Department of Labor Giving National Job Data Security Review

The U. S. Department of Labor has asked an outside agency to review the security controls designed to prevent early access to monthly employment data safeguarded by the federal government.

At the state level, there appear to be fewer security concerns, even though the early release of state data by Gov. Bev Perdue in August 2011 led the chairman of a congressional committee to demand additional information from Perdue and federal labor officials about the incident. For now, federal officials say they want states to protect this information, but they haven’t offered specific guidelines.

CNBC reported March 7 that the Labor Department has asked Sandia National Laboratories to review security issues surrounding the monthly job reports. Officials worry that monthly employment data could be leaking early, giving some Wall Street traders access to information that is supposed to be guarded strictly until its official release. Anyone gaining early access to this information could make major profits in securities markets by trading stocks before the employment numbers go public.

Sandia, with facilities in California and New Mexico, is under the U.S. Department of Energy’s National Nuclear Security Administration. Part of its mission is ensuring the nation’s nuclear weapons stockpile is safe and secure.

Carl Fillichio, a senior adviser for public affairs at the Labor Department, told CNBC no single incident prompted the security review. “Our concern is that it never happen, not that it has happened,” he said.

But CNBC analyst Jon Najarian noticed unusual trading activity in the options market ahead of the Feb. 3 jobs report. “I thought the buying in S&P 500 was a tip-off that someone knew the numbers before the release,” Najarian said.

The national jobs data, including the unemployment rate and the job estimates by industry sector, typically are released on the first Friday of every month. State-level data are usually released on the third Friday of every month by the agency housing the state’s employment security program.

The department’s Bureau of Labor Statistics produces the national and state-level employment data, with some assistance from each state’s employment agency.

North Carolina data

Carolina Journal reported last year that Perdue violated a cooperative agreement between BLS and the state of North Carolina on Aug. 18 when she told the Rotary Club of Asheville that the state had lost 11,000 public-sector jobs in July. The monthly employment report was released to the public at 10 a.m. the day after her speech.

The state jobs report is little more than data collected and analyzed at the federal level by BLS that is sent back to each state’s employment agency and reported to the public. The states enter a cooperative agreement with BLS announcing the date of each month’s job release by Dec. 31 of the preceding year and pledging not to disclose information from the jobs report while the embargo is in effect.

Perdue’s slip amounted to a violation of the agreement, BLS regional director Janet Rankin in Atlanta told CJ.

According to BLS officials, Betty McGrath, then director of the Labor Market Information Division of the state’s Employment Security Commission (now known as the Division of Employment Security in the N. C. Department of Commerce) reported the violation to the BLS regional office in Atlanta after seeing media reports of the Perdue comments.

Rankin followed up with interviews with ESC officials, including agency head Lynn Holmes. Rankin did not say if any further action was taken.

Advance look

In January, CJ reported that Perdue’s press office has gotten an advance look at the embargoed data since January 2011, and perhaps before then. Documents and correspondence obtained by CJ showed that Perdue’s staff received the information at least 24 hours in advance and used the early access to massage the monthly press release that reported job data to the public. The press office typically rewrote the text and added positive spin.

CJ suggested that the sharing of data may violate a federal law protecting the confidentiality of embargoed federal employment data. This report caught the attention of U. S. Rep. John Kline, R-Minn., chairman of the Committee on Education and the Workforce. In a Dec. 21 letter, Kline asked Perdue and U.S. Labor Secretary Hilda Solis to supply correspondence and other material related to the news stories to his committee.

On behalf of Solis, Brian Kennedy, Labor’s assistant secretary for congressional and intergovernmental affairs, wrote to Kline. “I am pleased to correct some of the inaccuracies and misimpressions reflected in the online [CJ] posting and to further respond to your inquiry,” he said.

Kennedy acknowledged the August incident with Perdue did occur, but took issue with CJ’s assertion that the early release was “quite likely in violation of federal law.”

Kennedy also stated that the sharing of data with Perdue’s office was permissible.

CJ’s attempts to speak with Kennedy were unsuccessful, and a Labor Department spokesman told CJ that Kennedy doesn’t speak to reporters.

Since Perdue’s gaffe, BLS has had internal discussions about the guidelines the states are expected to follow.

In September, BLS Associate Commissioner Pat Getz discussed the issue in an email exchange with fellow employees. The cooperative agreement with North Carolina, she said, “does not clearly state that LMI may give the estimates to the governor’s office ahead of the release with the understanding that they must keep the data embargoed until the release date/time.”

For now, however, BLS doesn’t want to dictate early data-sharing guidelines to the states.

BLS spokesman Gary Steinberg told CJ, “Ideally, the data is contained as much as possible, but we let states decide how much it is contained. We tell everyone with access that it should be contained as much as possible.”

N.C. Commerce Department spokesman Tim Crowley explained the department’s procedures for preparing monthly employment press releases. Several Commerce Department labor analysts and public affairs employees “review estimates cleared by BLS as final and ready for publication and prepare the press release and accompanying materials for distribution at the scheduled release time,” Crowley said. “It’s certainly appropriate to share estimates cleared by BLS as final and ready for publication with the governor’s office.”

Don Carrington is executive editor of Carolina Journal.