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Prepublication copy, uncorrected proofs A Satellite Account to Measure the Retail Transformation: Organizational, Conceptual, and Data Foundations Panel on Measuring the Transformation of Retail Trade and Related Activities Committee on National Statistics Division of Behavioral and Social Sciences and Education A Consensus Study Report of
Prepublication copy, uncorrected proofs THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001 This activity was supported by a contract between the National Academy of Sciences and the U.S. Department of Labor, Bureau of Labor Statistics, under Contract No. 1625 DC-19-C-0009. Support for the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation, a National Agricultural Statistics Service cooperative agreement, and several individual contracts. Any opinions, findings, conclusions, or recommendations expressed in this publication do not necessarily reflect the views of any organization or agency that provided support for the project. International Standard Book Number-13: 978-0-309-XXXXX-X International Standard Book Number-10: 0-309-XXXXX-X Digital Object Identifier: https://doi.org/10.17226/26101 Additional copies of this publication are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu. Copyright 2021 by the National Academy of Sciences. All rights reserved. Printed in the United States of America Suggested citation: National Academies of Sciences, Engineering, and Medicine. (2021). A Satellite Account to Measure the Retail Transformation: Organizational, Conceptual, and Data Foundations. Washington, DC: The National Academies Press. https://doi.org/10.17226/26101.
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Prepublication copy, uncorrected proofs PANEL ON MEASURING THE TRANSFORMATION OF RETAIL TRADE AND RELATED ACTIVITIES J. STEVEN LANDEFELD (Chair), Consultant and former Director of the Bureau of Economic Analysis, Washington, DC CAROL A. CORRADO, The Conference Board, Washington, DC GREGORY DUNCAN, University of Washington TERESA C. FORT, Dartmouth College JOHN C. HALTIWANGER, University of Maryland-College Park DALE W. JORGENSON, Harvard University MICHAEL MANDEL, Progressive Policy Institute, Washington, DC KELLY MCCONVILLE, Reed College LEONARD I. NAKAMURA, Federal Reserve Bank of Philadelphia WESLEY YUNG, Statistics Canada, Ottawa, Ontario STUART ELLIOTT, Co-study Director NANCY KIRKENDALL, Co-study Director ANTHONY MANN, Program Associate ELLIS GRIMES, Senior Program Assistant v
Prepublication copy, uncorrected proofs COMMITTEE ON NATIONAL STATISTICS ROBERT M. GROVES, (Chair), Office of the Provost, Georgetown University LAWRENCE D. BOBO, Department of Sociology, Harvard University ANNE C. CASE, Woodrow Wilson School of Public and International Affairs, Princeton University MICK P. COUPER, Institute for Social Research, University of Michigan JANET M. CURRIE, Woodrow Wilson School of Public and International Affairs, Princeton University DIANA FARRELL, JPMorgan Chase Institute, Washington, DC ROBERT GOERGE, Chapin Hall at the University of Chicago ERICA L. GROSHEN, School of Industrial and Labor Relations, Cornell University HILARY HOYNES, Goldman School of Public Policy, University of California-Berkeley DANIEL KIFER, Department of Computer Science and Engineering, The Pennsylvania State University SHARON LOHR, School of Mathematical and Statistical Sciences, Arizona State University, Emerita JEROME P. REITER, Department of Statistical Science, Duke University JUDITH A. SELTZER, Department of Sociology, University of California-Los Angeles C. MATTHEW SNIPP, School of the Humanities and Sciences, Stanford University ELIZABETH A. STUART, Department of Mental Health, Johns Hopkins Bloomberg School of Public Health JEANNETTE WING, Data Science Institute and Computer Science Department, Columbia University BRIAN HARRIS-KOJETIN, Director CONSTANCE F. CITRO, Senior Scholar vi
Prepublication copy, uncorrected proofs Acknowledgments This report reflects the contributions of many colleagues who generously gave their time and expert advice in helping prepare the panelâs report on measuring the transformation of retail trade and its activities. The panel thanks Bureau of Labor Statistics (BLS) Commissioner William Beach and Associate Director Lucy Eldridge for their help in understanding the challenges confronting measurement of retail trade and in shaping the scope of the study. We also thank BLS staff, in particular the panelâs main contacts at BLS â Jenny Rudd, Chris Sparks, and Chris Manning â who worked within BLS to find answers to questions the panel raised throughout the study; Chet Meyers, Jenny Rudd, Kandi Miller, and Brian Chansky for their background briefings at the first panel meeting; and Ken Robertson, Matthew Russell, Brian Chansky, Brendan Williams, Bonnie Murphy, and Dominic Smith for their presentations and discussions at the panelâs workshop, which helped us understand key conceptual, methodological, and source-data issues. The panel also benefited greatly from presentations on topics central to the panelâs charge in measuring the transformation of retail trade, made by experts from the Bureau of Economic Analysis (BEA) (John D. Samuels, Tina Highfill, and Ana Aizcorbe) and the Census Bureau (Emek Basker, Ian Thomas, and Edward Watkins). A number of other experts at BEA and Census also helped in providing important insights in understanding current and alternative estimates of retail trade; in particular, I was greatly helped by Erich Strassner, Edward Morgan, and Thomas Howells at BEA. We are also grateful for the presentations by, and discussions with, experts from academia, business, international organizations, and the Federal Reserve Board. These experts provided perspective on researchersâ and other data usersâ views of the forces transforming retail trade, the statistical challenges