oversight

1990 Census: Costs are Uncertain Because Wage Rates May Be Uncompetitive

Published by the Government Accountability Office on 1990-05-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

--         linited   States   General   Accounting   Office

GAO        Report to the Chairman and Ranking
           Minority Member, Subcommittee on
                                                                           ’
           Census and Population, Committee on
           Post Office and Civil Service, House of
           Representatives
May 1990
           1990 CENSUS
           Costs Are Uncertain
           Because Wage Rates
           May Be Uncompetitive

                                                                       6
                                                              II
                                                              141380
,
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      General    Goverument       Division

      B-23900 1

      May I,1990

      The Honorable Thomas C. Sawyer
      Chairman, Subcommittee on Census
        and Population
      Committee on Post Office and Civil Service

      The Honorable Thomas J. Ridge
      Ranking Minority Member
      Subcommittee on Census
        and Population
      Committee on Post Office and Civil Service
      House of Representatives

      This report responds to your request that we examine the Bureau of the
      Census’program for using geographic pay rates for temporary positions
      in the Bureau’s 449 district offices during the 1990 census. We specifi-
      cally reviewed whether the Bureau has identified sources to fund its
      geographic wage rates and examined the process the Bureau used to
      establish its pay rates. We provided preliminary information on these
      issues to the Subcommittee on December l&1989.

      In our March 27, 1990, testimony before the Subcommittee,l we dis-
      cussed how uncertainty about the competitiveness of the geographic
      pay rates raises concerns about the Bureau’s ability to attract and retain
      sufficient staff. In previous censuses, the Bureau had difficulties
      recruiting and retaining employees in some geographic areas, which con-
      tributed to delays and increased costs in completing key census field
      activities.

      The Bureau had planned to hire about 285,000 employees for peak cen-
      sus operations, based on its budgeted 70 percent mail response rate for
      census questionnaires. However, the Bureau did not achieve the
      expected response rate. The Bureau reported a 63 percent response rate
      on April 19-the date at which the Bureau created its address list for
      follow-up in urban offices. The address list for follow-up in suburban
      and rural offices was generated by the district offices during the week
      of April 23.

      The Bureau estimates that it will need to hire about 5,300 additional
      employees for follow-up activities for every percentage point below the

      ‘The Decennial Census: Potential Risks to Data Quality Resulting from Budget Reductions and Cost
      In+



      Page 1                                                              GAO/GGD-90-781990Census
                                                                                                         I




                   E289001




                   budgeted response rate. As a result, the Bureau may need to hire as
                   many as 37,100 additional employees to address the expanded
                   workload. Peak hiring for the census will be from April to June 1990,
                   with some hiring continuing until September 1990. Fieldwork for nonre-
                   sponse follow-up,z the most labor-intensive census activity, began in
                   urban offices on April 26 and is scheduled to begin May 3 in suburban
                   and rural offices.


                   We believe that the Bureau’s decision to implement a geographic wage
Results in Brief   program is an important advance over its previous pay plans and should
                   help it compete for needed staff. The Bureau identified sources of fund-
                   ing to meet the approximately $60 m illion in increased costs that it esti-
                   mated would be needed to increase wages under its geographic wage
                   program . However, these estimated costs were based on the expected 70
                   percent census questionnaire response rate.

                   The costs of the geographic wage program will now increase because the
                   Bureau must hire additional staff to handle the increased workload
                   caused by the 63 percent response rate. Before the Bureau implemented
                   the geographic wage program , it estimated that each percentage point
                   below the expected response rate leads to about $10 m illion in addi-
                   tional follow-up costs, which primarily are personnel costs. The Bureau
                   has not released estimates of how much the increased wages under the
                   geographic wage program will add to that amount. However, census
                   costs clearly will increase to address the low response rate-unantici-
                   pated follow-up efforts could increase census costs by $70 m illion,
                   which does not include the costs resulting from the increased wages pro-
                   vided by the geographic wage program .

