In this episode, I sit down with William Beach, former Commissioner of the Bureau of Labor Statistics, to dig into how America’s most important economic data are produced. We talk about the nuts and bolts of how the BLS jobs numbers are collected, processed, and released, as well as why revisions happen and what they really mean. Bill shares his perspective on the commissioner’s role, the challenges of falling survey response rates, and how statistical agencies can rebuild public trust in their work. We also touch on his experiences working across two administrations and his ideas for the future of federal data. This conversation sheds light on a system that is often misunderstood, yet vital for understanding the economy.
Guest Bio
William W. Beach is the Senior Fellow in Economics at the Economic Policy Innovation Center (EPIC) and the Coffin Fellow at the Calvin Coolidge Presidential Foundation. Beach also serves on the UKG Workforce Institute Advisory Board.
Prior to these appointments, Beach was the fifteenth Commissioner of Labor Statistics at the Bureau of Labor Statistics in Washington, DC. He took up his duties there on March 28, 2019. Prior to joining BLS, Dr. Beach was vice president for policy research at the Mercatus Center at George Mason University from February of 2016 to March of 2019; and, prior to that served as the Chief Economist for the Senate Budget Committee, Republican Staff, from 2013 through early 2016.
Among his other professional positions, he was the Lazof Family Fellow in Economics at The Heritage Foundation and founder and director of the Foundation’s Center for Data Analysis (CDA). Prior to joining Heritage in 1995, Beach served as a senior economist in the corporate headquarters of Sprint United, Inc., in Kansas City and, from 1991, as the president of the Institute for Humane Studies at George Mason University.
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Transcript
00:01.83
Jon
Well, hi, Bill. Good to see you.
00:03.76
William Beach
John, it’s great to be in the program.
00:05.70
Jon
i mean, thanks so much for coming on. Your phone must be still ringing off the hook.
00:11.30
William Beach
ah Yeah, I think I should get a rebate from the phone company. um It’s it’s a, as I’ve mentioned to others, this is truly a remarkable, a remarkable episode.
00:23.70
William Beach
I’ve been in Washington a long time. I’ve spoken with a lot of reporters. I’ve done a lot of things on the edges of, know, commenting on, on matters in front of
00:31.56
Jon
Right. Yeah.
00:31.90
William Beach
lovely I have never seen a an explosion of press interest on what would I think arguably be called a very narrow, otherwise a very narrow event an agency.
00:42.53
Jon
he
00:43.24
William Beach
Most people don’t know about where the agency head is is replaced suddenly becomes world news. I mean, I have reporters from other countries, so it’s it’s remarkable.
00:48.77
Jon
yeah
00:53.92
William Beach
I’m very pleased by it because I think the issues raised in this in this particular episode go well beyond a personnel ah issue, they go to the whole question of whether our statistics are going to be trusted and how we measure the economy. So it is, is it’s very important, and I’m very pleased by the attention that it’s getting.
01:14.59
Jon
Yeah. So I’d like to start by sort of kind of zooming in and then zooming back out, because I think the one thing that I’ve heard a lot of, let’s say, ah misunderstanding about is how these numbers are collected and created, right?
01:31.42
William Beach
Right. Sure.
01:32.24
Jon
Job numbers, inflation numbers, and then the commissioner’s role in getting those numbers out the door. So I was hoping as someone who’s done this, you know, did this for a while,
01:38.23
William Beach
right
01:42.39
Jon
you know, can you explain that and and pick, you know, whatever, whatever one sort of makes sense, you know, either either any of the data that BLS produces, which is a lot, um you know, what is the process like?
01:47.21
William Beach
your
01:52.69
Jon
How many people work on it? How long does it take? And then what is your role to, you know, get those things out the door in the monthly release?
02:01.02
William Beach
Uh, so, so as noted, I was commissioner from 2019 March until 2023 March. So I had a, a very rich period of time to be leading the, uh, leading the Bureau. and what, what I mean by that is that I got to see a lot of changes to the way we collect data under very circumstance, circumstances, which I’d hoped were not to be repeated. So very stressful circumstances.
02:26.46
Jon
Mm-hmm. Mm-hmm.
02:26.74
William Beach
So I saw the system stressed. which is really important for me to say because a very stressed system survived and we are in a period of time where there are new stresses on BLS, but I think to answer certain implied question, it’s always out there, will BLS do well? I think they’ll do fine.
02:44.69
William Beach
Okay. So what are, what are we talking about when we say collecting data? Why are we doing that? We’re, we’re collecting what are called sample data. We’re not asking everybody in the country.
02:57.82
William Beach
or every business in the country a question. So there are hundreds, hundreds of millions of people and really about 112, 115 million ah establishments that are in the database of the BLS. So you can’t ask all of them every month.
03:15.38
Jon
right
03:15.44
William Beach
So what we do is we create a representative sample This is like, ah like do you take 2% of all the fish in the, in the lake, but you you, you don’t take just the fish you can see. You say, well, there’s this, there’s minnows here and there’s bass here and there are Northern pike here.
03:33.39
William Beach
Uh, and so you take a representative sample and that sample for the survey that’s been very controversially, uh, this disputed here recently, this is the establishment survey.
