April 1, 2000
A Report by the Council of Economic Advisers
PDF Version of Report
Constitutionally, the purpose of the decennial census is to ensure an
accurate apportionment of seats in the House of Representatives based on state
populations. Since the early 1800s, however, policy makers have recognized that
an accurate census can provide other valuable information to improve the policy
process. Today, policy makers at all levels of government, as well as private
businesses, households, researchers, and nonprofit organizations, rely on an
accurate census in myriad ways that range far beyond the single fact of how
many people live in each state. This report provides a brief overview of these
FEDERAL GOVERNMENT USES
Monitoring compliance with
Federal law. Questions on ancestry, gender, race, Hispanic origin, language
spoken at home, place of birth, citizenship and year of entry provide critical
information for monitoring compliance with the Voting Rights Act, the Civil
Rights Act, and other anti-discrimination and affirmative action plan
Assessing economic well being. Accurate census
data are critical for developing accurate assessments of economic well-being
for the Nation as a whole as well as for different racial, ethnic, and regional
Assisting families and low-income populations.
Accurate census data are critical for programs that aim to identify areas
eligible for housing assistance and rehabilitation loans; housing subsidies;
job training and employment services; energy cost assistance; and community
economic development. Accurate census data also are critical to allocating
funds for supplemental food programs and other social services for women and
Assisting the elderly, the disabled, and veterans.
Accurate census data are required to determine and forecast the number of
persons eligible for benefits based on age, such as Social Security and
Medicare and to forecast the number of persons eligible for Social Security
disability benefits. They are necessary to develop baselines for reducing
employment barriers faced by persons with disabilities and to allocate funds
for vocational education and rehabilitation programs for disabled workers.
Accurate census data are required to determine where to build veterans
hospitals, to establish baselines for veteran population projections, and to
report to Congress on the needs of selected groups of veterans, such as
Vietnam-era and female veterans.
Education. The accuracy of
census data affects the allocation of funding for numerous Federal education
programs such as vocational and adult education.
data on farm residence help USDA assess housing conditions and needs on farms.
Information on place of work and journey to work helps the Federal government
formulate national transportation and energy-use policies.
STATE AND LOCAL GOVERNMENT USES
boundaries. Decisions on redistricting and the determination of state and
local voting district boundaries require accurate census data.
Education. Accurate census data are critical to local government
agencies and school boards trying to determine the need for new schools,
including what type (elementary, middle, or high school).
Infrastructure, public health and environmental protection, and program
planning. Numerous state and local government planning responsibilities
depend on accurate census data, including determining the need for schools,
highways, public transportation, hospitals, libraries, and police and fire
protection. Water and sewage disposal information helps identify needs for
water purification, treatment, or sewage facilities. Farm data are used to
allocate funds to land grant colleges, for cooperative extension activities,
and for grants to agricultural experiment stations. Accurate census data make
for better planning and implementation of a variety of programs, including
education and training, health, education, and social services. Accurate census
data help public health officials perform tasks such as locating areas in
danger of ground water contamination and waterborne diseases. They help
environmental agencies analyze energy consumption, identify conservation
opportunities, and forecast energy needs.
Accurate census information helps local governments predict transportation
needs in disaster recovery and contingency planning initiatives. The data help
governments and relief agencies in assessing the amount of displacement and the
shelter and recovery needs of populations affected by natural disasters such as
floods, hurricanes, tornadoes, and earthquakes.
low-income populations, the elderly, the disabled, and veterans. Accurate
census data are necessary for appropriate state implementation of Federal
programs for these groups in areas such as housing assistance, energy cost
assistance, community development, and employment and social services. Accurate
census data also help city and community officials pinpoint areas that need
special programs such as meals-on-wheels and social service agencies identify
special needs such as telephone access in case of medical emergency.
Product development and marketing.
Accurate census data on where people of different ages live helps businesses of
all kinds to develop and market their products. For example:
Manufacturers of baby products such as baby food, clothes,
diapers, and toys, and manufacturers of maternity clothes and greeting cards
need accurate information on children as they develop and market their product
lines, as do television producers of children's programs and planners of
large family amusement parks.
Architects, contractors, and real estate firms need accurate
information on the size and composition of households and their housing as they
design, build, and sell houses and apartments.
Producers of consumer durables such as television sets, washing
machines, and home furnishings benefit from accurate information on households
and their characteristics.
Accurate census information on language spoken at home helps
television and radio stations define foreign language service areas and
marketing companies develop products and services tailored to those who speak
languages other than English.
Forecasting demand. Businesses forecasting demand for their
products require accurate census data to develop these forecasts. Utilities
depend on accurate census data to develop long-range plans for new facilities
Location decisions. A variety of business location decisions
are improved by accurate census data. Examples include: businesses seeking to
pinpoint areas to gauge potential markets for locating new stores, plants, or
warehouses; businesses interested in finding sites having a labor force with
certain education characteristics; building developers and contractors
selecting sites for new housing developments; and businesses seeking to
pinpoint areas of a city for locating new restaurants specializing in
particular types of ethnic food.
Providing equal opportunities and achieving compliance with
Accurate census data help businesses set up and monitor affirmative
action and anti-discrimination plans. And they help companies to comply with
anti-discrimination legislation such as the Equal Employment Opportunities
Examples of Business Use of Census Data. Newspaper accounts
and census questionnaires provide examples of businesses that use census data.