                   Moreover, the geographic wage program is vulnerable to further cost
                   increases as census hiring continues. The Bureau did not have the
                   opportunity to test its geographic pay rates under census-like conditions
                   because the wage program was not implemented until after the Bureau
                   had completed its field tests for the 1990 census. The Bureau therefore
                   may find that its pay rates are not competitive in some areas as signifi-
                   cant hiring for the census continues. In the past, the Bureau has had to
                   raise pay while field activities were ongoing to attract sufficient staff.
                   The Bureau said that if it needs to raise wages during the census, it will


                   ‘For nonresponse follow-up, the Bureau hires enumerators to obtain completed census questionnaires
                   from households for which a questionnaire was not received by mail.



                   Page2                                                               GAO/GGD-BO-78199OCensua
                        B28Boo1




                        have to alter census plans to absorb the additional costs or request addi-
                        tional funding from Congress.


                        The objectives of our work were to (1) determine whether the Bureau
Objectives, Scope,and   has identified sources to fund its geographic wage rates and (2) examine
Methodology             the process the Bureau used to establish its pay rates. To meet the first
                        objective, we reviewed budget documents showing the sources the
                        Bureau has used to fund the geographic wage rates and reviewed how
                        the Bureau reprogrammed those funds into the appropriate census
                        accounts. We did not verify the Bureau’s projection of the total costs of
                        using the wage rates once they were established.

                        To meet the second objective, we reviewed the Bureau’s June 1989 mem-
                        orandum establishing the geographic pay program. The memorandum
                        provided details on the rationale, anticipated costs, and development of
                        the pay program. We interviewed Bureau officials responsible for devel-
                        oping the program to further identify the process the Bureau used to
                        develop its pay rates and apply those rates to its district offices.

                        Our work was done between October 1989 and April 1990 at the Bureau
                        headquarters in Suitland, Maryland, in accordance with generally
                        accepted government auditing standards.


                        The most fundamental staffing challenge confronting the Bureau is
Geographic Wages        ensuring that its pay rates are competitive. The Bureau was able to
Needed to Attract       recruit a sufficient number of qualified employees during most of the
Sufficient Staff        test censuses it held to prepare for the 1990 decennial census. However,
                        the Bureau experienced serious recruiting difficulties in some areas
                        when it began to recruit for census address list development activities in
                        1988. These recruiting problems forced the Bureau to raise pay to
                        attract sufficient staff.

                        The Bureau increased pay for enumerators and selected other field staff
                        during its 1988 suburban and rural address development effort in east
                        coast states where it had exhausted all other recruiting strategies3 Enu-
                        merator pay was increased from $5.50 to $8.00 per hour in New Jersey;
                        Connecticut; parts of Maryland and Virginia in the Washington, D.C.,
                        metropolitan area; and parts of Pennsylvania and New York.

                        “1990 Census: Delays in Completing the Address List for Suburban and Rural Areas (GAO/
                             _89- 74, July 1989).



                        Page 3                                                             GAO/GGD-90-781990Census
According to the Bureau, the $8.00 per hour pay rate was established
arbitrarily in 1988, but the Bureau believes it contributed to attracting
applicants. For example, in Northern Virginia, 200 persons had been
recruited before the pay increase, but in the 2-week period after the pay
increase was implemented, 500 applicants were recruited. However, the
Bureau’s evaluation of the results of the pay increase was limited to two
of the six areas where the increases were used-Connecticut and North-
ern Virginia-because data were not available on the results of the pay
increase from the other locations.

Recruiting difficulties in 1989 led the Bureau to increase pay for enu-
merators and other staff in the state of New York and parts of Massa-
chusetts to complete fieldwork. Enumerator pay was raised from either
$6.60 or $6.00 per hour to $7.00 per hour in these areas.4 After the pay
increase, most areas were able to hire sufficient staff to complete the
Bureau’s 1989 urban address list development field activity on schedule.
However, the White Plains and Hempstead district offices in the New
York region and the Worcester office in the Boston region experienced
staff shortages despite the increase in enumerator pay and completed
the field activity at least 1 week late.

Title 13 of the U.S. Code authorizes the Secretary of Commerce to estab-
lish administratively determined pay rates for temporary employees
hired for the decennial census and related activities. In a series of testi-
monies during 1988 and 1989, we encouraged the Bureau to consider a
geographic pay system that would be sensitive to labor market condi-
tions and competitive with local wage rates.6 The Bureau subsequently
developed and implemented a district office geographic pay program for
the 1990 census.

