Bureau of Labor Statistics (BLS): What It Is and How It Works

The Bureau of Labor Statistics, established in 1884, is the principal fact-finding agency for the U.S. government in the field of labor economics and statistics. Headquartered in Washington, D.C., the BLS operates as an independent, nonpartisan entity, ensuring its data remains objective and free from political influence. Its mission is to “measure labor market activity, working conditions, price changes, and productivity in the U.S. economy to support public and private decision-making.”

The BLS achieves this by conducting surveys, compiling data, and publishing reports on topics such as employment, wages, inflation, occupational safety, and economic trends. Its data is widely regarded as the gold standard for economic indicators, used by everyone from the Federal Reserve to small business owners. The agency employs economists, statisticians, and data scientists who work to ensure accuracy and reliability in the information it provides.

A Brief History of the BLS

The BLS was founded during a period of rapid industrialization in the United States, when labor disputes and economic uncertainty were on the rise. In 1884, Congress established the Bureau of Labor within the Department of the Interior to study labor conditions and address growing concerns about worker rights and industrial practices. The agency’s first commissioner, Carroll D. Wright, set a precedent for rigorous, impartial research, producing reports on wages, hours, and working conditions.

In 1913, the BLS became part of the newly created Department of Labor, reflecting its growing importance in addressing labor issues. Over the decades, the BLS expanded its scope to include critical economic indicators like the Consumer Price Index (CPI) and the unemployment rate. During the Great Depression, World War II, and subsequent economic shifts, the BLS adapted its methodologies to meet the nation’s evolving needs, cementing its role as a vital source of economic intelligence.

Today, the BLS operates with a budget of approximately $600 million annually and a staff of about 2,500 employees. Its commitment to transparency and accuracy has earned it global respect as a model for statistical agencies.

Core Functions of the BLS

The BLS performs four primary functions: data collection, analysis, dissemination, and research. These functions work together to produce actionable insights about the U.S. economy.

1. Data Collection

The BLS gathers data through a variety of methods, including surveys, administrative records, and partnerships with other agencies. It conducts surveys of households, businesses, and government entities to capture information on employment, wages, prices, and other economic variables. For example, the Current Population Survey (CPS), conducted in collaboration with the U.S. Census Bureau, collects data from about 60,000 households monthly to estimate the national unemployment rate.

The BLS also collects data from businesses through programs like the Occupational Employment and Wage Statistics (OEWS) survey, which provides detailed information on wages and employment by industry and occupation. These surveys are carefully designed to ensure representative samples and minimize respondent burden.

2. Data Analysis

Once collected, raw data is processed and analyzed by BLS statisticians and economists. This involves cleaning data to remove errors, applying statistical models to account for seasonal variations, and weighting responses to reflect the broader population. The BLS uses rigorous methodologies to ensure its estimates are accurate and reliable, often cross-checking results with other data sources.

For instance, when calculating the CPI, the BLS tracks price changes for a fixed basket of goods and services, adjusting for quality improvements and consumer behavior. This analysis requires sophisticated techniques to ensure the index reflects true inflation trends.

3. Data Dissemination

The BLS publishes its findings through reports, databases, and online tools, making them accessible to a wide audience. Major reports, such as the Employment Situation (which includes the unemployment rate) and the CPI, are released on a regular schedule, often monthly or quarterly. These releases are closely watched by financial markets, as they can influence interest rates, stock prices, and economic forecasts.

The BLS website (www.bls.gov) serves as a comprehensive resource, offering downloadable data, interactive charts, and detailed explanations of methodologies. The agency also publishes specialized reports, such as regional employment trends and industry-specific analyses, catering to diverse user needs.

4. Research and Development

Beyond its core data products, the BLS conducts research to improve its methods and address emerging economic issues. This includes developing new statistical techniques, exploring alternative data sources (like big data), and studying topics like gig work and automation. The BLS also collaborates with academic institutions and international organizations to advance the field of labor economics.

Key BLS Data Products

The BLS produces a wealth of data, but several of its programs stand out for their impact and visibility. Below are some of the most prominent:

1. Unemployment Rate

The unemployment rate, derived from the Current Population Survey, is one of the most widely cited economic indicators. It measures the percentage of the labor force that is jobless and actively seeking work. Released monthly as part of the Employment Situation report, the unemployment rate provides a snapshot of labor market health.

The BLS also calculates alternative measures of unemployment, such as U-6, which includes discouraged workers and those marginally attached to the labor force. These broader metrics offer a more nuanced view of underemployment.

2. Consumer Price Index (CPI)

The CPI tracks changes in the prices of a fixed basket of goods and services, such as housing, food, transportation, and healthcare. It is the primary measure of inflation in the U.S., influencing everything from Social Security adjustments to wage negotiations. The BLS releases the CPI monthly, with separate indices for urban consumers (CPI-U) and wage earners (CPI-W).

