BLS compensation programs: what will users need? - Bureau of Labor Statistics - includes list of 9 major Bureau of Labor Statistics programs

Monthly Labor Review, Feb, 1990 by Daniel J.B. Mitchell

An academic analyst speculates on the future needs of labor-management practitioners, academic researchers, and government policymakers for BLS compensation data

To help mark the Monthly Labor Review's 75th year, the editors asked both data users and data producers to speculate about programs and data needs in 2015, when the Review will mark its centennial. This article, and the one beginning on page 38, deal with the Bureau's compensation programs.

Data on wages and compensation often have been less visible than data on price inflation and unemployment.(1) During the 1990's and beyond, however, changes in compensation systems may well play a critical role in reconciling conflicting pressures in the American labor market. This will make it crucial for the Bureau of Labor Statistics to monitor and disseminate compensation data.

Although I am a frequent user Of BLS data on compensation, I am not in a good position to know about the cost/benefit side of data collection. Judgments about that are made by the Bureau and the political process. My role here is to put forward user preferences, against a backdrop of current BLS compensation programs and likely changes in the labor market.

Who needs what?

BLS currently operates nine primary programs which gather compensation information as shown in exhibit 1. The data produced by these programs are of varying degrees of interest to three constituency groups. (1) practitioners who set pay (managers, unions, and sometimes neutrals), (2) academics (researchers), and (3) government macro policymakers (along with private forecasters). Although their data needs overlap, their demands for further compensation information differ in many ways. Thus, BLS, faced with resource constraints, must make decisions concerning competing needs.

Practitioners' views are officially presented tO BLS by union and management advisory committees. Federal Government policymakers are obviously in position to make their needs known and to influence resource allocation.(2) Academics lack formal channels of input and, of course, have no direct control over resources. They have, nonetheless, been active supporters Of BLS programs, particularly when budget cuts have been threatened.(3) Development of formal communications between BLS and academic users Of BLS compensation data would assist in balancing competing demands from users.

Here are ways in which each program might be improved from the viewpoint of their primary constituencies, especially in light of changing compensation practices and changing information technology.

Practitioners. In stylized terms, practitioners primarily want information on who is being paid what. Surveys of compensation-setting behavior suggest that a first step is commonly to find out what other employers (within similar industries or locations) currently are paying related groups of workers.(4) Information so obtained is not necessarily slavishly applied; the ultimate pay decision might be to pay more or less than some perceived going rate or market average. But knowledge of the outside market is a starting point in the decision process.

To be most helpful to the practitioner, surveyed compensation information must first be detailed. This involves disaggregation by occupation, location (or labor market), and by the type of pay practice under which payment is made. Apart from detail, there is the issue of frequency of data collection and the speed of publication. Information on wage rates paid a year or two ago, even if provided on a detailed basis, will be of limited interest. Finally, of relevance to practitioners is the intent of other firms regarding future compensation decisions. Unfortunately, BLS does not survey salary intentions, a significant gap in its compensation data base.(5)

Of the three user categories, compensation-setting practitioners are most likely to want data on the traditional printed page; they do not feel a need to subject the data to further processing. However, practitioners will want to know of emerging trends for competitive reasons. Which of the nine programs in exhibit I are likely to be of most concern to practitioners? The Current Employment Statistics survey provides information on pay levels and trends by detailed industry, but does not include benefits and lacks straight-time hourly earnings estimates outside of manufacturing. This is troublesome, given the growth of benefits relative to wages since World War H and the growth of the service sector industries, which are less likely than manufacturing industries to have nationwide paysetting practices. On the plus side, earnings data from the establishment survey have a fast turnaround.

Current Population Survey data on usual weekly earnings potentially are available on a detailed occupational basis. (Most practitioners are probably unaware of this source of pay information which could be valuable, especially to those who need data on occupations with national labor markets.) The key issue is speed of publication. Much annual labor market information from the cps is available immediately after each year closes, and is published in the January issue of Employment and Earnings. Inclusion of detailed annual occupational earnings data on the same schedule would be valuable to practitioners (although practitioners' understandings of who is in a given occupation may not always be in accord with cps methodology). For practitioners in the union sector, the existing system of tracking major collective bargaining settlements (those involving 1,000 or more workers) is helpful. It provides relatively frequent data with quick turnaround. And it permits tracking of such items as the frequency of use of cost-of-living adjustments and lump-sum payments. The listings of contract settlements in Current Wage Developments provides the ability to track individual bargaining situations. Generally, it has been assumed that the major agreements set patterns for smaller units. However, significant divergences between major agreements within manufacturing were found when BLS kept track of the smaller settlements (late 1950's through late 1970,S).(6) Just as firm and establishment size seemed to shrink in the 1980's, so too did the number of workers covered by major agreements relative to overall union representation.(7) Major union settlements may thus have less importance, even within the union sector, than was once the case. Industry wage surveys provide substantial occupational detail and sometimes indicate generally what type of pay system is involved, time or incentive. Obviously, these surveys are of greatest potential use to paysetters within the covered industries. Unfortunately, the long intervals between surveys and the lag between collection and publication limit the usefulness of industry wage surveys to practitioners. Area wage surveys provide data only on certain widely used occupations. The surveys are taken regularly and have quicker turnaround time than do industry wage surveys. Both area and industry wage surveys provide information on the dispersion of pay, information of potential value to the firm in considering its pay policy relative to others in the labor market.