Trump Could Upend Agency Behind ‘Phony' Jobs Report

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By Ben Penn

Nov. 28 — Donald Trump will soon be able to appoint a new leader of the agency that compiles the jobs data he called “phony” on the campaign trail.

President-elect Trump can appoint a new commissioner of the Labor Department’s Bureau of Labor Statistics as early as one week after he’s sworn into office. The current commissioner’s four-year term expires Jan. 27. The commissioner post is the only political appointment within the BLS, and it is intended to be a nonpartisan position to ensure that the unemployment rate and employment gains, among other indicators, are measured independently of White House influence.

Trump said on the campaign trail that the BLS’ 4.9 percent jobless rate is essentially government propaganda and that the true measure is as high as 42 percent. That has some economists unsettled about his power to change the direction of the BLS.

“The thing that actually worries me the most is the fact that the term of the commissioner of the BLS is coming to an end in January,” Jennifer Hunt, chief economist at the DOL from 2013 to 2015, told Bloomberg BNA.

“There has not been a problem in the past, until now, with the commissioner of labor statistics under any administration, but that’s definitely something to watch,” said Hunt, now an economics professor at Rutgers University. “You want someone who is basically a technocrat to be heading BLS.”

Trump has already backed off from other campaign positions, such as an outright repeal of the Affordable Care Act and a Justice Department investigation of Hillary Clinton. It remains to be seen if he would publicly cast doubt about the statistical agency’s accuracy in monitoring labor market performance or if his BLS commissioner appointment would reflect that stance.

“I would not over-interpret what happened in the campaign,” Timothy Kane, who has twice served as senior economist for Congress' Joint Economic Committee, told Bloomberg BNA. “Donald Trump called it a fraud or a hoax or whatever. I’d dismiss it as these are how campaigns are done; you speak at a level that’s going to resonate.” Kane, who called himself conservative, is now a fellow at Stanford University’s Hoover Institution.

Trump’s transition team didn’t respond to an e-mail request for comment Nov. 28.

Loss of Faith

The bigger concern for Hunt and others is a matter of public trust.

“The most likely bad outcome would simply be a loss of faith in the BLS statistics,” she said. “Suppose he appointed someone who in the past had questioned BLS’s unemployment numbers as Trump implicitly did.”

Hunt said perhaps the worst-case scenario would be if Trump tapped someone who shared the views of Jack Welch, the retired General Electric chairman. Welch indicated in a 2012 tweet that BLS must be cooking the numbers, referring to a promising jobs report published shortly before the election.

Jordan Matsudaira, former chief economist of President Barack Obama’s Council of Economic Advisers, told Bloomberg BNA that the BLS data collectors are already challenged by declining public response rates related to privacy fears. It’s unclear how candidate Trump’s views may morph once he’s president. But any White House rebuke of government statistical agencies would be alarming, he said.

“I would worry that a president or any public official casting doubt about the motivations of statistical agencies, characterizing their motivation as political, casting doubt on the quality or the usefulness of the data is going to undermine the government’s ability to collect accurate information from public surveys,” said Matsudaira, who last year returned to his job as an assistant professor at Cornell University. “It’s going to decrease people’s trust or sense of obligation they might feel in responding to these government agencies.”

BLS Changes Would Be Tough

An early indication of whether the new administration will depart from the types of economic personnel traditionally preferred by the GOP will come when Trump selects his Council of Economic Advisers. The CEA chairman and labor secretary have made recommendations for the BLS position in the past.

For Trump to actually administer wholesale revisions to the BLS fact-finding process would be an enormous undertaking, observers said. The agency prides itself in producing neutral, transparent data for policy makers, analysts and businesses to rely on and interpret as they please. Plus, a major shift in methodology could limit the numbers’ comparability to previous data, hindering the agency from measuring change over time.

Another reason the administration wouldn't overhaul the BLS is because agency career staff would push back, possibly by informing reporters the moment they sense unethical White House input, Douglas Holtz-Eakin, who directed the Congressional Budget Office under President George W. Bush, told Bloomberg BNA.

“It’s an incredibly independent agency,” Matsudaira said. “I think they take their role as objective measurement scientists incredibly seriously and, almost to a fault, refuse to engage in policy conversations.”

Regardless of who is in the White House, the career BLS economists will continue to collect household data that measures monthly job growth and workers’ participation in the labor force.

That still leaves Trump and his labor secretary with the option of giving more attention to other BLS indicators that receive less mainstream coverage but might better reflect the economic angst that elected Trump to office.

The official jobless rate only reflects people who are actively looking for work, but the president-elect may instead emphasize the percentage that includes discouraged workers who have stopped looking for jobs and involuntary part-time employees.

The next president and labor secretary could also place greater stock in the labor force participation rate, or the share of working-age people who are employed or looking for work. The participation rate trended downward under Obama, but if it surges, the figure may present a better opportunity for Trump to prove progress than the unemployment rate.

Fears of Budget Cuts

Even the economists who don’t take Trump’s campaign words about the jobless rate too seriously still have concerns that the BLS reports could suffer from slashed funding.

“A statistical agency is actually one of the few areas, as a conservative, where I think we should be spending more money, not less, because it gives a sense of where the sore spots in the economy are,” said Kane of the Hoover Institution.

The BLS budget, in real terms, hasn’t kept pace with the rising salaries and building costs over the past two decades, Katharine Abraham, who was Bill Clinton’s BLS commissioner and a member of Obama’s CEA, told Bloomberg BNA.

“The economy has gotten more complicated, so I am concerned that in a tight budget environment that that’s going to translate” into budget cuts at the BLS and other statistical agencies, said Abraham, now a University of Maryland professor.

Timing of BLS Vacancy Is Coincidence

The BLS commissioners are appointed by presidents and confirmed by the Senate to four-year terms. The opening isn’t intended to fall so soon after a new president is sworn in, but the timing of outgoing Commissioner Erica Groshen’s 2013 start date just happens to mean her term expires a few days after Obama leaves office.

The agency’s current deputy commissioner, William Wiatrowski, a career employee, is scheduled to fill in for Groshen on an acting basis until the Senate confirms Trump’s nominee, BLS spokeswoman Megan Kindelan told Bloomberg BNA.

The BLS, through Kindelan, declined to comment on the concerns expressed about Trump’s commissioner pick.

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

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