3. Producer Price Index (PPI)

The PPI measures price changes at the wholesale level, capturing shifts in the costs of goods and services before they reach consumers. It is a leading indicator of inflationary pressures and is used by businesses to forecast costs. The PPI is released monthly and covers industries like manufacturing, agriculture, and healthcare.

4. Employment Cost Index (ECI)

The ECI tracks changes in wages, salaries, and benefits, providing insight into labor costs for employers. It is a critical tool for understanding wage inflation and is used by the Federal Reserve to gauge monetary policy. The ECI is released quarterly.

5. Occupational Employment and Wage Statistics (OEWS)

The OEWS program provides detailed data on employment and wages for over 800 occupations across industries and geographic areas. It is widely used by career counselors, businesses, and policymakers to understand labor market trends. The data is updated annually.

6. Job Openings and Labor Turnover Survey (JOLTS)

JOLTS measures job openings, hires, and separations (quits, layoffs, and discharges) to assess labor market dynamics. It provides insights into worker mobility and employer demand, helping economists predict economic cycles. JOLTS data is released monthly.

7. Occupational Outlook Handbook (OOH)

The OOH is a comprehensive guide to careers, offering information on job duties, education requirements, earnings, and growth prospects for hundreds of occupations. Updated every two years, it is a valuable resource for students, job seekers, and educators.

How BLS Data Is Used

The BLS’s data serves a wide range of stakeholders, each leveraging it for different purposes:

Policymakers

Federal, state, and local governments rely on BLS data to design and evaluate economic policies. For example, the Federal Reserve uses the CPI and unemployment rate to set interest rates, while Congress uses wage data to adjust the federal minimum wage. During economic crises, such as the 2008 recession or the COVID-19 pandemic, BLS data helps guide stimulus measures and recovery plans.

Businesses

Companies use BLS data to inform hiring, pricing, and investment decisions. Retailers track the CPI to adjust prices, while manufacturers monitor the PPI to manage supply chain costs. The OEWS and OOH help businesses benchmark wages and plan workforce development.

Researchers and Academics

Economists and social scientists use BLS data to study trends like income inequality, automation, and globalization. The agency’s public datasets enable rigorous analysis, contributing to academic papers and policy recommendations.

Workers and Job Seekers

Individuals use BLS data to negotiate salaries, explore career paths, and assess job market conditions. The OOH, for instance, helps students choose majors aligned with high-demand fields, while wage data empowers workers to advocate for fair pay.

Financial Markets

Investors and analysts closely monitor BLS releases, as they can move markets. A higher-than-expected CPI might signal rising inflation, prompting bond yields to rise, while a falling unemployment rate could boost stock prices by signaling economic strength.

Challenges and Criticisms

Despite its reputation for rigor, the BLS faces challenges in maintaining the quality and relevance of its data. One issue is survey response rates, which have declined over time due to privacy concerns and respondent fatigue. Low response rates can introduce bias and reduce accuracy, though the BLS mitigates this through statistical adjustments.

Another challenge is keeping pace with a changing economy. The rise of gig work, remote jobs, and nontraditional employment arrangements complicates traditional metrics like unemployment and wages. The BLS has explored alternative data sources, such as online job postings, to address these gaps, but integrating them into established frameworks takes time.

Critics sometimes question the BLS’s methodologies, particularly for the CPI. Some argue it understates inflation by not fully capturing housing or healthcare costs, while others claim it overstates inflation by not accounting for quality improvements. The BLS responds by regularly updating its methods and publishing detailed explanations of its approach.

The BLS’s Impact on Society

The BLS’s work touches nearly every aspect of American life. Its data shapes monetary policy, influencing mortgage rates and retirement savings. It informs labor laws, protecting workers’ rights and safety. It guides career choices, helping individuals navigate a complex job market. And it provides a shared understanding of the economy, fostering informed public debate.

During pivotal moments—like the Great Recession or the COVID-19 pandemic—the BLS’s timely data helped policymakers respond to unprecedented challenges. For example, its rapid reporting on job losses in 2020 informed the scale of stimulus packages, while its occupational data highlighted the risks faced by essential workers.

Globally, the BLS serves as a model for statistical agencies, sharing best practices through organizations like the International Labour Organization. Its commitment to transparency—publishing methodologies, revisions, and raw data—sets a high standard for public trust.

Conclusion

The Bureau of Labor Statistics is more than a government agency; it is a vital institution that illuminates the U.S. economy’s strengths and challenges. Through meticulous data collection, analysis, and dissemination, the BLS empowers decision-makers across society, from the White House to the classroom. Its reports on unemployment, inflation, wages, and occupations provide clarity in a complex world, helping the nation navigate economic uncertainty.