February 12, 2010    Volume 17, No. 3

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Obama Puts BLS's International Labor Comparison Program On Chopping Block


By Richard A. McCormack
richard@manufacturingnews.com

If the Obama administration has its way, American businesses, economic analysts and the public will soon have no idea how U.S. labor and productivity rates compare to foreign rivals. In its fiscal year 2011 budget submission to Congress, the Obama administration targets for elimination the $2-million International Labor Comparison Program run by the Bureau of Labor Statistics. It says the data series, the only one of its kind in the world, does not get enough use and needs to be cut, in order to save money. The program tracks foreign labor rates, including those of China. It has been in operation since the 1960s.

"Our priorities have to change," said President Obama speaking of his desire to eliminate 120 government programs including the International Labor Comparisons program. The program, like the 119 others slated for termination, "just doesn't work."

That wasn't the case a year ago, however. In its fiscal year 2010 budget submission to Congress issued in early 2009, the Department of Labor said there were "many users" of the International Labor Comparison Program statistics including "policy makers throughout the U.S. government and U.S. business and labor groups who use the data to assess U.S. economic performance relative to other countries and to provide indicators of the competitive position of the United States in increasingly globalized markets."

The President's FY 2011 budget request says that "savings associated with this termination would be used to help finance other critical needs of BLS." A budget spokeswoman at the BLS said "there are other more critical needs to be funded" and that the series "is not a principle government economic indicator" such as the unemployment rate or the Consumer Price Index.

The $2 million in funding will be used to modernize the "Consumer Expenditures Initiative" and expand the use of commodity and service price collection "to reduce Consumer Price Index variance," says the 2011 congressional budget request.

The BLS "International Comparisons of Hourly Compensation Costs in Manufacturing" will no longer be produced, and the office will disband its workforce of 16 analysts. The program has funded the groundbreaking research conducted by Dr. Judith Banister that tracks manufacturing labor costs in China, and compares them to those in the United States and other industrialized countries. Banister's studies also provide an analysis of Chinese incentives and cost structures that have helped change the landscape of global manufacturing.

The BLS labor comparison data program is currently conducting a similar study of labor costs in India.

Killing the program shows that "the Obama administration has...come up with a creative way to deal with the increasingly bleak news with regard to the economic position of the United States in the world," says David Martin, a retired federal economist. "What will be lost will be a ready reckoning of how the country is measuring up on the world economic front."

Martin adds: "If you want to see one reason why the NAFTA might not have been such a good idea, you can consult one of the many tables the office has compiled on manufacturing composition. [F]or instance, you can see that in the United States in 2007, production workers in manufacturing made an average of $27.27 an hour, counting fringe benefits, while in Mexico they made $2.29 an hour."

In another comparison of international manufacturing employment, the office reports a 3.9 percent decline in U.S. manufacturing employment in 2008, the highest level of decline among the 17 countries it compared. Every year since 2000, the United States lost 3 percent of its manufacturing jobs. "One may search the Internet high and low and he will find no better indicator of this country's relative deindustrialization," according to Martin.

So where did all of those jobs go? All you have to do is look at the Banister report on the program's Web site to find out. The number of manufacturing workers in China surged by 11.1 million between 2002 and 2006, according that report, an amount that is almost equal to the total number of Americans employed in the manufacturing sector.

"Here you see in raw numbers verification of your impression that almost everything you buy these days has a 'Made in China' label on it," Martin comments. "The BLS International Labor Comparisons Office has been documenting global economic change that some people would apparently prefer that we not know about, whether we believe in it or not. The three-word [Obama] campaign slogan of 'Yes, we can,' it would seem, is to be replaced with an older three-word saying, 'ignorance is bliss.' "

Officials within the BLS told Manufacturing & Technology News that they do not know why the program was targeted for elimination. MTN has submitted a Freedom of Information Act request seeking all correspondence between the Department of Labor and the Office of Management and Budget discussing plans and reasons for killing one of the country's only global benchmarking data series. Congress would have to approve the Obama administration request.


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