Ex-Im Methodology to Estimate the Number of Jobs It Supports Is Based on Export Values and Labor Statistics

To estimate the number of U.S. jobs associated with the exports it helps  finance, Ex-Im uses a methodology based on the input-output approach. Second, it determines the total value  of exports Ex-Im supports for each industry. Third, it multiplies these  export values by BLS’s jobs ratio for each industry to obtain the jobs for  that industry. Finally, it aggregates across all industries to produce an  overall estimate. Using this process, Ex-Im estimated 255,000 jobs supported in 2012. Moreover, the documentation accompanying the ERT also describes  several limitations and assumptions to those data, including the  following:
The employment data are a count of jobs, not of persons employed,  and treat full-time, part-time, and seasonal jobs equally. Furthermore, the ERT data assume average industry relationships;  however Ex-Im’s clients could be different than the typical firm in the  same industry. 1), Ex-Im determines the industry associated with each transaction. Finally, according to government officials and trade policy researchers,  the methodology that Ex-Im uses does not answer the question of what  would have happened without Ex-Im financing. Ex-Im Does Not Describe Limitations or Fully Detail Assumptions in Its Reporting on Employment Effects

Ex-Im reports the number of jobs its financing supports and the  methodology it uses but does not describe the limitations or fully detail the  assumptions related to its data or methodology. Conclusions

Ex-Im’s primary mission is to support U.S. jobs through the exports that it  finances, and it estimates the number of jobs supported by its financing in  order to provide Congress and the public with a broad sense of its impact  on U.S. employment. The lack of detailed reporting reduces the  ability of congressional and public stakeholders to fully understand what  the jobs number represents and the extent to which Ex-Im’s financing  may have affected U.S. employment. Recommendation for Executive Action

To ensure better understanding of its jobs calculation methodology, the  Chairman of Ex-Im Bank should increase transparency by improving  reporting on the assumptions and limitations in the methodology and data  used to calculate the number of jobs Ex-Im supports through its financing. Ex-Im further stated that it will begin  implementation of the recommendation this fiscal year with its 2013  annual report, which will include greater information on the assumptions  and limitations of its methodology. Ex-Im will provide this information in  annual reports and on its website. Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to (1) describe the methodology and  processes the Export-Import Bank of the United States (Ex-Im) uses to  calculate the effects of its financing on employment in the United States,  (2) examine the limitations of Ex-Im’s approach and how Ex-Im reports on  its methodology, and (3) describe alternative methodologies and their  limitations. In addition, we reviewed GAO’s  Standards for Internal Control in the Federal Government to assess Ex- Im’s communication regarding its jobs calculation methodology.
Why GAO Did This Study

Ex-Im provides loans, guarantees, and insurance to U.S. exporters. One of Ex-Im's primary missions is to support U.S. jobs through exports. In its 2012 annual report, Ex-Im stated that its financing helped support an estimated 255,000 export-related U.S. jobs.
In 2012, Congress passed the Export-Import Bank Reauthorization Act of 2012. The act required GAO to report on the process and methodology used by Ex-Im to calculate the effects of export financing on U.S. employment. This report (1) describes the methodology and processes Ex-Im uses to calculate the effects of its financing on U.S. employment and (2) examines the limitations of Ex-Im's approach and how Ex-Im reports on its methodology, and provides additional related information.
To address these objectives, GAO reviewed relevant Ex-Im documents, obtained and reviewed the data Ex-Im uses for its calculations, and interviewed agency officials and trade policy researchers.

What GAO Found

The U.S. Export-Import Bank's (Ex-Im) methodology to calculate the number of U.S. jobs associated with the exports it helps finance has four key steps. First, Ex-Im determines the industry associated with each transaction it finances. Second, Ex-Im calculates the total value of exports it supports for each industry. Ex-Im implements these first two steps using its own data. Third, Ex-Im multiplies the export value for each industry by the Bureau of Labor Statistics (BLS) ratio of jobs needed to support $1 million in exports in that industry--a figure known as the "jobs ratio." Finally, Ex-Im aggregates across all industries to produce an overall estimate.
Ex-Im reports the number of jobs its financing supports and the methodology it uses but does not describe limitations of the methodology or fully detail its assumptions. Although the BLS data tables that Ex-Im relies on are based on a commonly used methodology, this methodology has limitations. For example, the employment data are a count of jobs that treats full-time, part-time, and seasonal jobs equally. In addition, the data assume average industry relationships, but Ex-Im's clients could be different from the typical firm in the same industry. Further, the underlying approach cannot answer the question of what would have happened without Ex-Im financing. Ex-Im does not report these limitations or fully detail the assumptions related to its data or methodology. GAO's Standards for Internal Controls in the Federal Government states that, in addition to internal communication, management should ensure adequate communication with external stakeholders, which could include Congress and the public. Because of a lack of reporting on the assumptions and limitations of its methodology and data, Congressional and public stakeholders may not fully understand what the jobs number that Ex-Im reports represents and the extent to which Ex-Im's financing may have affected U.S. employment.

What GAO Recommends

To ensure better understanding of its jobs calculation methodology, GAO recommends that Ex-Im improve reporting on the assumptions and limitations in the methodology and data used to calculate the number of jobs Ex-Im supports through its financing. Ex-Im agreed with the recommendation and stated that it would begin reporting more detailed information in its fiscal year 2013 annual report.