measures actual transaction prices rather than list prices.

The PPI is used for business planning, forecasting and adjusting prices under terms of contracts.

Improvements in measurement techniques and price quotations are part of a comprehensive overhaul of the index, to be completed in 1985. The PPI data base is being expanded at six-month intervals to cover all mining and manufacturing industries, with about 90,000 price quotations and 6,000 product indexes each month. A more limited effort is being made to cover service industries, whose products are difficult to measure.

BLS uses several measures to track workers' compensation. Besides the monthly index of hourly earnings there is the employment cost index, which provides compensation and wage changes by industry, occupation, union and nonunion status, and region. BLS also surveys wages by area and by occupation; these data can help businesses estimate labor costs and determine plant locations.

The agency tracks productivity for the economy as a whole, for specific sectors of the economy and for specific industries; it measures productivity changes attributable to new technology; and it compares U.S. productivity figures with those of other industrialized nations.

Late last year BLS introduced another set of productivity measures to supplement the existing output-per-employe-hour measures. These multifactor productivity measures, as they are called, relate output to inputs of labor and capital in manufacturing, retailing and other major economic sectors.

Productivity indexes are used to assess labor needs and to estimate effects of technological improvements.

The 1970 Occupational Safety and Health Administration law gave BLS responsibility for measuring job safety and health. Once a year it carries out a major survey counting the number of illnesses and injuries and compiling incidence rates. The law requires extensive record-keeping by business--the only mandatory reporting for any BLS programs.

In its growth and projection activities, BLS uses alternative assumptions to look at the economy 10 years ahead and to determine future demand for workers in specific industries and occupations. Such projections are valuable in planning.

Unlike the Census Bureau, BLS relies on the voluntary cooperation of businesses (except for OSHA data). Generally, the larger the enterprise, the more extensive the cooperation. Users realize that the effectiveness of what they get from BLS depends on the the completenes and accuracy of what they give to BLS.

Retired BLS Commissioner Ewan Clague, a robust 87, likes to tell the story of the reporter who was writing an article on shipbuilding and asked an admiral running a shipyard some questions about the output of ships. "The admiral fixed him with an eagle eye and thundred, 'Do you want statistics or do you want ships?'"

The admiral was wrong, says Clague; both ships and statistics are required. The better the statistics, the better the nation can fill its needs.

HOW WELL BLS does its job is underscored by a key business observer, John Post, retired executive director of the Business Roundtable and former chairman of the BLS Business Research Advisory Council, established by Clague after World War II along with a parallel Labor Advisory Council.

"BLS is not politicized, even though its findings may hurt the administration," Post points out. "The integrity of BLS is very important, and the staff wants to be surgically clean as far as dealing with the numbers is concerned."

COPYRIGHT 1984 U.S. Chamber of Commerce
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