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Understanding Business Dynamics: An Integrated Data System for America’s Future
based on IRS filings augmented with data from various censuses and surveys.
The business lists serve a number of critical purposes. They are used to create sampling frames for a wide variety of surveys conducted by the agencies; to benchmark survey data; to publish employment and wage data; and to generate key statistical aggregates, most notably many of the inputs to the national income and product accounts. Comparison projects conducted cooperatively between the Census Bureau and BLS indicate that the business lists do not consistently align—for example, in terms of employment and establishment counts assigned to certain industries, or in their ability to pick up small and new businesses. Inconsistencies in the business lists carry direct implications for the reliability of key business statistics—from gross domestic product, to aggregate employment, to productivity and industrial production—derived at least in part from business list data. In turn, this creates problems for data users. Perhaps most notably, the Federal Reserve’s monetary policy is affected when productivity data—calculated using output data from the Census Bureau and input measures (industry employment) from BLS—are inaccurate, because that information factors directly into measured inflation trends.
Continued evolution of the U.S. business data system hinges, to a significant extent, on improving the Census Bureau and BLS business lists. The potential of reconciling the business registers is a highly visible example of what can be gained through effective interagency data sharing. Recent legislation—specifically the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA), which allows sharing of confidential business data among BLS, the Bureau of Economic Analysis (BEA), and the Census Bureau for statistical purposes—provides a foundation facilitating the kind of data coordination needed to work toward this goal. However, the Census Bureau is not permitted to share its underlying business list or survey data with BEA or BLS because they are commingled with federal tax information. The panel supports extending CIPSEA to increase the flexibility with which information can be shared among statistical agencies for purposes of constructing a comprehensive business register and for designing special surveys.
Effective coordination of the statistical agency data programs is essential for improving the accuracy, coverage, and timeliness of business data, as well as the efficiency with which they are produced. Before work can progress further to reconcile the business lists, and before data sharing among the three CIPSEA-designated agencies can be fully exploited, the IRS regulations and tax code legislation must be changed.
Measures should be taken immediately to facilitate the expansionof CIPSEA to increase the kinds of information that may be shared