By Denny Gulino

WASHINGTON (MNI) – If anyone wonders where the jobs report numbers
come from Friday morning, they can rest assured that the usual room at
the Labor Department has been partially refurbished and ready for action
and the reporters there will be equipped for the first time with actual
rulers.

Rulers? That has been the reaction of the reporters as the
Department reminded them of the special arrangements that go into effect
with Friday’s jobs report.

The changes have not been welcomed by reporters, about two dozen of
whom show up between 7:30 and 8:00 a.m. ET, ready to be isolated so they
can see the jobs report a half hour before anyone else outside the
Department. That allows them to better prepare their headlines, tables
and stories.

For the July jobs report, for the first time reporters will have to
empty their pockets and leave behind wallets, purses, and anything other
than their clothing and shoes in lockers installed outside the room in a
hallway.

The Department advised that no longer will pens, pencils,
calculators or anything else other than paper is to be carried into the
“lockup” room, in case anyone was plotting to conceal tiny transmitters
somewhere.

Pens, pencils and the rulers — clear plastic and solid black —
will be supplied by the Labor Department, the reporters have been told.

While reporters are figuring out what rulers are to be used for,
they will be operating without the benefit of any nutritional
supplements, to be specific, the donuts and coffee that have often aided
in the analysis of the Bureau of Labor Statistics numbers. No food or
drink of any kind are to be allowed in.

The new Labor Department regime is an interim step toward even
tighter security arrangements to be implemented in September. By then
the Department will have replaced the electro-mechanical cutoff switches
that sever connections with the outside world at 8:00 a.m. with
something more sophisticated.

Meanwhile, the current cutoff boxes will have to suffice,
continuing to make it impossible to send anything via the data lines
until they reconnect at 8:30 a.m.. The Department long ago also
prohibited cellphones and wi-fi and installed radio frequency monitors
to preclude any kind of premature wireless transmissions.

The Department’s evident mistrust became explicit earlier in the
year when it announced it had employed the government’s Sandia
Laboratories to study how security could be enhanced. Although no
malicious security breaches involving the numbers have occurred up to
now, the Department has said enhancing security is simply a prudent
business decision.

Rep. Darrell Issa and his Government Operations Committee
intervened at one point, holding a hearing June 6 in which he urged
Department officials to negotiate an arrangement with the news media
more mutually satisfactory.

Labor’s original plan was to force reporters to use
government-supplied computers, software and Internet connections instead
of proprietary hardware, software and point-to-point data circuits. At
the time Issa blasted the Department saying “the Department of Labor
needs to reverse course on this wrong-headed policy change.”

The Department negotiated with wire services to soften the
restrictions to allow the news agencies’ own equipment and circuits.

But as part of the process, the Department winnowed out some in the
media: beginning Friday, the Bond Buyer newspaper and its business
partner Nasdaq OMX will be on the outside, as will Need to Know News —
a firm owned by MNI — and RTT, an Internet news service.

A Labor Department spokesman Thursday told MNI the excluded firms
“in general” were told they did not have a need for pre-release access
to the information that would contribute to a public understanding of
the data reports.

“No one is being cut” from access, the spokesman said, but in the
Department’s view they have never been admitted under the Department’s
own, newly-imposed criteria that requires they must be a “journalistic
enterprise likely to contribute” to understanding of the data by a broad
swath of the public.

A committee of civil servants, in screening applicants, had to see
“the organization was not only journalistic but primarily journalistic
and that the purpose of the seats was to do the things that our criteria
say, and not to do something else,” the spokesman said.

“For the very first time the Labor Department has its own
credentialing policy” rather just relying on a Capitol Hill press pass,
the spokesman said.

One firm that had appeared to be previously excluded under the new
criteria, Thomson Financial, actually was not, the spokesman said, and
will continue to operate inside the lockup room “for the time being,”
since it is owned by Thomson Reuters which has been allowed in.

The entire list is posted on the Department’s Web site,
www.dol.gov/media. Eventually the department will tell those who are
admitted how many staffers they are allowed to have in the lockups and
that may require a change in their staffing arrangements, the Labor
Department spokesman said.

In September, newly-admitted outlets will be the Tribune Company
and the Fox Business Network.

As has been reported previously by MNI, it is possible, even likely
that milliseconds prior to 8:30 trading activity will suddenly explode,
as some high-frequency trading operations try to prompt some sudden
volatility as if they had somehow obtained the key jobs numbers early.

Dubbed by one Tabb Group analyst as “banging the beehive” such
activity can be mistaken to be the result of leaks, particularly if the
premature trading activity turns out to have been in the right
direction.

Two of the three excluded news firms had high frequency traders as
customers for the data published at 8:30 ET and, as MNI previously
reported in March, the driving force behind the new security
arrangements is a Labor Department fear that the so-called algo traders
can somehow find out the numbers early, despite the circuit cutoff
switches.

But the Department has never confirmed that or specified the exact
reasons for the new lockup procedures, beyond a brief reference to
algorithmic trading in the June 6 hearing by one Labor official:

“Providing the raw data to subscribers trading on it through
algorithms,” public affairs advisor Carl Fillichio told the committee
June 6, “is not the purpose of the lock-ups.”

** MNI Washington Bureau: 202-371-2121 **

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