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Companies warn Trump: Census citizenship question could be costly

By Lauren Tara LaCapra
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FILE PHOTO: An informational pamphlet is displayed at an event for community activists and local government leaders to mark the one-year-out launch of the 2020 Census efforts in Boston

FILE PHOTO: An informational pamphlet is displayed at an event for community activists and local government leaders to mark the one-year-out launch of the 2020 Census efforts in Boston, Massachusetts, U.S., April 1, 2019. REUTERS/Brian Snyder/File Photo

(This April 17 story corrects the tenth paragraph to show DeVere Kutscher is no longer executive director of the Census Business Coalition.)

By Lauren Tara LaCapra

NEW YORK (Reuters) - An array of U.S. companies have told the Trump administration that a citizenship question on the 2020 Census would harm business if it leads to an undercount of immigrants, undermining the data they use to place stores, plan inventory and plot ad campaigns.

Corporate executives, lobbyists and representatives from major industry groups like the Chamber of Commerce, the National Retail Federation and the International Council of Shopping Centers have raised the issue in meetings with government officials, according to more than a dozen sources familiar with the matter. Some meetings date back to 2017, when the administration was first mulling adding the question.

Industry officials continue to seek assurances from the Census Bureau and the Commerce Department that the question's impact on the quality of Census data will be minimized, according to the sources, who described the meetings on condition of anonymity.

The pressure reflects the economic importance of the decennial count of America's inhabitants.

The Census is used to draw voting districts and divide some $800 billion in federal programs. For companies, it provides the most detailed picture available of consumer and labor markets. Under the administration's proposal, the Census would ask whether respondents are citizens of the United States for the first time in 70 years.

Corporate America finds itself in an unlikely alliance with immigrant advocacy groups that have sued to block the question on the basis it could scare immigrants out of participating, and therefore cost their communities funds and political representation. The Supreme Court plans to hear arguments on the case next week.

Clothes-maker Levi Strauss & Co, transport companies Uber Technologies Inc and Lyft Inc and media group Univision Communications Inc are among a handful of companies supporting that lawsuit. In court documents, they said the citizenship question "threatens to undermine (the) reliability of Census data and therefore substantially reduce its value to businesses."

Few other companies or trade groups, however, have been willing to discuss their opposition to the citizenship question publicly. In interviews, sources said they are only voicing opinions in private meetings, out of concern about a White House backlash.

Spokespeople for several major trade groups along with big name companies like Walmart Inc, Alphabet Inc's Google, Amazon.com Inc and many others either declined to offer a statement for this story or did not respond to requests for comment.

"While corporations and business groups are reluctant to enter the political turmoil surrounding the citizenship question on the 2020 Census, they nonetheless depend heavily on accurate Census data for their operations," said DeVere Kutscher, who was until recently executive director of the Census Business Coalition, one of the main groups advocating on behalf of industry.

"As a result, they are focusing their efforts on what they can do to support a complete, secure, and accurate count, and are understandably concerned about the impact of any factor which could jeopardize that," he added.

Underscoring the political stakes, earlier this month President Donald Trump ripped "radical" Democrats opposed to the citizenship question on Twitter, saying a Census without such a question would be "meaningless."

The Census Bureau has taken pains to ensure everyone is counted, Burton Reist, a longtime Census official who oversees decennial communications and stakeholder relations, said in an interview. In response to questions about the business community's view on the citizenship question, a spokesman pointed Reuters to the Census Bureau's official responses to stakeholders.

The Commerce Department, which houses the Census Bureau, provided a statement detailing the planned communications and outreach spending that will encourage people to respond. The budget is $500 million, up from the $376 million spent in 2010.

"The Census Bureau has long been planning the most robust marketing and outreach effort in Census history for the 2020 Census," a spokesman said in a statement.

Documents released through litigation confirm that Commerce Secretary Wilbur Ross met with dozens of interested parties, including business groups, to get their views before announcing his decision to add the citizenship question last year.

While many expressed concerns that the question would hurt response rates, Ross was not convinced, according to a March 2018 memo he wrote explaining his decision. He said data from the question would help the Department of Justice enforce provisions of the Voting Rights Act.

AN "MRI" FOR BUSINESS

The stakes are high in getting an accurate count.

Retailers like Walmart and Target Corp use Census data to decide where to open stores or distribution hubs, and what to stock on shelves.

Big banks like JPMorgan Chase & Co use the information similarly for branch strategy, and real-estate firms scrutinize the statistics to determine where to build homes and shopping centers.

TV networks like Univision, meanwhile, rely on the numbers to plan programming in local markets. And the Census is an important input for tech giants like Google when they create myriad data-based products, such as maps.

"You get households, number of people, number of bedrooms, income, gender, age, race, marital status — it's almost like an MRI," said Jack Kleinhenz, chief economist for the National Retail Federation. "And it all goes into assessing where and how to provide goods and services."

Underscoring how the survey can drive major business decisions, Amazon's 20-city search for a new headquarters location also had Census data at its core.

Having failed to convince the administration to drop the question, companies are now focused on programs to encourage people to participate in the Census to bolster data quality, sources said.

Efforts could include company-wide email messages to employees, prominently displaying a link to the Census on corporate web sites or setting up physical stations where customers can fill out the survey inside of stores or malls, the sources said.

Ahead of the 2010 Census, McDonald's Corp featured information on restaurant placemats, Walmart greeters handed out flyers, big retailers featured reminders on receipts and utility companies stuck inserts into electric, gas and water bills.

Such programs have been helpful in the past, said John Thompson, who spent nearly 30 years at the Census Bureau before leaving as director in 2017. But whether they can overcome the negative impact of the citizenship question is an open question.

"They've got a tougher row to hoe," he said.

(Reporting by Lauren Tara LaCapra in New York; Additional reporting by Nandita Bose in Washington; Kenneth Li, Herb Lash and Caroline Humer in New York; and Katie Paul and Jeffrey Dastin in San Francisco; Editing by Richard Valdmanis and Paul Thomasch)