Most of the temporary census employees the Bureau is hiring for the
census will be enumerators. While enumerator pay rates for 1990 origi-
nally had been planned to be either $6.60 or $6.00 per hour, the geo-
graphic wage program contains seven different wage levels, with
enumerator pay increasing at $50 intervals and ranging from $6.00 to
$8.00 per hour.


4See 1990 Census: Enhanced Oversight Should Strengthen Recruitment Program (GAO/GGD-90-66,
April 1990) for a discussion of the results of the Bureau’s 1989 recruitment efforts and the challenges
it facea recruiting for the census.

%atus of Plans for the 1990 Decennial Census (GAO/T-GGD-89-20, May 6,1989); Status of Plans
for the 1990 Decennial Census: An Update (GAO/T-GGD-89-16, March 23,lSSS); Status of the lL%O
     nnial Census (GAO/T-GGD-88-63, Sept. 27,1988>.



Page 4                                                                 GAO/GGD-90-781990C~MUH
            ,

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                                          B-239001




                                          Figure 1 shows the number of the Bureau’s 449 district offices in each
                                          pay level at the start of nonresponse follow-up. The pay levels are iden-
                                          tified by their respective hourly enumerator pay rates. The Bureau may
                                          need to increase pay rates in some offices if it is unable to attract the
                                          additional staff needed to address the increased workload from the low
                                          mail response rate.


Figure 1: Geographic Pay Rate Levels as
of April 1990                             200   Number of District Offices

                                          150

                                          160

                                          140

                                          120

                                          100
                                                                   r
                                                $5.00    $5.60      $6.00    $6.50     $7.00    (7.50      $5.00
                                                Hourly Pay Rates

                                          Note: Pay rate levels are shown by hourly enumerator pay rates


                                          We believe that the Bureau’s decision to use the pay setting flexibility
                                          authorized in Title 13 represents an important advance over its previous
                                          pay plans and should make a major contribution toward enabling it to
                                          compete for needed staff.


                                          Personnel expenses for temporary census employees will be the single
Low Census Response                       most costly item in taking the census in 1990. The Bureau anticipates it
Rate W ill Increase                       will spend about 70 percent of its fiscal year 1990 decennial census
Cost of Geographic                        appropriation of $1.3 billion on personnel costs for temporary
                                          employees.
Wages        y
                                          The Bureau identified sources of funding to meet the approximately $60
                                          m illion in increased costs that it estimated would be needed to increase


                                          Page 6                                                                   GAO/GGWO-78 1990 Census
E239001




wages under the geographic wage program. The Bureau will use about
$38 million from its $73.6 million fiscal year 1989 carryover to fund the
geographic pay program. The carryover funds used for the geographic
wage program primarily were derived from lower than budgeted census
questionnaire printing costs and improved productivity and other staff
savings. A Bureau official said that the balance-about $12 million-
will come from funds designated in the Bureau’s fiscal year 1990
appropriation.

However, the lower than expected census response will cause personnel
costs associated with the geographic wages to increase. The Bureau’s
estimate of the additional cost resulting from the use of geographic
wages was based on the expected 70 percent census questionnaire
response rate. However, the Bureau achieved about a 63 percent
response rate as of April 19. As a result, the Bureau may need to hire as
many as 37,100 additional employees because it estimates that for every
percentage point below the expected 70 percent response rate, it needs
to hire about 6,300 employees. The Bureau has not released estimates of
the increased costs from hiring these additional employees using the
geographic wage rates.

At a minimum, the lower than expected response rate will add over $70
million to the total cost of the census. The Bureau has estimated that
each percentage point below the expected response rate results in about
$10 million in additional follow-up costs, which primarily are personnel
costs from hiring additional temporary workers. This estimate was
developed before the Bureau implemented its geographic wage program
and assumes the Bureau’s pay rates for enumerators would be either
$6.60 or $6.00 per hour, rather than the $6.00 to $8.00 hourly pay rates
contained in the geographic wage program. Therefore, additional costs
from the geographic wage program will add to the $70 million in follow-
up costs.




