Erica Groshen is a senior economics advisor at the Cornell University School of Industrial and Labor Relations and research fellow at the Upjohn Institute for Employment Research. From 2013 to 2017 she served as the 14th commissioner of the US Bureau of Labor Statistics, the principal federal agency responsible for measuring labor market activity, working conditions and inflation. She's an expert on official statistics, authoring an article in 2021 pondering their future.
Episode Description
When people think of public goods, they most likely think of things like parks or schools. But official statistics are also a kind of public good. They help us understand things like housing prices, the costs of goods and the spread of disease. However, this data infrastructure is under threat around the world. The work of official statisticians and the obstacles they face, is the focus of this episode of Stats and Stories with guest Erika Groshen.
+Full Transcript
Rosemary Pennington
When people think of public goods, they most likely think of things like parks or schools. But official statistics are also a kind of public good. They help us understand things like housing prices, the costs of goods and the spread of disease, but this data infrastructure is under threat around the world. The work of officials, I'm sorry that since again, Charles three two, the work of official statistics and the obstacles they face, is the focus of this episode of stats and stories, where we explore the statistics behind the stories and the stories behind the statistics. I'm Rosemary Pennington, stats and stories is a production of the American Statistical Association in partnership with Miami University's departments of statistics and media, journalism and film. Joining me, as always, is regular panelist John Bailer, emeritus professor of statistics at. Miami University. Our guest today is Erica Groshen. She's senior economics advisor at the Cornell University School of Industrial and Labor Relations and research fellow at the Upjohn Institute for Employment Research. From 2013 to 2017 she served as the 14th commissioner of the US Bureau of Labor Statistics, the principal federal agency responsible for measuring labor market activity, working conditions and inflation. She's an expert on official statistics, authoring an article in 2021 pondering their future. Erica, thank you so much for joining us today. Thank you for having me
John Bailer
So Erica, this is a, it's a delight to have you on here. And it's a it was, it was fun to review some of the stuff that you've done and and you know you've been involved in such important work over the years and official statistics, we're at a time when there are, there are concerns, and you even voiced many concerns in that 2021 article, but, but in particular, I know that you've, you've, you think that there's some risks that exist now for official Statistics and the statistical system in general. Can you talk a little bit about what those risks are?
Groshen
Sure? Let me start with a very kind of a long standing risk to the statistical system, which is that, right now, the statistical agencies rely very heavily on surveys, and they developed the whole concept of the scientific survey, and it's really the basis of an awful lot of our official statistics. But survey response rates are falling all over the country for everything, and so at this at this point, the statistical agencies need to move on to taking more advantage of the other kind of data that's just growing really rapidly, which is the digitization of almost everything in our economy, and that requires a whole new set of skills and techniques and kind of products. So it's a great opportunity born out of a challenge, but it requires resources that just haven't been forthcoming,
John Bailer
you know. And I think that when you've talked about this, you know, there, there are other risks beyond so. So one is, is kind of the the old, the old school tools that were used in this. And I, I know you've described this in other contexts as moving from stats 2.0 to STATS 3.0 in terms of the operation of these, these, these organizations. What are some of the others? I, I thought you had a top five list that included some others. If could you go through that with us, please, right?
Groshen
So, so there's inadequate resources. The statistical agencies have been terribly funded of late, and so that makes it very hard to keep doing what they're doing, let alone modernize what they're doing. Then there is. They are worried about loss of expertise as the senior staff leave, and particularly if we get a big exodus of staff. In the current situation with the current administration, there's a big emphasis on cutting staff. So I'm very worried about that. I am also worried about protecting the independence of the statistical agencies from interference. This interference could be because of hubris, or it could be because of ill intent, either financial gain or political manipulation. So I'm very worried about that eroding the trust in the statistical system. I worry also which would erode cross law, the loss about the loss of confidentiality of the data that the statistical agencies collect, and because we are not going to get good information from the from respondents if, if the agencies can't hold to the the protection for confidentiality, it's guaranteed by law and and this. Agencies have a remarkable record of protecting that confidentiality. And then finally, I worry about the users losing access to data. If that's suppressed,
Rosemary Pennington
it's some of this feels sort of related to the work of the system itself. And I wonder, you know, there has been such a distrust of data, and I think we've talked about that a lot on the podcast, in various contexts, in the public, and it's, again, that's a global problem. We've seen it in the States, but we've also seen it in other parts of the world. How much does this loss of confidence or this lack of confidence or mistrust of data impact these risks that you're identifying? Because I would imagine, if the public were more supportive or a better understood, perhaps these risks wouldn't be so potent, but maybe that's me being too optimistic.
