To read a portion of the Data Guide’s introduction, click here.
Introduction to Industry Data
Recap: Industry data is a foundation for any economic or labor market analysis. An industry is a category of economic activity. For example, Joe’s Plumbing might be a particular local business that is classified, along with all other similar businesses, in the industry of “plumbing, heating, and air-conditioning contractors.” To use a different example, Boeing is a single, global corporation that makes aerospace products, but different parts of its business in the United States are classified under different industries, such as “Aircraft manufacturing,” “Aircraft engine and engine parts manufacturing,” “Guided missile and space vehicle manufacturing,” and possibly others. Organizing data by industries helps economists and other researchers look past the details of individual businesses or corporations and see the bigger picture.
There can be many types of occupations within any single industry. For example, the industry of “Hospitals” includes various types of workers such as surgeons, nurses, receptionists, computer specialists, janitors, and cooks.
It is very important to realize that industry data is collected and reported by establishments rather than business or corporate entities. An establishment is a single, physical location of economic activity. For example, a single company with its corporate office in New York, a paper manufacturing plant in Georgia, and fifteen warehouses in various cities would comprise a total of seventeen establishments, and each establishment would be classified according to its own type of activity.
In this case, three different industries would be used:
- Corporate, subsidiary, and regional managing offices
- Paper (except newsprint) mills
- General warehousing and storage
These industry names are directly from the North American Industry Classification System (NAICS).
If one corporate site carries out two very different types of activities (e.g., a regional paper company has one building with an office upstairs and a warehouse below), these are typically reported as two separate establishments with separate industry codes “if separate records are kept” (according to the BLS Handbook of Methods.) Otherwise, the industry code for the establishment’s primary activity is used. The establishment itself is responsible for classifying its own activity, which can be a source of error in federal or state industry data due to misclassification, especially for very detailed industry categories.
Most data sources aggregate establishments by industry and by state, metro, or county-level geography. In some rare instances, an enterprise may be allowed to report employment and wages for a multi-site “reporting unit” instead of for individual establishments. In these cases, jobs are reported in a state- level “catchall” geographic category instead of any one county or metro area.
North American Industry Classification System (NAICS)
The North American Industry Classification System (NAICS), as of 2001, is the standard federal
system for classifying business establishments, replacing the outdated Standard Industrial Classification (SIC) system. It assigns business establishments a six-digit code and category title, organizing them primarily by similar production processes. Codes are hierarchical, and by removing digits from the end of a code you get a less detailed category code. For example:
- 23 – Construction
- 236 – Construction of Buildings
- 2362 – Nonresidential Building Construction
- 23622 – Commercial and Institutional Building Construction
- 236220 – [Identical to parent category]
NAICS currently has three versions: 1997, 2002, and 2007. There are fairly minor differences (mostly in the Telecommunications and Manufacturing sectors), but EMSI uses the 2007 classification for all data. Thus any 1997 and 2002 codes from data in EMSI’s original sources have been converted/reconstructed using 2007 codes. For more information about NAICS, see http://www.census.gov/epcd/www/naics.html.
EMSI NAICS codes also have a few differences from standard NAICS:
- EMSI combines all NAICS categories under 111 (Crop production) and 112 (Animal production) under a single code, 11A000, due to the paucity of detailed and complete agricultural employment data, as well as for compatibility with categories used for input-output modeling.
- EMSI uses the detailed residental/nonresidental codes under sector 238 (Specialty Trade Contractors), following QCEW.
- EMSI does not have data for 541120 – Offices of Notaries, since the BLS does not report data for that category.
- EMSI does not use the NAICS categories in sector 92 – Public Administration. Instead, EMSI puts all government employment (excluding Postal Service) into the following categories: Federal Government; Federal government, civilian, excluding Postal Service; Federal government, military; State Government, including education and hospitals; Local Government, including education and hospitals.
This classification follows that used by the BEA and (with the exception of military) by the OES and CES programs of the BLS.