03:45.13
William Beach
the survey of businesses to find out how many people are working this month, as opposed to that month, the gain or the loss, uh, that is about 120,000 firms and they ah cover, you know, sometimes up to 400,000, sometimes up to 500,000 work sites.
04:04.25
William Beach
Okay. That’s kind of, kind of an important number. So what we do is we ask these firms, would you like to participate in the survey? It’s a voluntary survey. That’s another thing people should know.
04:17.10
William Beach
It isn’t required by law that they do so. those Though there are 15 states that do require the businesses and people in those states to respond to federal surveys, we nevertheless don’t ask people to do this and say, well, under penalty of law.
04:31.29
Jon
Yeah.
04:31.43
William Beach
um So if they say yes, then they get a ah form that is filled out electronically every month and sent to an electronic collection data center.
04:46.24
William Beach
There are two of them, one in Chicago and one at Fort Walton Beach, Florida. Uh, so depending upon where they’re assigned, they send this, this form in. Now they, they’re looking at their business and what we asked them to do is look at their business for about a two week period in the middle of the month.
05:05.28
William Beach
That includes the 12th of the month. Now we do that because we have other surveys on the, on the labor force. that also say, let’s look at your employments is a situation who’s working in your house over a period of time that includes the 12th of the month.
05:22.09
William Beach
So BLS has designed their surveys of the labor force to include that that kind of that lodestone date. So we’re centered on that date.
05:28.91
Jon
Mm-hmm.
05:31.23
William Beach
ah The surveys come in to these electronic data centers. They’re filled out. We’re asking them things like how many people are working this month? ah oh but so What’s your industry code? Where you located?
05:44.07
William Beach
By the way, these are confidential data ah ah collections. they They’re protected under the Privacy Act and the Confidential Information and Privacy ah Security Act.
05:55.11
William Beach
So they come into these data centers and then from the data centers, they’re sent to Washington, D.C., to the BLS headquarters, which is currently at Suitland,
06:02.45
Jon
Mm-hmm. Mm-hmm.
06:05.82
William Beach
Maryland at the Suitland federal building. There about, um, I would say of 180 people are working on some slice of those data that have come in.
06:20.92
William Beach
And when they have finished processing their slice and they only have a couple of days at the end of the month, of suit they usually Monday and Tuesday of ah the last week, then about 40 people at BLS, sometimes a little bit less,
06:36.27
William Beach
bring all of that together and create the employment situation report or that portion of it dealing with establishments. um the The people who finally see all pieces of that final number, maybe by Wednesday of the of of that week are about 18 people in BLS.
06:56.27
Jon
Mm-hmm.
06:56.59
William Beach
BLS has 3000 employees, about 18 people see that. Okay. So there’s, there are some, there’s mathematics and statistics that have to be used. Remember it’s a sample, very small sample, and we have to then use some ah formula to say, well, this, this is how much we got here in this industry. And then we blow it up to the whole country.
07:18.85
Jon
it
07:18.82
William Beach
ah And that’s where the national numbers come from. You’ll note that the commissioner and didn’t have a single
07:25.11
Jon
Yeah.
07:25.68
William Beach
thing to do in all of this.
07:26.65
Jon
right
07:26.97
William Beach
ah
07:27.10
Jon
yeah
07:27.65
William Beach
Not once that I’ve mentioned the commissioners out there collecting sample or or processing it. ah The commissioner is the only presidentially appointed Senate confirmed person at the Bureau.
07:39.55
William Beach
I was the commissioner, so I’m a political. ah And I would see the data at 11 o’clock in the morning on Wednesday of the final week of the month. That’s the first time i would have seen the data. By that time, the data is completely done.
07:55.90
William Beach
It’s written up in a report in a draft.
07:57.85
Jon
Mm-hmm. Mm-hmm.
07:58.76
William Beach
It’s loaded on computers in the United States, uh, in data centers and in data centers around the world is rate. We have 16 distribution sites worldwide, uh, and they simultaneously release will release in about less than 48 hours from, from when I see the data, the commissioner is a day.
08:18.79
William Beach
I have, there’s nothing the commissioner can do to influence the data at that point. Uh, the only thing I could have done is if I had been informed that there was widespread fraud or interference, I could have not approved the publication of the employment situation report.
08:36.96
William Beach
That’s the only thing I could, I could stop it, but then I’d have to, I’d have every financial entity in the world i’m on my back.
08:44.87
Jon
Right.
08:45.76
William Beach
But, uh,
08:45.90
Jon
it’s fifty Yeah.
08:46.78
William Beach
Yeah, that’s how it that’s basically how the house is collected and then how it’s processed.
08:51.76
Jon
It’s and so throughout that process. how are ah checks being how are checks made at each of those different steps or each of those different locations to ensure that you know, the seasonal adjustments being done correctly and, you know, and the data are being processed correctly.
09:10.99
William Beach
Right.
09:13.29
Jon
Like, is there, is there ah a fact checking procedure that, you know, there’s, there’s a, there’s big teams here are like, how are all these, all these numbers sort of fact checked and, ah you know, quality assurance?
