This is not the way to move USDA agencies out of Washington
The public debate over the announced move of the USDA Economic Research Service and National Institute of Food and Agriculture has focused on whether a move is sensible. Equally important is how this move has been planned and implemented.
Agriculture Secretary Sonny Perdue announced on June 13 that the 80 percent of staff at the two agencies will move to Kansas City by the end of September. He justified the move as putting the agencies closer to their agricultural constituency and as saving taxpayer money. I am one of the agricultural economists who wrote a critique of the USDA cost-benefit analysis, finding two major costs that were omitted from the USDA justification.
Our critique has been cited widely for disputing the USDA claim that the move would save taxpayer money. Two flaws in the measurement of costs drove our findings. The first was that the USDA analysis inflated the cost of remaining in Washington, D.C. It identified Kansas City as the least expensive place to locate outside of Washington that met its relocation criteria.
By failing to compare this to the least expensive place inside Washington, they stacked the deck. The USDA real estate cost estimate would fall by $57-92 million in current 2019 dollars if it had compared sites outside the Beltway to the kind of alternatives that the General Services Administration would have identified in the District of Columbia, had it been asked to do so.
The second big cost we identified — and the one that turned the bottom line to a negative for taxpayers — resulted not from where these agencies are located, but rather from how the whole move process is being managed. This is the cost to the nation of lost research output when highly skilled researchers quit. On June 26, officials from the American Federation of Government Employees, which represents staff at both agencies, announced that internal surveys indicate that 80 percent of ERS researchers plan to resign or retire rather than move.
Even if half to three-quarters of relocating ERS and NIFA employees were to depart, as our analysis assumed, rebuilding expertise and productivity would be no easy job. These employees are overwhelmingly Ph.D. holders. They are not local hires in the Kansas City area. They are experts recruited in a national market. To attract replacements, the ERS and NIFA will have to compete with universities, research institutes, corporations and other federal agencies. Based on how competitive is the Ph.D job market in agricultural economics, we estimated that it will take four years of hiring 75-100 researchers annually to rebuild those agencies. Most of the new hires will be newly minted Ph.Ds, so they will need several years each to build the expertise in national scale agricultural issues and analytical methods of the employees who are departing. We calculate the monetary value of the lost research that is either not conducted or that trainees conduct less efficiently at $141 million – 203 million in 2019 dollars.
What is the value of agricultural and food research not conducted? I have written elsewhere about how much of what we know about America’s food comes from USDA research. Measuring economic values is tricky when markets are missing, and economists delight in quibbling over methods. Where we all agree is that there is a hidden cost when important work ceases to be performed.
Indeed, the very reasons that the United States government has formed agencies to perform research are that 1) this work would either not be done or not done equally well in the private sector, and 2) the benefits of the research work exceed its cost to taxpayers. So, when staff vacancies interrupt that research, taxpayers lose.
Moving these agencies out of Washington, did not have to trigger a hemorrhage of expertise. We teach our undergraduate students that the functions of management are planning, implementation, and control. Had the consideration of an agency move begun as a planning process that engaged agency staff to weigh the benefits and costs of moving, they would have been aware, and they would have felt included and valued. Instead, they felt alarmed and alienated when Purdue announced on Aug. 8, 2018, that they would be relocated.
Many organizations with highly skilled employees make special efforts to retain experienced staff. A common way to do that while moving is to open a branch office and to entice seasoned employees to move with attractive incentives and time to work out the details.
Consider the gradual way that Amazon, which also relies upon a highly skilled workforce, is expanding into new facilities across the Potomac from where the USDA is extracting ERS and NIFA. Amazon is planning a ten-year buildup into its HQ2 in northern Virginia; USDA’s implementation approach was to give employees 32 days to decide and less than three months to pack up and move to Kansas City.
The sad truth is that if done right, the relocation of the ERS and NIFA outside of Washington, might have made sense for America’s taxpayers, farmers and food consumers. The plan’s failure to pass muster arises from the massive costs of alienating an expert workforce to the point that most quit. So far, about a quarter of ERS and NIFA employees are gone. The cost in lost staff and morale is high, but it is not too late to turn back.
We have reached the 11th hour. If Perdue wishes to hold on to USDA research capacity in agricultural markets, policy, and science, the time has come to cancel the relocation plan and stem the staff exodus. We may never know if moving these agencies outside Washington would have made sense for American’s taxpayers. What we do know is that as it has been managed, this move fails the benefit-cost test.
Scott Swinton is a University distinguished professor at Michigan State University and past president of the Agricultural and Applied Economics Association. The views expressed here are his alone and do not represent those of MSU or the AAEA.