Groshen
Yeah, there's there's almost there. There's a feedback loop here, right? That all of these things that I've listed right would undermine trust, and then lack of trust is a contributor to facing these risks that we're talking about, right? So you get this downward spiral, and in a larger sense, that's what I'm worried about, that attacks on the credibility, attacks on the independence, inadequate funding, loss of confidentiality, all of those things further undermine trust, and then the trust leads to basically the loss of these statistical agencies and their products, because you're going to go back to this idea of public statistics being infrastructure public goods, would you want to drive on a bridge that you didn't trust? Right? Not really, right? Then you might as well not have the bridge. And if people don't trust the statistics, and they don't trust that that the information that they give to the statistical agencies will be used only for statistical purposes and not shared otherwise. Then you get, then, then you're going to get, nobody's going to want to fund it, and nobody's going to want to use it. And you just get a downward spiral. So in the larger sense, I'm worried about the downward spiral that comes from undermining all of the foundations of our statistical system,
John Bailer
you know, so, so one of the things that that's for me is a natural follow up is, is, you know, you talked about products. So I think it's important to kind of give a couple of examples of what those products might be. Because I think those products help answer the question, why should people care about this? You know, the the the person on the street may not appreciate this. And I, you know, when I, when I've looked at some of the products that BLS has put out, I mean, the the Occupational Outlook Handbook, it's hard to imagine someone who was about to enter the workforce not wanting to look at that. So can you talk about some of these products and why? Why are these important to have available for for the larger community?
Groshen
Yeah, so in a general sense, we believe that we're going to get the best outcome for society if we allow people as much as possible to make decisions for themselves, and that's true to the extent that they make good decisions, they can only make good decisions if they have good evidence, good data to base it on. And so it's the underpinning of our whole strategy for our society that that these statistics contribute to. So give you examples, right? The Occupational Outlook Handbook. Now we know BLS produces all of these very famous statistics, like the unemployment rate and the jobs growth and inflation and all of that, and I'll get to those. But actually, the most heavily used site, or set of web pages on the BLS website, is the Occupational Outlook Handbook, because job seekers at all levels, and career counselors and employers who are looking to hire people want to know about what occupations are paid, what qualifications go into them, also to and where they're located geographically. They they look there, right? And so, I mean, including the prisoners who are about to be released, right? Everybody has equal access to this information. You don't have to be rich to. Get it. It's right there for everybody. So, so that's an example very broadly used at kind of the other end of the spectrum are the national economic indicators that are relied upon for monetary policy. So the Federal Reserve System has a dual mandate, which is stable prices and maximum sustainable employment? Well, BLS produces inflate inflation rate and the jobs numbers, both unemployment rate and job growth, all right? And that, BL the Fed looks at many other things, but it's two main targets are, are the encapsulated in those numbers, and that sets that, that's from that, from their monetary policy decisions. We get increases or decreases in interest rates we get, we get efforts to fight recessions and and efforts to cool down the economy, to fight inflation. So, so those are important, but the inflation rates are used for so much more than that. So, for example, the federal government adjusts Social Security benefits using the CPI, if the BLS makes a a 1/10 of a 1% mistake on the inflation rate, then the federal government will overpay or underpay beneficiaries by A billion dollars. So, you know, makes a difference. And I could go on
Rosemary Pennington
you mentioned, I think, like the loss of expertise, and I think inadequate resources as potential risks. What does it take to just so people can understand what that might mean. What does it take to produce maybe one of these indicators that that people rely on daily?