09:27.66
William Beach
Sure. So there are about 460 people at the national headquarters that work for the um Associate Commissioner for Employment and Unemployment Statistics.
09:39.33
William Beach
And they do all these things that you just mentioned. They are ah adjusting the data for seasonal seasonality, which you’d want to do.
09:42.29
Jon
Yeah. Great.
09:48.07
William Beach
you know, ah every every summer, ah ah bunch of people become um you it look start looking for jobs. These are called teenagers, winning summer jobs.
09:54.56
Jon
right
09:58.00
William Beach
And if you didn’t seasonally adjust that number, you would say, oh, my gosh, look at the unemployment rate’s way up because we asked the question, are you working or looking for work in the past four weeks? And a person could say, yeah I just got out of high school and I’m looking for work.
10:12.28
William Beach
ah So we have a seasonal adjustment to kind of average through that normal increase. ah There are people who are looking at ah duplicate returns. Sometimes a firm will send in their returns two or three times because these are machine loaded and machine transmitted data.
10:33.35
William Beach
And sometimes the transmission is rep replicated for whatever strange reasons happen.
10:33.42
Jon
Mm-hmm.
10:39.73
William Beach
ah We’re looking for incompleteness. ah And when we when we have a situation where a a, um, a firm, particularly a large one to say, just imagine any of your large box retailing operations when they’re, they’re firm, their form doesn’t get in.
10:59.80
William Beach
Then someone will be on the phone. Some people, maybe many will be on the phone trying to find out if they’re just late in sending it in or they’re not going to send it in or it’s in the mail.
11:10.78
Jon
Right. Yeah. Right.
11:12.23
William Beach
So there’s, you know, normal sort of things are going on. Um, I would say, is as I mentioned, about 120 people out of the 460 or so are engaged in that monthly, monthly profits. It’s a, it’s a, it’s a big operation.
11:25.79
Jon
right
11:25.86
William Beach
It’s not so big at the field level because at the field level is electronic. Uh, the data are collected rapidly. Um, There’s another survey that’s reported in the employment situation report called the household survey.
11:39.46
William Beach
And that’s is a a big field operation, but it’s entirely conducted by the census bureau and paid for by a BLS. So this is where people call households and interview them.
11:48.14
Jon
Right.
11:51.44
Jon
Right. so So hopefully people listening now have a better sense of how this process works. A lot of people working a long time and the commissioner sees it about, what, 48 hours before it actually hits our screens and sort of already locked in.
12:06.04
William Beach
Yeah. All right.
12:10.56
Jon
So I think hopefully that will that will help people understand that piece of the puzzle. I think the other piece of the puzzle that… I think is often confusing for folks is why the numbers get revised.
12:21.42
Jon
Right. And this was sort of the reason why we’ve, why we’re having this conversation, right. Is that we had these big revisions to the couple previous months. And so, um, so given everything you’ve just told us, maybe you could tell us why these numbers end up getting revised.
12:38.53
Jon
We’ve got this sample of 120 some odd thousand establishments with a lot of people collecting the data and processing it.
12:42.09
William Beach
or
12:45.35
Jon
And so, I think just instinctively, it makes sense that there’d revisions, but I’m go to let the former commissioner tell us like how, why these numbers are revised and then how that process sort of works its way through.
12:58.41
William Beach
Sure. ah Well, if all 120,000 firms reported on time, there would be no revisions.
13:07.16
Jon
Yeah. yeah
13:08.77
William Beach
Okay, so so they don’t all report on time. ah Unlike the household survey, where 100% of the sample is surveyed every month without fail, ah even though our response rate’s not 100%, we know the non-responders have just said, we don’t want to, we’ve contacted, the everybody’s contacted each month.
13:29.37
William Beach
With the business survey and they’re voluntary turning it in we give them two more months to get that survey in.
13:36.97
Jon
you
13:37.69
William Beach
So let’s go back to the lake with the minnows and the bass and the northern pike and all that stuff in the lake. We’ve done this survey and we’ve sent out the surveys to the minnows and to the bass and to the northern pike.
13:51.47
William Beach
and um about 70% of the fish have have have reported. So on the basis of that, we say, well, the other 30% must be like the 70%.
14:03.38
William Beach
And so we’ll use our mathematics to say, here’s the we’ll blow up the sample and we’ll say, here’s the total number of fish by type in the lake.
14:11.97
Jon
Yeah.
14:13.16
William Beach
So if you get a pretty good first response, 70, 80%, so seventy eighty percent then you know your revisions if from data coming in on the second month and the third month are not going to be very big. And that’s that’s been the history.
14:27.50
William Beach
um
14:27.57
Jon
yeah
14:28.60
William Beach
So the problem we’re having now is the response rate has dropped down to around 50%. That’s the first month response rate. Now, by the time we get to the third month,
14:40.56
William Beach
we get 93, 94% of the returns in. So it’s still an excellent, excellent sample, but there’s now fewer returns in the first month.
14:46.41
Jon
Right.
14:48.93
William Beach
So when we say, here’s here’s our estimate for the number of types of fish and the types of of changes in this in the in the lake from last month to this month, our first month estimate could be significantly off.
15:03.85
William Beach
If the second month comes in with information that disconfirms our assumption that what came in the first month is like what’s going to come in on the in the second month.
