Sunday, November 15, 2020

Analysis: Business Uses of Census Data: Implications of the Recent Supreme Court Decision

The Presidential race and the accompanying struggle for Congress diverted attention from a Supreme Court decision with important implications for business.

Collecting data on the nation’s nearly 330 million inhabitants is a fraught exercise in the best of times. But the COVID-19 outbreak played even more havoc this year with the Census Bureau’s plans to complete its decennial count.

Nevertheless, it had still hoped that an additional two weeks at the end of October would have enabled it to derive a more accurate population count through knocking on more doors and allowing more households the chance to send in their own Census forms at the last minute.

But an October 13 Supreme Court decision meant that the Bureau had to wrap up its tallying process on Oct. 15, two weeks ahead of schedule—essentially backing the Trump Administration’s insistence that the count be completed by the statutory deadline of December 31, 2020, as required by law and directed by the Secretary of Commerce who oversees the bureau.

That ruling, Ross v. National Urban League et. al., came despite concerns by both the American Statistical Association and the Census Bureau’s own census takers and partners that the quality of the data collected might be compromised by a perfect storm of a shortened schedule, dropped quality control procedures, litigation and the politicization of parts of the current census.

Much of the commentary on the decision has revolved around the impact of the Census population counts in determining political contests, particularly how an undercount of immigrants and low-income minorities might affect each state’s apportionment of congressional seats and Electoral College representation.

That impact, while certainly important, is not what I will attempt here. In contrast, the effect on business, while it has been less discussed in the media, is also significant, and consequently deserves more attention that I’ll try to provide now.

By way of background, the Constitution specifically calls for a census count in Article 1, Section 2: “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers…The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct.”

But the current fracas over the Census has its origins in the 1990s, when Republicans and Democrats squabbled over the use of statistical adjustment (more commonly known as “sampling”) to estimate population.

While Democrats saw this method as both scientifically based and a means of deriving a more accurate count of urban areas, Republicans were suspicious of what they regarded as a scheme that would shift the balance away from white suburban and rural areas where they were more dominant. They emphasized the phrase “actual Enumeration” from the brief constitutional mandate for the census.

(Kenneth Prewitt offers a useful overview of this partisan dispute in “Politics and Science in Census Taking,” a 2003 report published by the Russell Sage Foundation and the Population Reference Bureau.)

But politicians running for office aren’t the only ones vitally concerned by this struggle. Business professionals also have a vital interest in accurate population counts.

First, population estimates are the mother’s milk of business research. Companies planning expansions or relocations need to know if an area is growing or contracting, by how much, or in what ways. For instance, they may be experiencing an influx of new ethnic nor racial groups, or an age cohort may be growing. Companies need to know if there will be a demand for their products and services.

Over time, estimates of population data enable companies to project trends and ensure that they are staying ahead of the curve.

Back in March, Rhett Buttle and Katie Vlietstra Wonnenberg, in an opinion piece for The Hill, cited other, more specific business uses for the census, including:

* Financial institutions that identify sound lending opportunities;

* Real estate appraisal companies that determine current and future housing demands;

* Retailers (such as department stores) that analyze demographic changes (and guesstimate how many people to hire);

* Nielsen, which calculates TV ratings;

* Entrepreneurs and other small businesses, which seek current Census information to reduce economic uncertainty that can affect their plans.

On the other hand, accurate Census data affects how the agencies that regulate such businesses interact with customers— for instance, in assessing compliance with the Home Mortgage Disclosure Act(HMDA) and the Community Reinvestment Act (CRA) and in performing fair lending examinations.

Moreover, the availability of such data may assist emerging sectors in pinpointing areas of need for different population niches. It can assist firms helping disabled Americans, for instance, target rural areas that have traditionally underserved this group, or help some communities as they transition from manufacturing or agriculture to employment centered around tourism, clean energy, and outdoor recreation, according to a July 2019 analysis for the Center for American Progress done by Olugbenga Ajilore and Zoe Willingham.

Especially in the last couple of years, population shifts have become so rapid and far-ranging that businesses are seriously handicapped by arbitrary bureaucratic and judicial decisions that hinder the collection of current and comprehensive data. 

Unfortunately, business professionals have become collateral damage in the Republican-Democratic struggle over representation. They are as entitled to “the public’s right to know” as other individuals.

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