Numerous small businesses responded to a request for examples of
business uses of census data, but so too did some large companies. For example,
one large fast-food chain reported that for the past 20 years they had relied
on decennial censuses to perform market analysis and determine site locations
for new restaurants. The company also has used the Census Bureau's TIGER
Line files (a digital map database) to merge their own proprietary information
with the detailed social and economic data from the decennial census for small
geographic areas for use in its corporate planning.
Around the time of the last census, a prominent newspaper ran a lead
article in its Business section entitled, "For Business, Census is a Marketing
Data Motherlode." The article noted how retailers, such as one large general
merchandise company, use the census to fine-tune neighborhood promotions; how a
large grocery chain used it to study potential sites for new stores; and how
one consumer products firm used it to estimate sales of diapers a decade out.
The article also described how banks use census data to provide a basic
demographic sketch of the neighborhoods around each of their branches.
Examples of uses of census data culled from a sample of monthly
activity reports from the Census Bureau's Regional Office Information
Services Program include the following:
An independent television station in Philadelphia that is using
ZIP code level data for a viewer profile to design program and advertising
A foreign language newspaper distributor seeking increased
circulation in New York, New Jersey, and Connecticut used census data to list
languages spoken at home in each county of the three states.
A major advertising firm used census data on languages spoken at
home in the Chicago area to develop a new advertising campaign for a
A district sales office for an automobile manufacturer is using
ZIP Code and city profiles for a market analysis that will be used to help
local dealerships develop sales campaigns.
A real estate company in Colorado is using census data to
determine which languages to use on a series of instructional tapes on buying
and selling real estate.
COMMUNITY GROUP USES
Delivering health, social, and educational services. In many
cases, private social service agencies and community groups have the same needs
for accurate census data as state and local government agencies that provide
social services. Private groups benefit from accurate census data to set up and
administer assistance programs for children, teens, and older persons; to
provide services that reflect cultural differences; to teach English, and
conduct voter registration drives; to provide housing and job training for
displaced homemakers; to provide veteran support services and promote the need
for veteran services and facilities.
Disaster relief. As with social services, non-governmental
organizations benefit from accurate census information in much the same way as
governments when planning for and responding to disasters like hurricanes,
tornadoes, floods, and earthquakes.
Location decisions. Individuals can make better choices about
home-buying, job relocation, or starting a small business if they can take
advantage of accurate census information.
ACADEMIC RESEARCH USES
Accurate census data are vital to researchers in a wide variety of
endeavors. Some of the most important needs include the following:
Any research requiring comprehensive information at the
neighborhood level must rely on the census, with its tract level
Research on ethnicity or other research requiring reasonable
numbers of observations of relatively small population groups must rely on the
The decennial census is the only consistent source of data for
researchers examining trends over periods of decades.
The census is the best source of information for research on
immigration and mobility.
USES BY OTHER SURVEYS AND DATA COLLECTION
Serving as an important base for other surveys. Data from the
decennial Census form a crucial input into the sample designs of other national
surveys such as the Current Population Survey (the source of the nation's
unemployment statistics), the Survey of Income and Program Participation, the
National Crime Victimization Survey, the Survey of Recent College Graduates,
the Consumer Expenditure Survey (the source for expenditure weights used in
calculating the Consumer Price Index), and statistics complied by the National
Center for Educational Statistics (NCES) and the National Center for Health
Calculating rates. Data from other sources are combined with
data from the Census to compute rates of various indicators. For example, NCHS
uses its own survey data combined with Census data to calculate numerous vital
statistics and rates for health service utilization. Similarly, the Bureau of
Justice Statistics uses Census data to calculate imprisonment and victimization
rates, and the Federal Bureau of Investigation uses Census data to calculate
Creating national estimates. Census data are used to adjust
surveys to be nationally representative. For example, the NCES uses Census data
to make its survey results on education indicators reflect the total United
Case Study: The Current Population Survey. Information on the
labor force, employment, and unemployment is derived from the monthly Current
Population Survey (CPS). The March supplement to the CPS provides information
for calculating the poverty rate and measures of household and family income.
The accuracy of the CPS depends critically on the accuracy of census
information, because all of the population controls for a decade
are derived from the previous decennial census. These population controls are
then updated monthly using estimates of births, deaths, and migration. The BLS
has incorporated information about the undercount in the 1990 census into the
BLS Commissioner Abraham has advised Census Director Prewitt that if
the BLS had not incorporated the undercount, and, instead, used the official
1990 census population estimates used for apportionment, its estimate of the
working age population would have been too low by 2.1 million. Labor force
information for persons of Hispanic origin and blacks would have been affected
disproportionately because these groups make up three-fourths of persons not
counted in the official statistics. Without information on the undercount, BLS
says its estimates of the overall level of employment and unemployment would
have been too low, and the geographic and demographic distribution of
unemployment (and other measures) shown in their data would have been
inaccurate. Moreover these errors would have persisted for (at least) the next
Unemployment statistics from the CPS are included in the allocation
formulas used to distribute funds in many Federal programs. Use of inaccurate
population estimates could cause a shift of several percent in a state's
allocation. Many Federal programs are tied to the poverty rate, which could
also be affected by inaccurate population counts. This and other information
derived from the CPS affects evaluations of such initiatives as welfare reform,
health insurance legislation, and minimum wage legislation.
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