15:15.27
William Beach
And that is that’s the nature of it. There’s no conspiracy here. There’s no rigging of the data. there is a ah much more much more awesome problem. It’s much more severe.
15:26.76
William Beach
And that is that we’re losing our ability to estimate accurately the final number because the first month number is falling and response rate is falling.
15:37.67
William Beach
Well, just go out and crack the whip, right? Just say you’ve got to get it in. Require it. Well, we know from other countries and we know from other surveys that response rates are not easily reversed no matter what you do.
15:48.88
Jon
Yeah.
15:49.30
William Beach
Pay people, ah change the survey, make it easier, you know, make it two questions as opposed to 18. um Almost nothing will change that.
16:00.00
William Beach
So there are solutions, hope we can talk about them, that to to to this problem. But if you say, Bill, tell me about the that the revisions, is it because we’re doing a worse job?
16:10.66
William Beach
Well, okay. yeah My first answer is no, we’re not doing a worse job. We have, we have this, this problem. The second thing is that revisions do tend to be bigger, even with good response, when the economy is coming out of slow times or when the economy is slipping into slow times, we appear to be slipping into slower economic activity.
16:33.51
William Beach
ah Maybe I’m, I hope it’s just temporary, right? It’s in periods of slow down that our first estimate will overestimate the number.
16:45.11
William Beach
The second month comes in, maybe smaller businesses, right? Maybe the small businesses were underrepresented in the first one.
16:49.12
Jon
Right.
16:51.51
William Beach
And they’re the ones that are having the economic trouble.
16:54.41
Jon
Yeah.
16:54.38
William Beach
Well, now we get this better information. And so we revise downward. Downward revisions, upward revisions tend to follow the business cycle.
17:03.63
Jon
Right. And these and the smaller businesses. um Even though so, so let’s only ask this. So in terms of the sample are the smaller businesses, they’re trying to represent the overall, the aggregate sort of makeup of of the economy.
17:21.62
William Beach
That’s Right.
17:21.92
Jon
um But the small businesses are more likely to be making changes as the economy sort of ebbs and flows.
17:29.08
William Beach
bra
17:29.13
Jon
um so So what happens then for these small businesses that are making larger changes, or or I guess really more of the question is the creation and destruction of small businesses.
17:45.14
Jon
How does the BLS then address that either because of the revisions or they’re trying to find, you know, Joe’s burgers that no longer exists, right?
17:55.75
Jon
How do they go in and sort of try to fill in some of the gaps of like, re I guess, resampling the establishments.
18:02.83
William Beach
So, so we have, we, we have a, we have a real challenge here in doing our survey work because when we first draw our sample is drawn from all of the data on all of the businesses as of March of the year in which we draw the sample.
18:20.06
Jon
Mm-hmm.
18:20.26
William Beach
now I say that because that is a particularly important month. The quarterly census of employment and wages is the sampling frame. That is, that’s the entire leg. And we’re drawing it.
18:31.68
William Beach
We’re drawing our sample based on that one month. We’re saying this is representative of the economy as of March. Well, now now you’re in November. Okay.
18:40.00
Jon
Yeah.
18:40.41
William Beach
And the economy has softened. Well, what we have is a model. it’s and it’s and It’s a statistical model called the birth-death model. We run it every month to estimate based on overall economic conditions, other things happening in the economy, GDP, thought about ah all all that stuff.
18:59.72
William Beach
How many firms are being formed that were not in the March sample How many firms are dying that were in the March sample, but now we think are not because we don’t really know, right?
19:11.53
William Beach
We just don’t know. And so the birth death model is very important to the monthly estimates. It’s not, it’ll add maybe 15% change one way or the other, but it is also highly sensitive to the business cycle.
19:22.58
Jon
Mm-hmm.
19:26.99
William Beach
So when the economy particularly is decreasing,
19:27.55
Jon
Yeah.
19:30.15
William Beach
we have a hard time getting that death rate or that decrease in infirm rate correct.
19:36.89
Jon
Mm-hmm.
19:37.76
William Beach
So one area where we would like to make improvements at BLS is in the birth death model. I think there are ways to do that.
19:44.53
Jon
Yeah. Mm
19:44.83
William Beach
um We’d also like to increase the the the kinds of data that are used each month to estimate the number of jobs. We can take have survey data like we’ve talked about and blend that with data from other other sources. Perhaps we can blend in the the data from ah ADP, which looks at private sector employment each month, or from indeed.com, or from the other websites that follow employment.
20:12.76
William Beach
And by having a blended set, one survey that we’re controlling totally one set of what are called internet data or, or publicly available data, we can get a better fix on the direction and magnitude of the employment change month to month.
20:29.91
Jon
Yeah. I wanted to ask quickly ah before moving on, on the response rates. I think at least I’m sort of familiar with falling response rates at on the household surveys, right? You know, people are tired of answering surveys. There’s landline, move from landline to mobile phones and and more migration, all these sorts of things.
20:47.51
Jon
What is the… I guess, sort of ah state of the art understanding of why response rates at the establishment level has changed? Is it is it is kind of the same reason that there’s still a person at the end of the day that needs to fill out or submit a form?
