Introduction
Following the dismissal of Erika McEntarfer, the Commissioner of the Bureau of Labor Statistics (BLS), U.S. President Donald Trump indicated he would nominate a new director for the agency the following week. It is crucial that businesses and investors perceive Trump’s candidate as impartial and independent from the White House, as trust in the integrity of government data is fundamental to economic prosperity.
Background on the BLS and McEntarfer’s Dismissal
The BLS, under McEntarfer’s leadership, recently released the July employment report, revealing that the U.S. economy created only 73,000 jobs. The report also included revised data for the previous two months, showing that only 19,000 net new jobs were created in May and 14,000 in June.
Trump, angered by the report, falsely claimed on social media that McEntarfer “manipulated” employment figures for political purposes. However, there is no evidence to support these claims, and it would be extremely difficult to alter the data even with malicious intent. As former BLS Chief William Beach explained to Politico, hundreds of analysts work on the figures, which are finalized by around 40 individuals who have served under both political parties. “The Commissioner doesn’t see these figures until the Wednesday before their Friday publication,” Beach added.
Implications of Trump’s Decision
By incorrectly asserting that employment data is biased, Trump undermines the credibility of information relied upon by policymakers, businesses, households, and investors. The economic consequences are far-reaching. Without accurate knowledge of the economic reality, investors may perceive higher levels of risk, businesses might postpone new projects, and the Federal Reserve could make a costly mistake in setting interest rates.
Historically, countries like the Soviet Union and China have frequently falsified economic data to support their policies. The dismissal of McEntarfer and the appointment of a new BLS Commissioner carries significant historical weight, as it echoes authoritarian regimes’ manipulation of economic data for political gain.
Importance of BLS Data
BLS data on the labor market and U.S. government economic statistics, in general, are the definitive reference point. There is no substitute for them, as private sector data, while important, are often compared to and less representative than government statistics.
Routine revisions to official statistics, like those prompting McEntarfer’s dismissal, should not be a cause for concern. Government agencies must balance the need for high-quality data with timely reporting.
Challenges in Collecting BLS Data
The BLS faces challenges in collecting employment data, including late responses from businesses and monthly payroll practices. The agency must provide decision-makers with timely, yet high-quality information. For instance, the BLS publishes an estimate for May in June based on partial data, then refines it further in July before releasing the final figures in August.
Additional challenges include estimating job losses from businesses exiting the market and new net job creation in newly formed companies, as well as accounting for seasonal employment fluctuations.
Key Questions and Answers
- Q: Why is it important for the BLS Commissioner to be nonpartisan?
A: A nonpartisan Commissioner ensures the integrity and trustworthiness of BLS data, which are crucial for policymakers, businesses, households, and investors to make informed decisions.
- Q: How might falsified employment data impact the economy?
A: Inaccurate data can lead to misperceptions of risk among investors, delayed business projects, and potentially erroneous interest rate decisions by the Federal Reserve.
- Q: What are the challenges in collecting BLS employment data?
A: The BLS must deal with late business responses, monthly payroll practices, and estimating job losses and gains from businesses entering or leaving the market, as well as accounting for seasonal employment fluctuations.
- Q: Why should Trump avoid installing a partisan Commissioner at the BLS?
A: Historically, countries that manipulated economic data for political gain faced increased interest rates and worsened debt crises, as markets lost trust in official statistics.
Author Information
Michael R. Strain, Director of Economic Policy Studies at the American Enterprise Institute, is the author of The American Dream Is Not Dead (But Populism Could Kill It) (Templeton Press, 2020).
Copyright: Project Syndicate, 1995 – 2025
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