News: CJ Exclusives

Perdue Staff Appears to Have Violated Signed BLS Agreements

Federal officials warn against 'politicization' of job estimates

Members of Gov. Bev Perdue’s administration appear regularly to have violated signed agreements between the state and the federal Bureau of Labor Statistics when they shared monthly employment reports that were protected by an embargo, documents obtained by Carolina Journal indicate.

The agreements were signed Aug. 9, 2010, by BLS regional commissioner Janet Rankin, then-state Labor Market Information Division director Elizabeth McGrath, and then-Employment Security Commission chairman Lynn Holmes.

In signing the agreements, Holmes and McGrath promised to avoid all improper use or disclosure of confidential information. (To download the 110-page agreement in PDF format, click here.)

Various Perdue officials reviewed information from jobs reports that — according to the terms of the agreement with BLS — was supposed to be seen only by employees in the Labor Market Information Division of ESC while the embargo was in effect. Documents obtained by CJ show that the governor’s officials used this information to craft press releases to give the jobs reports a favorable political spin.

The agreement signed by Holmes specified, “States will not share estimates outside of the LMI unit until they are final and ready for publication. The purpose of this requirement is to prevent politicization of estimates.”

Under the agreement, the state would provide employment statistics for five federal programs and in return receive $1.96 million in federal funds. The employees who work in those programs essentially are agents or contractors for BLS.

The instructions for the agreement issued by BLS state that the Confidential Information Protection and Statistical Efficiency Act of 2002 safeguards the confidentiality of individually identifiable data used for statistical purposes. The instructions also refer to the BLS Commissioner’s Order No. 1-06, titled “Confidential Nature of BLS Statistical Data.”

That order (PDF download) states that confidential data includes: “pre-release economic data. Statistics and analyses that have not yet officially been released to the public, whether or not there is a set date and time of release before which they must not be divulged.”

On that same day, McGrath signed a document titled “BLS Agent Agreement,” stating she understood her responsibilities to protect confidential information and that a knowing disclosure was a felony carrying a fine up to $250,000 and five years imprisonment.

In Asheville on August 18 of last year, Perdue discussed figures from the jobs report in a speech given while the federal embargo was still in effect. This clear violation of the agreement was reported to BLS officials by McGrath. Rankin, BLS regional commissioner in the Atlanta office, confirmed to CJ that Perdue’s public statements violated the agreement; Rankin told CJ she interviewed ESC officials about the breach.

Perdue officials continue to insist that the governor and her staff have done nothing wrong. CJ invited Department of Commerce spokesman Tim Crowley to review the agreements between the state and BLS and to comment on whether it was appropriate for public information officers, communications directors, or Perdue to have early access to embargoed data.

In an email, Crowley gave this response: “It’s entirely appropriate for the Division of Employment Security, formerly Employment Security Commission, to share the final employment estimates with the Governor’s office.”

CJ has been unable to determine whether Holmes and McGrath shared the data voluntarily or if Perdue administration officials demanded access to the data. Legislators questioned Holmes about the early data sharing during a meeting of the Revenue Laws Study Committee Jan. 4. She said the early sharing was standard procedure.

The leaked information includes the state unemployment rate and associated data from the BLS household survey. It also includes the net job change estimates by industry sector from the BLS business establishment survey. A few employees in McGrath’s division provide some assistance with the estimating process. National data is released the first Friday of every month and state estimates usually come three weeks later.

In apparent violation of the prohibition on the politicization of employment data, at least four persons who are not in the LMI division other than Perdue saw and tried to spin the embargoed data before its authorized release, emails obtained by CJ show. On at least one occasion in 2011, ESC spokesman Larry Parker, Perdue press officers Chrissy Pearson and Mark Johnson, and Commerce spokesman Tim Crowley discussed how to word ESC news releases to reflect positively on the governor.

BLS requires each state to publish a schedule for the monthly release of state employment data and requires its state agents to not share the data before the official release date, typically the third Friday of each month.

At Perdue’s appearance at the Aug. 18 Rotary Club of Asheville meeting, the governor said the state lost 11,000 public-sector jobs in July, and the Asheville Citizen-Times reported her remarks. That information was protected by an embargo until 10 a.m. the following day. CJ first reported on the violation Aug. 19 and in more detail Dec. 19 after obtaining email exchanges between ESC and Perdue’s press aides.

Citing the CJ story, on Dec. 21, U.S. Rep. John Kline, R-Minn., the House Education and Workforce Committee chairman, wrote Perdue and U.S. Labor Secretary Hilda Solis expressing his concern about the improper release of data. “Unemployment data can affect the confidence of markets, consumers, and employers,” Kline wrote. “Federal law provides safeguards to ensure no one uses this information for unfair gain.”

Kline requested Perdue to provide documents and emails between her office, BLS and ESC. The documents were due Jan. 4 but Perdue asked for an extension. CJ has been unable to determine when Perdue will deliver the documents to Kline.

For years, ESC was an independent agency housed administratively in the North Carolina Department of Commerce. Last year the General Assembly, with Perdue’s concurrence, placed the agency under the direct control of the Commerce Department and renamed it the Division of Employment Security. The transition took place late last year and Commerce officials are still working out the operational details of the merger.

Holmes now carries the title assistant secretary of commerce for employment security, but the BLS programs are now under Assistant Secretary for Labor and Economic Analysis Stephanie McGarrah. Former LMI Director McGrath was retained, but no longer supervises the BLS programs.

Don Carrington is executive editor of Carolina Journal. Prior to joining the John Locke Foundation, he was deputy director of ESC’s Labor Market Information Division.