21:02.35
Jon
is there something different about establishments from individual householders?
21:07.02
William Beach
There seems to be two things at work here. um First off, a systematic ah change. when And that is that all firms, large and small, are less willing to prioritize the form as opposed to their business.
21:23.93
William Beach
I mean, that’s shocking, isn’t it?
21:24.18
Jon
Yeah. Yeah.
21:25.54
William Beach
And…
21:25.68
Jon
Yeah.
21:25.81
William Beach
and
21:26.71
Jon
ah
21:27.32
William Beach
So that that is part and parcel with the general overall trend in people saying I’m going to be less responsive to what government asking me to do. So we do think that that’s part of it.
21:38.47
William Beach
Another one, frankly, John, is just there is just a an almost a ah completely episodic and of unexplainable month to month reason. You know, one, one, one time I remember the the employment people at the, at the Wednesday briefing that I’ve referred to said, Oh commissioner, we have a very serious problem, um, with the numbers we didn’t get to have the big box retailers submitted. And so, well, that is a big deal.
22:06.46
William Beach
And, uh, and so why didn’t they do it?
22:06.57
Jon
Yeah.
22:09.60
William Beach
Well, they both were doing inventory checking and inventory year end inventory checking. And they were just too damn busy. Okay, well, that don’t happen.
22:16.38
Jon
Yeah.
22:17.62
William Beach
um It’s, you have peculiar circumstances come up. In the end, it’s a solid survey because you get 95, 93%, 91%.
22:27.96
William Beach
That’s very good from from survey statistics.
22:29.37
Jon
Yeah.
22:31.05
William Beach
It’s that first month that’s the issue.
22:33.46
Jon
Right.
22:33.97
William Beach
That’s the weakness. We don’t throw the baby out with the bathwater because it’s performing well. The survey is performing well overall, but not in that first month.
22:42.94
Jon
Right. So there are probably, so so I’m hoping that the purpose of this conversation that people sort of understand this process a little bit better. But I’m sure there are some people listening to this saying, okay, so the commissioner sees this report or these reports, right, for all these different data series a couple of days before they go out.
23:02.99
Jon
There’s no conspiracy. They can’t change anything. It’s locked in. So what does the commissioner actually do then? Like, what like what is the what is the job?
23:10.04
William Beach
I think so.
23:11.81
Jon
So, yeah. So what is what is the day-to-day role of the of the commissioner?
23:17.49
William Beach
So the commissioner has a big job, um, and that is to lead change at the Bureau because the economy is constantly changing. And we’ve, we’ve, we’ve actually mentioned several things that are happening in the economy right now.
23:31.21
William Beach
that are affecting our data. The commissioner has to be a good and effective leader. ah There are continuous problems. So you’re busy making the big long-term changes. I’ll illustrate it from my own term.
23:45.48
William Beach
I came in with three objectives. ah to kind of redo the way we think about retail, retail employment, because we were not counting in the retail category online retail, which was really strange.
23:56.56
William Beach
So our our employment numbers were like with all those people were in we’re warehousing or something, which is completely bizarre.
23:56.66
Jon
Yeah. Yeah.
24:03.05
Jon
yeah
24:03.49
William Beach
The second thing was to improve our productivity estimates because we were not doing a good job there in counting service productivity in the service sector. But the biggest thing I did was to work on the CPI and make major changes to the CPI, which hadn’t been updated ah since 2012.
24:21.00
William Beach
31 of 37 recommendations that came from the National Committee on Statistics, we recommend we we implemented those.
24:27.40
Jon
Mm-hmm.
24:28.27
William Beach
All right. So that’s that’s how you affect the day to day activities by affecting the long term picture. We made investments in ah automation research. we We looked at AI. We, you know, we we kind of said, here’s where we’re going to be. And I spent a lot of time doing things like interacting with the the two administrations, Trump and Biden, getting their policy priorities kind of reflected in the product we were doing, certainly the annual publications.
24:55.64
William Beach
Um, you’re, you’re continuously busy with, with other smaller things, visiting the regional offices, uh, boosting morale. Uh, I had a lot of work I had to do to get the, uh, BLS ready to move from the postal square building and but next to union station in Washington, DC to a suburban location.
25:12.69
Jon
Right.
25:15.71
William Beach
Yeah. That’s the kind of thing you do. You do not manage on a day to day basis. There are good managers there.
25:20.44
Jon
Yeah.
25:21.38
William Beach
You do not collect the data. These are, these are product. ah efforts done by experts and there’s no role for you to play there other than to be the pretty face in front of the camera.
25:32.56
Jon
Right. So I want to come back to ah the the firing of the of the commissioner, but but before we I want to sort of like go forward and come back.
25:45.10
Jon
There’s been nominee, the president has nominated ah someone to to take over. There’s been lots of other names sort of floated without sort of getting into individual issues.
25:55.60
William Beach
right
25:56.51
Jon
experiences from your perspective, what makes, what, if you were nominating someone, what are you looking for? Are you looking for government experience, being an economist ah you know, we’re having worked in government agencies before, like, what do you, you know, you, you are now in charge. You get the, you get the honor. i’m putting you in charge now to get, to nominate the next ah commissioner. What are you looking for in that person?
