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A Justifiable Tightening Of Reporters’ ‘Lockup’

The Labor Department’s monthly reports on unemployment and payrolls may be the government’s most valuable data apart from national security matters. Until now, the security of that data has relied mostly on an honor system involving the journalists who report it.

The old system of releasing this closely watched news is scheduled to have one final run, on June 1, when the department reports its May statistics. That morning, as usual, accredited reporters will gather at the department’s “lockup” room to begin preparing stories on their organizations’ terminals and other equipment. At 8 a.m., Labor Department press officers will cut off the room’s internet service and collect the journalists’ cell phones. Then the reporters will receive the figures - 30 minutes before the rest of the world - so they can be ready to file their stories at precisely 8:30 a.m., when outside communications will be restored.

Beyond the lockup, thousands of traders around the world will be waiting to pounce on the data. An advantage of just a few seconds might make a trade successful. A leak received 10 or 20 minutes ahead of time could be life-changing, if it could be exploited without detection.

The current system has been in place for at least a decade without any scandal or other evidence of malfeasance on the part of the reporters. Yet you do not need to be a veteran of the intelligence services to see the security holes in this arrangement. We now live in a world of wireless data transfer. A journalist’s laptop or terminal could be modified, with or without the knowledge of his or her news organization - or even without the knowledge of the journalist - to send the data to a nearby receiver during the embargo.

So the Labor Department has decided to revamp the way it releases sensitive information. When the new rules take effect in July, reporters who enter the lockup will not be allowed to bring anything except paper research notes or other paper materials. The department will provide computers loaded with Microsoft Word - along with pens and pencils, which are among the items journalists cannot bring into lockup - on which journalists can compose their stories. The department will also supply telephones, but the lines will go dead during the 30-minute blackout period.

News organizations are crying foul. Outfits such as Bloomberg, Dow Jones and Reuters compete fiercely for subscribers who pay a lot of money for split-second access to market-moving information. The current system ensures that each company is prepared to move the data at exactly 8:30, since they have 30 minutes to get ready using their own terminals. Under the new approach, each newsroom will have to wait until 8:30 to begin transferring and reformatting the files that their reporters have created using the government-issued word processing software. The time required to do this will vary, but it is a sure bet that subscribers will see information faster on some news feeds than on others. The laggards’ customers will be very unhappy.

Further, all of the text-based services will be at a disadvantage compared to television journalists, who will be allowed to stand in front of their cameras - though motionless and silent except for a single government-issued test word they can utter to test their microphones - from 8:28 until 8:30, at which point they will be allowed to start talking. The first word of the new numbers will most likely come from a broadcast journalist’s mouth. The text-based services are livid about this, too.

These services have found an ally in Sen. Roy Blunt, R.-Mo., who wrote a letter to Secretary of Labor Hilda Solis objecting to the new system. “Given the market-moving impact of these numbers and the largely automated processes of today’s market institutions, even a minor flaw in the timing or accuracy of this data could result in a destructive impact on global markets,” he wrote, according to Bloomberg.

The government is not here to serve the press; both are supposed to serve the public. The Labor Department bluntly reminded reporters of this when it rolled out the new rules. In a conference call last month, Carl Fillichio, the Labor Department’s senior adviser for communications and public affairs, observed, “The Labor Department provides press lock-ups for one reason only: to serve the general public by facilitating the news media’s ability to read, review, ask questions about and prepare news stories explaining embargoed economic data reports.”

Members of the press demanded to know what problem the Labor Department is trying to fix. Though Fillichio refused to comment in detail on any past security matters, he emphasized that “It’s simply prudent management to review and update our processes.”

The department’s new rules certainly are not a foolproof defense against leaks. Sensitive data can be disclosed by careless or corrupt federal employees, and sometimes by outsiders who are given early access to somewhat less critical news. Last year, for example, North Carolina Gov. Bev Perdue let slip her state’s unemployment rate a day before the statistic was officially announced.

It is reasonable for the press to expect the Labor Department to be vigilant against leaks. It is unreasonable to insist that the department take avoidable risks with sensitive data just to make journalists’ jobs easier or to level the playing field among competitors in the news business.

The press will eventually adapt to the new process. Or, if they choose not to, journalists can go look up the statistics on the Labor Department’s website at 8:30 a.m. the morning of the release - just like you and me.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s most recent book, The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book, Looking Ahead: Life, Family, Wealth and Business After 55.

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