Groshen
Oh, gee. Well, one of the interesting things that I learned when I was commissioner was just how different each one of these programs is. So, let's see. Well, let me, let me talk about the current population survey, which is a household survey of 60,000 households every month. All right, at the very beginning of the process, there is the BLS Census Bureau work on choosing a sample. So out of all of the people, all of the households in the country which 60,000 are going to be chosen, right? And that's done because that works from a register that the Census Bureau has of all of the households. And then there's a decision about how to do a stratified random sample, which means choosing a sample so that you don't accidentally leave out any important groups. So every so you want to make sure that, even though it's random, that you have enough homes with veterans in them, or in this in this state, geographically, right? Do you have a stratified random sample that's chosen? Then there are the people who reach out to all of those respondents and ask them to participate. The survey itself is the product of a lot of research. Which questions do we want to ask? How are we how are we going to combine them to make the measures that we want to put out the the the the enumerators ask the question right now, this be the CPS is collected mostly by phone, but the first contacts are in person, or actually by mail, and then or in person, and then that people are asked for their phone number. And so then there's a phone conversation every month with all of the participants. Now those participants are doing a voluntary public service. They don't have to say yes, so they're an important contributor too. They are reckon. They recognize how important this is, and they they contribute their information, which is hugely important to all of the rest of us, then you have the programmers who have programmed all the processing of the information that's collected. And this goes to analysts who put it together into the release and of. Um, you've got the IT specialists who put it up on the website and and at the very tail end, you have the commissioner who looks at the report and says, Oh, that's cool. That looks fine here. Why don't you change this language, you know, this little bit of language on the release. And that was that my only role there. But anyway, so it is a highly orchestrated, almost factory like process that happens every month in in involving people who know exactly what they're doing, and where a lot of thought has gone into every single step. It
Rosemary Pennington
definitely sounds like one, one missing piece, and it will all fall apart.
Groshen
You need expertise of all kinds. You need expert enumerators to talk and recruit the participants. You need good programmers. You need survey, survey, psychiat, psychologist, methodologist, to design the questions and to test them before they're on there, you need the statisticians to come up with to design the how you do the survey and then how you interpret the results. It's Yes, it's quite a process.
John Bailer
Yeah, oh,
Rosemary Pennington
sorry, you're listening to stats and stories, and we're talking about official statistics with Erica grossen.
John Bailer
So I'm a huge fan of the current population survey. We used it extensively on a number of projects when we were looking at some occupational fatal injury kind of rates and patterns across different categories and and ultimately, you know, we were looking for re information that was being generated by statistical agencies, and some of the best employment numbers that we could get that, you know, would that would cover the whole year that would that was generated year upon year, unlike the census, which, well, the decennial census, and it was just this incredible resource, and it was that the quality of the information was a critical part of that story. And so, I mean, I, I worry a lot about about these, these types of of products becoming less reliable and and, and not having that same kind of punch to them. You know, I think it might help people to realize this isn't a new thing to do, official statistics, right? That there is a there is an ancient history to this. Can you put on your historian hat for a minute, Erica and kind of comment on, what are some of the, what were some of the early motivations and inspirations for for official statistics.
Groshen
Well, the earliest ones I know about are, are in the Bible. So I think God commands Moses to count all of all of the Israelites, right? And why? Why do they do that? Well, one part was for military purposes. How many people do we have available to defend ourselves or to attack? Right? And also for taxation purposes, to support government so and then, the thing about statistics is that it's an economics jargon. We call it an experience good that once you have it, you find many, many uses for it, right? So, for instance, I've talked about how the Federal Reserve uses employment and inflation information for monetary policy. Well, the reason the BLS started collecting that was to facilitate bargaining between employers and employees in the time of nascent unions. But having that information allowed us to move off of the gold standard to a better basis for monetary policy. But then you have to have an anchor, and the anchor becomes the dual mandate, which is produced by statistics. So it's almost a precursor to modern monetary policy, too, and you can just see it throughout history that information gathering has been really key to governance of any sort.
John Bailer
Yeah, I, you know, I remember reading a book of a historian who commented that one of the first inspirations for for the use, or motivations for the use of statistics was the transition from into this, this kind of a fixed society versus hunter gatherer society, you know, you're there was this compilation of of kind of resources and products, and then ultimately, what was being transferred and exchanged, and being able to to kind of account for that. I mean this so, you know, it's, you. It for people to think, Gee, why are we doing official statistics? Well, it's not new. I mean, you know, it's, you know, we're doing this because this is part of what happened came along with civilization. We're just doing in a more sophisticated and kind of more targeting in that, in the way that we do it. Yeah.
Groshen
I mean, one of the other things that you see at the very dawn of civilization is standard Weights and Measures, because that that, then you then you can make trades. Then you can, you can trust somebody you don't know very well if you both agree what a pound is, and you can, you know a pound of this or that. And in these days, statistics are even more important, because one of the main things that we trade much more effectively than we were ever, ever able to trade before, is information. And statistics are a way, you know, a very important way where we trade information.