26:24.04
William Beach
ah So this particular nomination cycle is unique. ah The job is a much bigger job ah today than it was on July 31st, the day before the firing.
26:35.42
Jon
Mm-hmm.
26:35.91
William Beach
You have so much more you have to do as commissioner, not only lead leeach change, but you’ve got to do an immense amount of immediate work ah triaging trust, ah trust in the statistics.
26:48.44
William Beach
um All right. So what am I looking for? well I’m not looking for a person who understands what’s happening, have happens in BLS. And people are surprised by that because you don’t know on the outside what’s happening on the inside.
27:02.38
William Beach
This is a statistical agency that is handling extremely sensitive data. And as a consequence, it is not open to the public for inspection.
27:12.99
Jon
Right. Yeah.
27:13.35
William Beach
It’s like a security agency.
27:15.20
Jon
yeah
27:16.16
William Beach
So what you want the nominees to have had yeah He or she should be familiar with all the products that BLS has, demonstrated a an interest in the statistical system, perhaps had some service or some interaction. you A lot of private economists are very active in the statistical system ah through their associations and through their own work.
27:39.32
William Beach
I think the major thing you want is you want someone who has demonstrated leadership in a situation of change. ah Managing knowledge workers is extremely important.
27:50.37
Jon
Right.
27:51.05
William Beach
You have to have experience there. Otherwise, you’ll be overwhelmed by all the things you don’t know about how to manage people’s agenda and how how to work with their with their views.
27:59.98
Jon
right
28:02.50
William Beach
But the main thing is you have to really have been through a life experience of successfully producing change in an or organization. And I think that’s why good commissioners tend to be mid to late career ah people, ah not because they’re wiser, but because they’re just more more banged up. um they’ve they’ve They’ve kind of gone through things.
28:22.71
William Beach
It’s not an easy job.
28:23.03
Jon
Yeah. Right.
28:24.93
William Beach
um And it’s a job that is term limited.
28:25.06
Jon
yeah
28:27.04
William Beach
You have four years and basically you could you could be reappointed, but the expectation is you only have four years.
28:33.83
Jon
right
28:33.88
William Beach
ah so so So that’s what I’m looking for. I’m looking for, I think that a PhD in economics is important because you’re dealing with the academy and they’re kind of touchy about that. um I think you should know statistics pretty well because you’re going to get a lot of that language and in meetings and you you you can’t ask what a standard deviation is in those meetings.
28:49.31
Jon
no
28:53.60
William Beach
um so um So that’s that’s what i’m I’m looking for, but I’m definitely not looking for a person who knows how to solve the problem on the outside.
28:54.45
Jon
yeah
29:03.81
William Beach
ah They need to be open, but once they’re on the inside, that’s their job. Problem solving, you know getting to those big changes, leading leading the organization.
29:12.58
Jon
Yeah. So now stepping back to to August 1st, the president um fired the the commissioner, Erica McIntyre for who i know very briefly through my service to a couple of BLS ah commissions.
29:29.66
Jon
um and And I just want to get in your head a little bit. When you heard that she had been fired explicitly for, you know, I think he the president sort of, you know, tweeted out or whatever, you know, that she faked the the job numbers.
29:43.13
Jon
what was your What was your immediate reaction? Like, what was your immediate thought? were you First off, were you like, I’m glad I’m not commissioner anymore? Like, I’m guessing that was your first thought. But…
29:53.16
William Beach
Uh, I actually, i actually was, I, I, it is a good story. Uh, I was at lunch with a good friend of mine when we were talking about, uh, revitalizing uh, kind of an institution in Washington.
30:06.07
William Beach
And so I went out to the parking lot and I drive a pickup truck and I was sitting in my pickup truck and, um, you know, so I thought, well, I’ll just check my emails. Cause you don’t do that during lunch and texts and see what’s going on, you know?
30:16.73
Jon
right
30:18.97
William Beach
And in my phone was blowing up.
30:21.94
Jon
but
30:22.01
William Beach
ah It was just blowing up. And I sat there with the engine, the AC running, it’s pretty hot day, for 45 minutes, I think, um partly on a conference call.
30:31.28
Jon
wow
30:33.14
William Beach
I’m the co-chair of the Friends of BLS. and It’s an advocacy group. And we were doing our response to the firing. And I knew, I was stunned.
30:45.58
William Beach
I’ve known Erica for a long time. She’s maybe the best qualified person in a long time to to have that position, ah just a distinguished career in statistics and in management.
30:56.16
Jon
Mm-hmm. Mm-hmm.
30:57.45
William Beach
So the accusation was was amazing. and ah And so we issued this the statement and then thereafter, I’ve been really busy on media. ah I want to back up and say something about President Trump and his and what he did.
31:14.30
William Beach
Um, he he certainly had the right to do what he did. I’m, I’m, I’m maybe I’m in a minority, but I believe that the president does have the right over the executive branch appointees to remove any, ah any appointee that he that he wants. It’s, uh, some argue that that’s not the case. And if it, if it shouldn’t be the case in Congress, should act so specifically in legislation to exempt that in that person or that position from such an action.
