. "4 Limitations of the Current Data System for Measuring Business Dynamics." Understanding Business Dynamics: An Integrated Data System for America's Future. Washington, DC: The National Academies Press, 2007.
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Understanding Business Dynamics: An Integrated Data System for America’s Future
sharing and lack of coordination result in an underutilization of resources. Not only can data sharing result in improved quality of economic (and other) statistics, it may also potentially reduce costs to the agencies and the burden placed on survey respondents who receive similar data requests from multiple agencies (see Chapter 3 on this point).
The production of economic statistics relies heavily on survey and administrative data collected and housed by the Census Bureau, BLS, and BEA. However, with a few specific exceptions, these agencies are not permitted to share their data sources when they include Title 26 (U.S. Code) federal tax information. The Confidentiality Information Protection and Statistical Efficiency Act (CIPSEA) has expanded the potential for data sharing among these agencies. However, enabling legislation for the sharing of tax data is not part of CIPSEA. As a result, data in the Census Bureau’s business register, which is constructed in large part from IRS tax data, cannot be shared.14 This, in turn, impedes coordination of the business lists maintained by the statistical agencies. In some cases, agencies have had to purchase private business lists that are inferior in some ways, simply because they did not have access to the business data at another agency (for example, the Survey of Small Business Finances at the Federal Reserve has used sampling frames from Dun & Bradstreet). Controlled access to government lists would eliminate these kinds of costs and allow more accurate data to be used.
Since the Census Bureau’s business register relies heavily on IRS source data, the agency’s ability to share with BEA and BLS is extremely limited. The Census Bureau itself does not collect any data on receipts from nonemployer businesses but simply uses IRS data for such cases. These data cannot be shared. Likewise, BLS and BEA access to data on sole proprietors—of which there are roughly 1.5 million, a group of businesses that constitutes a large fraction of economic activity—and partnerships is extremely limited and has been excluded from previous data-sharing proposals.15
See Appendix B in the Committee on National Statistics (CNSTAT) report ImprovingBusiness Statistics Through Interagency Data Sharing (National Research Council, 2006) for an overview of recent legislation governing data sharing and access to federal tax data. Papers by Nick Greenia and Mark Mazur and by Robert Parker in that volume provide further details of statistical agency access to IRS data. The full text of the CIPSEA legislation can be found at http://www.eia.doe.gov/oss/CIPSEA.pdf.
The effort to promote greater data sharing for business list reconciliation is further complicated because BLS data are shared with state programs. The Labor Market Information Cooperative Agreement includes provisions for BLS and state agencies to share data for five BLS programs—Current Employment Statistics, Local Area Unemployment Statistics, Occupational Employment Statistics, the QCEW, and Mass Layoff Statistics. Under the legal terms of the agreement, the state agencies have access to data collected through these