When thinking about the labor market, you might envision large corporations and small businesses made up of thousands upon thousands of jobs–plus salaries, hourly pay, taxes, etc. But it’s important to remember that those corporations and businesses are part of a broader grouping: industries. And industry data is at the heart of labor market information.
Organizing data by industries helps economists and other researchers look past the details of individual businesses or corporations and see the bigger picture. At Emsi, we use industry data as a foundation for all economic and labor market analysis.
What is an Industry?
An industry is a category of economic activity. A single industry is usually composed of multiple establishments, and the occupations within them, that conduct similar types of business.
For example, Joe’s Plumbing might be a particular local business that is classified, along with all other related businesses, in the industry of “Plumbing, heating, and air-conditioning contractors.” Even if Joe’s Plumbing doesn’t offer heating and air-conditioning services, the business is still relevant to this particular industry.
Let’s use a more familiar example. Boeing is a single, global corporation that makes aerospace products. But because it makes a wide variety of those aerospace products, different parts of its business are classified under different industries, such as “Aircraft manufacturing,” “Aircraft engine and engine parts manufacturing,” “Guided missile and space vehicle manufacturing,” and possibly others.
Breaking Down the Data
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.
The key thing to remember is that establishments, rather than business or corporate entities, collect and report industry data. 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.
In most cases, data sources show establishments separated by industry and by state, metro, or county-level geography. Sometimes, however, businesses are 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. Within Analyst, one of Emsi’s data analytics tools, this appears as “County Not Reported.”
How Industry Data Includes NAICS Codes
The North American Industry Classification System (NAICS) 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 five versions: 1997, 2002, 2007, 2012, and 2017. There are fairly minor differences (mostly in the Telecommunications and Manufacturing sectors), but Emsi uses the 2017 classification for all data. Thus any 2007 and 2012 codes from data in Emsi’s original sources have been converted/reconstructed using 2017 codes. Click here for more information about NAICS.
Emsi NAICS codes also have a few differences from standard NAICS:
- Emsi combines all NAICS categories under 111 (crop production) and 112 (animal production) into single codes, 111000 and 112000, respectively. This is due to the general lack of detailed and complete agricultural employment data present in QCEW, Emsi’s primary source of industry data.
- Emsi uses the detailed residential/non residential 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 creates a separate hierarchy for public-sector establishments under code 90 (Government), instead of using the NAICS categories in sector 92 (Public Administration). This allows us to include all government employment (excluding Postal Service) within 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. For more detailed methodology, see this Knowledge Base article. This classification follows that used by the BEA and (with the exception of military) by the OES and CES programs of the BLS.
Industry Data in Emsi Tools
Emsi’s core labor market information data is made up of industry, occupation, education, and demographic data. We combine these datasets to create reports within our analytical tools, such as Analyst and Developer. We even have several industry-oriented reports, like the Industry Overview, Industry Table, and Industry Map. These tools are built to help businesses and organizations of all kinds to better understand their position (and competition) in the labor market.
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