Wage data to empower data-driven decision making

September 04, 2018

The Workforce Data Quality Campaign’s new brief, Making Wage Data Work: Creating a Federal Resource for Evidence and Transparency, reviews options to establish a secure resource of employment and earnings data. This resource could be used to produce better information on the labor market outcomes of education and workforce programs. The paper explores scenarios that could build upon the work already being done at the Census Bureau, the Department of Health and Human Services, and the Department of Labor.

Although there are various sources of employment and earnings data within federal and state agencies, none are both comprehensive and widely accessible. A single federal resource of wage data could be used to produce a nationwide data tool that could, for example, help prospective students, policymakers, employers, and educational institutions compare the earnings outcomes of different majors, nationwide.

The issue is on the radar of policymakers. Last fall, the Commission on Evidence-Based Policymaking called for the creation of a single federal source of wage data for statistical purposes and evaluation. Legislation to start implementing the Commission’s vision passed the House of Representatives, but has not yet passed the Senate. Within their own budget proposals, the Obama and Trump administrations have called for expanding access to the National Directory of New Hires database to better facilitate evaluation and performance reporting, including on workforce training programs, but Congress has yet to authorize such a proposal. The Census Bureau and the University of Texas System have piloted a potential source of wage data. The Department of Labor and the states are negotiating a new wage record interchange agreement.

Congress and the President, along with relevant federal and state agencies, should work together to develop one or more of the following options to improve wage information for multiple purposes:

  • The Longitudinal Employer-Household Dynamics program at the U.S. Census Bureau
  • The National Directory of New Hires under the U.S. Department of Health and Human Services
  • A new comprehensive database or expansion of the wage record interchange systems under the U.S. Department of Labor

The new WDQC brief examines current coverage and allowable uses of those existing sources of wage data. The paper also reviews federal and state actions required to make each source more comprehensive and viable as a single resource for federal and state agencies and authorized researchers. With that resource, agencies that already have expertise could then securely and more efficiently match employment and earnings data to other program data.

Policymakers, workers, jobseekers, students, and businesses should be able to take into account more comprehensive, comparable trends on employment and wages to help them make better decisions about their own investments and improve their chances of economic success. A single federal source on wage data would be a significant step toward realizing that goal.