We Have a Sharing Problem

Two Children Sharing

The United States has a decentralized statistical system with agencies such as the Census Bureau, Bureau of Labor Statistics (BLS), and Bureau of Economic Analysis (BEA) each producing their own economic metrics. There are advantages to this system; however, there is currently one big flaw: the agencies do not work from an internally-consistent set of data. In fact, they are barred by law from sharing important microdata with one another, and this leads to statistics on the U.S. economy that are badly inaccurate. These accuracy problems affect everything from the BEA’s national and state GDP statistics, to the BLS’s and the Census Bureau’s (separate) employment, payroll and establishment statistics, to statistics on the productivity growth and trade balances in strategic sectors such as manufacturing. And because these statistics are used by the federal government to make fiscal and monetary policy decisions, this data sharing problem leads to misdiagnosis of economic problems and ineffective policies. Moreover, the lack of data sharing leads to work redundancy (many agencies procuring their own data to produce similar statistics), increasing budget costs while also increasing the reporting burden on private businesses.

The resolution to this problem is rather simple. Congress should amend the Internal Revenue Code such that statistical agencies such as the BEA and BLS gain access to the Census Bureau’s Business Register (which is derived from IRS data). The “Efficient Export Promotion to Help American Businesses Act of 2012” would do just that, effectively remedying the data-sharing problem (a summary of the bill here; full text here). But the bill was only introduced in May, and it has a long way to go in Congress before ever becoming law.

Image credit: bengrey

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About the author

Luke Stewart is an economic analyst at the Information Technology and Innovation Foundation.