Page 6
                        E-2moo1




                        The Bureau is satisfied that overall its geographic pay rates will be suf-
Uncertainty About       ficient to compete for needed staff. However, the Bureau has noted that
Competitiveness         in the event that its pay rates are not adequate to attract sufficient
Makes Geographic Pay    staff, it will have to increase pay during the census. According to the
                        Bureau’s June 1989 memorandum establishing the pay program,
Program Vulnerable to   increasing pay rates during the census will require it to modify census
h?h  hCreUeS  During    plans to absorb the added costs or request additional funding from
the Census              Congress.

                        The Bureau cannot be certain that its pay rates are adequate in all areas
                        as significant census hiring continues. Unlike many other key compo-
                        nents in the census, the Bureau’s pay rates have not been tested under
                        census-like conditions, because the geographic wage program was not
                        implemented until after the Bureau had completed its field tests for the
                        1990 census.

                        According to the Bureau, it evaluated a number of alternative
                        approaches to designing its pay program and determined that identify-
                        ing a position comparable to the census enumerator was not feasible. As
                        a result, the Bureau did not use a detailed market analysis to develop its
                        geographic pay rates. The Bureau did not document the basis for its
                        determination, and we were not able to assess its efforts in this area.

                        The Bureau developed a model to show the relative pay needs of its dis-
                        trict offices to assist it in determining pay rates. For example, the model
                        showed that pay in New York should be higher than pay in St, Louis but
                        did not identify the actual pay rates that the Bureau should offer in
                        each locality. According to the Bureau, managers in headquarters and
                        the field used the rankings identified by the model to provide general
                        direction on which of the Bureau’s seven pay levels each district office
                        should offer to be competitive. The Bureau generally did not document
                        the reason a pay rate was established for an individual office. As a
                        result, we were not able to evaluate the pay decisions that Bureau offi-
                        cials made for specific offices.

                        In the absence of testing the wage rates under census-like conditions and
                        a detailed market analysis, the Bureau established its 1990 pay levels
                        based in part on its hiring experiences during precensus field activities.
                        However, these precensus field activities differ significantly from the
                        actual census because the degree of public contact during precensus
                        activities generally is much less than during the census. Most enumera-
                        tors hired for the census will visit households to gather information
                        from those that have not returned a census questionnaire. Contact with


                        Page 7                                              GAO/GGD-90-781990Census
B239001




a resistant public contributes to turnover and discourages potential
applicants, according to Bureau officials.

The Bureau decided to use a maximum 1990 enumerator pay rate of
$8.00 per hour based on the results of the pay increases it used in 1988.
However, the Bureau is offering enumerator pay rates below $8.00 per
hour in the district offices covering areas where it raised pay to this
level in 1988.6 The 1990 enumerator pay rates in the 21 district offices
covering areas where the Bureau increased pay in 1988 are between
$.60 and $2.60 per hour below what the Bureau offered in 1988. About
half of the district offices in these areas will offer enumerator pay rates
at least $1.00 per hour below the 1988 pay rate.

The Bureau believes it will recruit successfully despite the lower pay
rates, because it has a census promotion effort and a network of local
district offices to recruit, neither of which existed in 1988. In addition,
the Bureau plans to provide supplemental payments during certain cen-
sus activities, including nonresponse follow-up, to enumerators and
other field staff who meet productivity goals and continue working for a
specified period of time. These payments could add the equivalent of
over $1 .OOper hour to enumerators’ pay.

Nonetheless, in the event the Bureau is unable to hire a sufficient num-
ber of staff it may be forced to increase wages. We estimate, on the basis
of the Bureau’s staffing projections for district offices in areas that had
the $8.00 pay rate in 1988, that if the Bureau raises 1990 nonresponse
follow-up pay to the $8.00 level in all areas covered by the 1988 pay
increase, the additional costs resulting from increased enumerator and
field supervisor wages would be about $1.6 million. However, the
Bureau’s district office staffing projections were based on the expected
70 percent response rate. Since the actual census response rate is less
than 70 percent, these costs will increase significantly if the Bureau is
forced to hire a large number of additional staff in these areas in addi-
tion to raising pay.

The Bureau implemented lower pay rates elsewhere in the country
partly to offset the increased costs of the geographic wage program.
Throughout the 1990 census cycle, the Bureau had planned that the
minimum enumerator pay rate it would offer for the census would be

“The only area where the Bureau is planning an $8.00 per hour enumerator pay rate for the census is
in the New York region, which covers New York City and surrounding counties. Enumerators in 22 of
the region’s 28 district offices will receive the $8.00 per hour pay rate.