in measuring the change, and suggestions for addressing needed changes in measurement: Chad Syverson (University of Chicago), Steve Noble (McKinsey and Company), Jack Kleinhenz (Retail Trade Federation), Drew Spata (Macys), David Glick (FLEXE), Richard Phillips (Yale Divinity School and former CEO of Pilot Freight Services), Anne Goodchild (University of Washington), Leland Crane (Federal Reserve Board), Phillip Smith (Statistics Canada), Marshall Reinsdorf (International Monetary Fund), and Robert Feenstra (University of California, Davis). The panel could not have conducted its work efficiently without the capable staff of the National Academies of Sciences, Engineering, and Medicine, including Brian Harris-Kojetin, Director of CNSTAT, and Constance Citro, Senior Scholar, who helped in framing the task for the Panel, advising on specific issues during the panel study, and making important suggestions on the presentation of the panel conclusions and recommendations. Nancy Kirkendall and Stuart Elliott did an outstanding job in working with the panel to distill and summarize a broad range of complex topics to support the conclusions and recommendations presented in the report. vii
Prepublication copy, uncorrected proofs Finally, and most importantly, I would like to add a note of appreciation for my fellow panel members who formed the core of the study team. Panel members helped in developing the focus, identifying and prioritizing the challenges and solutions, making presentations, chairing sessions, acting as discussants, drafting materials, providing detailed information in their areas of expertise, and reviewing and commenting on multiple rounds of workshop summaries and drafts of the report. This Consensus Study Report was reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise. The purpose of this independent review is to provide candid and critical comments that will assist the National Academies of Sciences, Engineering, and Medicine in making each published report as sound as possible and to ensure that it meets the institutional standards for quality, objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report: Emek M. Basker, Center for Economic Studies, U.S. Census Bureau; Thomas J. Holmes, Department of Economics, University of Minnesota; Thomas L. Mesenbourg, Jr., former U.S. Census Bureau; Colm A. OâMuircheartaigh, NORC, Harris School of Public Policy, The University of Chicago; Ariel Pakes, Department of Economics, Harvard University; Richard G. Phillips, Yale Divinity School, former Chair and CEO of Pilot Freight Services; Chad Syverson, Booth School of Business, The University of Chicago. Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations of this report nor did they see the final draft before its release. The review of this report was overseen by Charles F. Manski, Department of Economics, Northwestern University. He was responsible for making certain that an independent examination of this report was carried out in accordance with the standards of the National Academies and that all review comments were carefully considered. Responsibility for the final content rests entirely with the authoring committee and the National Academies. J. Steven Landefeld, Chair Panel on Measuring the Transformation of Retail Trade and Related Activities viii
Prepublication copy, uncorrected proofs Contents Summary 1 1. Introduction 7 The Panelâs Approach 8 2. Transformation of the Retail Sector 10 Recent Changes in the Retail Sector 10 How Recent Retail Changes Relate to the Basic Definition of the Sector 15 The Retail Transformation as Seen in Existing Statistical Series 18 3. Measuring Retail Employment and Labor Productivity 21 Measuring Retail Employment and Labor Productivity: The High-Level 21 Task Defining the Retail Sector 23 Measuring Output 32 Adjusting Nominal Output for Changes in Prices 43 Measuring Input 48 Additional Data Sources 51 4. Toward a Retail Satellite Account 57 What Are Satellite Accounts and How Are They Used? 57 Audiences for a Retail Related Satellite Account and Measures of 60 Employment and Productivity Defining a Retail-supporting Sector 61 Existing Satellite Accounts with Potentially Useful Features 66 5. Recommendations for a Retail Satellite Account 69 Motivation and Overarching Recommendations 70 Design of a Satellite Account (Specifications) 71 Studying and Solving Data Issues 75 References 80 Appendixes A Agenda for the Panelâs Workshop 84 ix
Prepublication copy, uncorrected proofs B Retail Output, Hours, and Labor Productivity, 1997-2018 86 C Biographical Sketches of Panel Members 88 Boxes 1-1 Statement of Task 3-1 Labor Productivity for Trade-Related Industries: How It Is Measured by the Bureau of Labor Statistics 3-2 Measuring the Economy: The North American Industry Classification System (NAICS) 3-3 NAICS Classification and Designation of Auxiliaries 3-4 Alternative Measures of Nominal Output 3-5 The Census Bureauâs Annual Economic Surveys 3-6 The Census Bureauâs Five-year surveys 3-7 BLS Data on Employment and Hours for Trade-Related Industries 3-8 Census Bureauâs Other Important Annual Survey 4-1 System of National Accounts 4-2 Evaluation Criteria 4-3 Four Alternative Definitions of a Retail-Related Sector Figures 2-1 Average annual change in labor productivity, 1997-2018, by type of output measure 4-1a Comparison of distributional and retail-supporting industry codes 4-1b Comparison of retail-controlled and enterprise-based industry codes Tables 2-1 Several Indicators of the Retail Transformation, 1997-2019 (percent) 3-1a Comparison of the Number of Establishments by NAICS Codes, as Measured by Three Programs, 2017 3-1b Comparison of the Estimated Number of Employees by NAICS Codes, as Measured by Three Programs 3-2 Number of Auxiliary Establishments that Supported Retail Trade, 2012 Economic Census App B Retail Output, Hours and Labor Productivity, 1997-2018 x