31:40.99
Jon
Yeah. Yeah.
31:41.22
William Beach
but This was not an exempted position. The second thing I’d like to say is it was extremely ill-advised. Um, uh, I don’t blame him for not knowing how BLS operates on the inside.
31:53.35
William Beach
I made this point a couple of times in our conversation today that you really don’t know unless you’re there yeah or unless someone tells you that said, John, there are people in the white house that I know who know ah how this system works.
32:04.38
Jon
yeah
32:06.40
William Beach
They know.
32:07.51
Jon
yeah
32:07.90
William Beach
And i if they, if they were unable to get to the president to advise him otherwise, okay, fine. They’re off the hook, but shame on them. If they said, this is okay thing to say, because it has done damage to the BLS. It’s done damage to economic statistics.
32:26.45
William Beach
Um, I was contacted once, if I have time to tell you, I was contacted once by a banker in Dusseldorf. um That’s in Germany. And this is for another reason, but during the course of the conversation, he said, do you know that the exchanges here in Dusseldorf shut down for 10 minutes prior to every first Friday’s labor labor report?
32:47.10
William Beach
And of course, I didn’t know that, but that’s how important it is to decisions made in remote areas, remote from the United States.
32:47.29
Jon
Yeah. Mm-hmm.
32:55.68
William Beach
ah It is a crucial ah monthly set point for financial and other kinds of decision making and to impugn it without any shred of foundation.
33:11.14
Jon
yeah
33:11.20
William Beach
is is, I’ll use the term ill-advised, but you could use a stronger term. So, so and i I hope the president now, and I think he has sort of backed walk back walked that a little bit, ah let it kind of subside ah because it’s so it’s damaging to the economy. You have to be able to have statistics to see the economy. The economy does not grow on trees.
33:32.53
William Beach
GDP is nowhere to be dug up like a root vegetable.
33:35.27
Jon
Right.
33:35.53
William Beach
um It is only defined in the numbers and the statistics that our statistical agencies produce.
33:42.82
Jon
I do want to come back to that and I do want to touch on the the solutions that you mentioned earlier. i did just want to ask, um you were appointed by President Trump. You served into the Biden administration.
33:55.84
William Beach
Right.
33:55.99
Jon
um And so you sort of had both of those and and McIntarfer was appointed by Biden, served obviously just for a few months in the Trump administration. Was your job, your role as commissioner any different as you stretched between those two those two um presidencies?
34:16.99
Jon
Or was the work you just, you know, you know November was the same as March, is just two different people sitting in the White House?
34:25.02
William Beach
Well, there were stark differences. Um, and I think that’s the, that’s a kind of a unique perspective. There wasn’t, if you, if let me answer it this way, if you were talking to a senior staff member inside BLS, they would have not, they, they, they would not have noticed any difference.
34:42.15
William Beach
Their job did not change from one administration to the next.
34:42.60
Jon
Right. Right. Mm-hmm. right
34:45.74
William Beach
my changed my My job changed a lot. um In the Trump administration, we were looking at a lot of issues like re-employment, what happens to unemployed people when they go into when they leave unemployment, how do we trace them?
35:00.42
William Beach
we were looking
35:00.51
Jon
you
35:00.99
William Beach
at local wages. we were we were We were very much interested in the immigration issues. um And so BLS was, through me, was getting special requests, tabulations, activity reports, and so forth.
35:13.09
William Beach
I was on a lot of panels. I was doing a lot of national security work. I was in SCIFs. um we And we were
35:18.33
Jon
Mm-hmm.
35:20.86
William Beach
24 seven for 18 months on the pandemic. When the Biden people came in, I then pivoted to looking at how do we create statistics that are more inclusive?
35:32.72
William Beach
ah how do we How do we define workers by other kinds of characteristics and and make them visible in our labor force reports? um I think the most the biggest example of that was when I initiated a monthly, not seasonally adjusted report on the unemployment rate of indigenous peoples. And that was that was very reflective of ah President Biden’s priorities.
35:56.21
William Beach
I did not sit in any national security issues that that dropped off. And of course, we were in the period of inflation. ah
36:04.07
Jon
Right.
36:04.33
William Beach
Where’s the end of my term? So there was quite a bit of work to be done on the price price side. So it it it and Elections matter, John, they they they really do. And priorities are embodied in, especially when the parties change, their new priorities. And, and, um, as a presidentially, uh, responsible person,
36:24.86
William Beach
Cause I was, while I was appointed by Trump, the Biden people liked me fine enough. I had to make sure that I was, uh, responsive to their requests and and ah that was appropriate at the same time.
36:34.35
Jon
Right. Right.
36:36.78
William Beach
i want to reemphasize no difference whatsoever in the daily working of the BR of BLS. ah The, you know, the top management worked with me on the special requests, but everyone else did their work, did their work.
36:42.97
Jon
right
36:51.04
Jon
Yeah. So looking forward, this is gonna be a very broad question. So we can, you can take it however you like, but but you’ve mentioned ah trust in the federal data collection, statistical agencies, and also solutions to some of the lots of issues. I mean, it’s data collection, it’s analysis. There are a lot of issues that pop up big and small that that have solutions.