Page 8                                                               GAO/GGD-SO-78
                                                                                 1990Census
             $6.60 per hour. However, to limit costs, the Bureau’s geographic wage
             program established a $6.00 per hour enumerator pay rate for 24 of its
             449 district offices.

             The increase in census costs if the Bureau needs to raise pay in these
             offices is relatively modest compared with the overall cost of the census.
             We estimate, on the basis of the Bureau’s staffing projections for these
             24 offices, that if the Bureau raises pay back to the $6.60 per hour wage
             level for nonresponse follow-up, the cost increase from additional wages
             for enumerators and field supervisors would be about $223,700. These
             costs would increase further if offices are forced to raise pay and hire
             additional staff to address the increased follow-up workload.

             We did not determine the likelihood that the Bureau will need to raise
             wages to attract sufficient staff. However, we believe that the Bureau’s
             1990 recruiting performance to date provides an indication of the diffi-
             culties the Bureau may face in hiring sufficient staff for the census. In
             addition, a successful recruiting program is especially important now
             that the Bureau will need to hire thousands of additional employees to
             complete follow-up activities.

             The Bureau generally has not met its recruiting milestones for the cen-
             sus. For example, the Bureau did not meet its milestone of achieving 70
             percent of its 1990 recruiting goal by March 16. According to district
             office reports in the Bureau’s management information system, the
             Bureau had met 44 percent of its recruiting goal for 1990 by March 16.
             When examined at local levels, the results appear even less favorable.
             About 91 percent of the Bureau’s district offices, where the recruiting
             and hiring actually take place, reported that they did not meet the
             70-percent milestone. About 66.7 percent of the Bureau’s district offices
             reported that they had met less than 60 percent of their 1990 recruiting
             goal.

             The Bureau also did not meet its milestone of achieving 100 percent of
             its 1990 recruiting goal by April 6. Nationally, the Bureau reported
             meeting about 62 percent of its recruiting goal as of April 14. About 29
             percent of the Bureau’s district offices reported that they had met 60
             percent or less of their 1990 goal.


             The Bureau’s decision to implement a geographic wage program is an
Conclusion   important step that should better enable it to compete for the staff it



             Page 9                                             GAO/GGIMOJ8 1990Census
                  B-239001




                  needs. The Bureau identified sources to fund the increased costs it origi-
                  nally estimated would result from its use of geographic wages, but the
                  cost of the program will now increase due to the lower than expected
                  census response rate. In addition, the program remains vulnerable to
                  further cost increases as the census continues. The Bureau cannot be
                  certain that its pay rates are competitive because it was not able to eval-
                  uate its geographic wage rates under census-like conditions. Since the
                  Bureau did not document either the basis for its decision to develop pay
                  rates without completing a market analysis or how it determined the
                  appropriate pay rates for its district offices, we were unable to assessits
                  efforts on these issues.


                  We did not obtain official comments from the Bureau on this report. We
Agency Comments   did, however, discuss the issues presented in the report with responsible
                  Bureau officials. They believe that the Bureau’s wage rates will be suffi-
                  cient to compete for needed staff. We have incorporated this view and
                  other comments where appropriate.


                  As arranged with the Subcommittee, we are also sending copies of this
                  report to other appropriate congressional committees; the Secretary of
                  Commerce; the Director of the Bureau of the Census; and the Director,
                  Office of Management and Budget. Copies also will be made available to
                  other interested parties upon request.

                  The major contributors to this report are listed in the appendix. If you
                  have any questions concerning this report, please contact me on 276-
                  8676.




                  L. Nye Stevens
                  Director, Government Business
                     Operations Issues




                  Page10                                              GAO/GGD-90-78199OCensus
,




    Page 11   GAO/GGD-90-W1990Gmaua
Appendix

Major Contributors to This Report



General Government     Issues
Division, Washington   51Christopher Mihm, Evaluator-in-Charge
                       Tyra DiPalma, Evaluator
DC.                    Gregory H. Wilmoth, Senior Social Science Analyst




                       Page 12                                             GAO/GGJMW78 1990 Cenana
(243000)
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