37:12.64
Jon
And so this sort of a two part question, I guess is, What is the solution to some of these detailed issues you’ve mentioned? Maybe we just pick a couple. And what is the solution to the broader issue of maybe this sort of cracks in the trust of federal data that are being collected and being ah published? Like, what do you think needs to happen, both at kind of a micro level and a macro level?
37:42.64
William Beach
Well, there are problems that need to be addressed. I think restoring trust in any product starts with your recognition that there’s a problem and you’re working on it.
37:57.19
William Beach
ah People are not going to be more trusting if you just ignore their criticisms. And I think that this particular thing on the revisions, um yeah Yeah, initially I wasn’t convinced it was a problem. I thought it was just episodic.
38:14.32
William Beach
um But I do think that there’s a systematic element that needs to be addressed. So let’s do blended data.
38:18.43
Jon
Mm-hmm. Mm-hmm.
38:20.00
William Beach
let’s let’s But Congress needs to step forward with some some money. I think the whole ah salvation of all of our surveys, they’re called probability surveys. ah The probability surveys can be restored or at least augmented with other data sets for yeah in BLS’s case for just about 40 million over a two year period. the i I’ve heard an estimate for system-wide that is all within all the 13 recognized statistical agencies of 160 million. I don’t know if that number is correct at all, but there is a number less than what Congress spends per day
38:58.78
William Beach
on um I don’t know, flights back to his constituency or something.
39:03.19
Jon
I’m sure.
39:03.82
William Beach
it
39:04.20
Jon
Yeah.
39:04.65
William Beach
It is not a large number in terms of the numbers that the federal government deals with.
39:09.83
Jon
And i I’ll just real quick, cause i was just looking this up. I think the BLS’s budget, right, is something like $600 million dollars a year. So we’re talking about, and that’s fallen by, I think my numbers are like 150 million over the last decade.
39:23.64
Jon
So they’re getting less money, but the numbers you just quoted are a fraction of that money.
39:24.27
William Beach
yeah
39:29.04
William Beach
fraction of that And the reason why we don’t have large numbers to deal with in BLS’s case is that we’ve been spending time ah without asking for additional funding, studying this problem and devising and testing solutions. So there are things out of the, um,
39:47.36
William Beach
just really out of out of the bank, we can we can pull and say, well, let’s now test this in real time. It takes about a year minimal of testing to make sure the new system is working like the old system and producing statistically sound results.
39:54.35
Jon
Yeah.
40:03.58
William Beach
Okay.
40:03.96
Jon
yeah
40:04.89
William Beach
So the second thing on trust is to understand that part of the reason why people don’t trust is that they’re not getting what they want. ah it’s It’s a kind of a funny connection between trust and utility.
40:19.71
William Beach
um If you are continuously told, oh, we can’t do this, we can’t do this, you just have to live with this product that you don’t really like, then you begin to like it less and less.
40:30.15
William Beach
um We learned during COVID that the public, particularly businesses, want higher frequency official statistics.
40:40.22
Jon
Mm-hmm.
40:40.45
William Beach
And we began to produce them during the COVID years using the household pulse survey and the business pulse survey, which was a weekly survey with weekly results. And everybody thought were great.
40:51.09
William Beach
um We didn’t ask many questions, but those questions were pertinent to the times we were in. So i I think we should find ways of doing high frequency official statistics.
41:03.26
William Beach
And that would mean we’d roll out new products. We would we would amaze people by the kind of higher utility the statistical system has in their daily lives.
41:12.67
Jon
no
41:12.66
William Beach
um And the frequency may be as high as as daily. ah Many of the many agents Many banks now, um as as well as well as Federal Reserve banks, as well as universities, do these daily forecasts of gross domestic product of of demand.
41:34.75
William Beach
It’s called Go Forecasting. it’s It’s increasingly accurate. And i think the statistics could do something like that. what What if you got a daily report of job changes in the economy?
41:47.32
William Beach
um ah by industry, by large industry sectors. I mean, it it would all be modeling, but but it it would be useful for a lot of firms and then weekly and maybe bi-monthly.
41:56.13
Jon
yeah
41:59.92
William Beach
So I think restoring trust is also doing a better job. overall of being more responsive. We’re we’re in a 20th century mold, post-World War II mold of doing survey work, probability surveys.
42:14.24
William Beach
That was the big thing in the 1950s. That was the cutting edge. And it has been very useful. But now we have other ways we can use the internet, AI, and lots of business data to see the world more clearly.
42:20.86
Jon
Yeah.
42:28.93
William Beach
And we need to do that.
42:30.54
Jon
yeah Well, ah Bill, thanks so much for coming on the show. I really appreciate it. I’m sure your phone is still blowing up even a few weeks later. ah And I hope people will find this value.
42:41.19
William Beach
just been quiet Amen.
42:45.25
Jon
Hopefully they understand a little bit more what goes into this process and the commissioner’s role. So um thanks so much for coming on the show. I hope I hope i get to see you again soon, maybe in that pickup truck.
42:54.98
William Beach
Thank you very much for having me.
42:55.11
Jon
All right. Thank sir. all right. Take care.