U. S. Bureau of Labor Statistics

Implementation of the NAICS 2007 Revision

inBureau of Labor Statistics

Programs

Amanda ChadwickMichael Searson

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Purpose of NAICS Revision

• NAICS Revisions occur every 5 years, alternating between large and small in scope

• The 2007 NAICS Revision was small in scope and changes were limited to:• Clarifying certain industry descriptions• Fixing items missed in 2002 definitions• Collapsing certain industries

• NAICS Revisions:• Reflect current economic activities• Capture new and emerging technologies

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Federal Register Notices

March 11, 2005 – 70 FR 12390• Contains the decision for 12 industry

splits, 7 direct changes, 15 title changes and 1 number change

March 16, 2006 – 71 FR 28532• 1 additional industry split

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What is included?

13 Splits• 13 2002-based industries that split into more

than one 2007-based industry

7 Directs• 7 2002-based industries that can be directly

converted from one 2002-based code to one 2007-based code

The remaining industries are considered out of scope and are not affected by this revision

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SplitsOne-to-More than One

11 of the split industries only have 2 possible 2007 codes• It is possible for 9 of these 11 codes to remain

in their original 2002-based code

1 split industry has 5 possible 2007 codes• 525930 – Real Estate Investment Trusts (REITs)

1 split industry has 7 possible 2007 codes• 339111 – Laboratory Apparatus and Furniture

Manufacturing

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The 13 Split 2002-Based NAICS Codes

111219 Other Vegetable (except Potato) and Melon Farming111998 All Other Miscellaneous Crop Farming315211 Men’s and Boy’s Cut and Sew Apparel Contractors315212 Women’s, Girls’, and Infants’ Cut and Sew Apparel Contractors326199 All Other Plastics Products Manufacturing326291 Rubber Product Manufacturing Use326299 All Other Rubber Product Manufacturing

334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing339111 Laboratory Apparatus and Furniture Manufacturing518111 Internet Service Providers525930 Real Estate Investment Trusts (REITs)541612 Human Resources and Executive Search Consulting Services541710 Research and Development in the Physical, Engineering, and Life Sciences

Estimated National total – 67,000 establishments

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DirectsOne-to-One Relationships

• 516110 Internet Publishing and Broadcasting

• 517211 Paging

• 517212 Cellular and Other Wireless Telecommunications

• 517310 Telecommunication Resellers

• 517510 Cable and other Program Distribution

• 517910 Other Telecommunications

• 518112 Web Search Portals

7 industries in this revision that will be converted directly from the 2002-based code to their appropriate 2007-based code

Estimated National Total – 23,000 establishments

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Milestones/Timeline• January 2005 - Decision to combine the

NAICS 2007 Revision with the 2007 ARS • March 2005 - Federal Register with

NAICS Update for 2007 Notice released• March 2006 - Second Federal Register

with NAICS Update for 2007 Notice released

• August 2006 - NAICS 2007 Revision (N7R) State training

• October 2006 - 2007 ARS Begins• October 2006 - Dual Coding Begins

(Varies State to State)

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Milestones/TimelineContinued

• January 2007 – Meet with BLS Programs on data conversion

• May 2007 - 2006/4 Data to National Office - Early look at N7R changes via the future NAICS

fields on the EQUI file

• End of July 2007 - 2007/1 Data to National Office

• End of August 2007 - 3 files become available• November 2007 - Dual Coding Ends (Varies

State to State)• January 2008 – Final analysis of 2007 NAICS

revision

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First Program to convert is Quarterly Census of

Employment and Wages (QCEW)

• Used as a sampling frame for most BLS surveys

• Used as employment base or benchmark for most BLS surveys

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UI Tax Rate & Actuarial Analysis

UI-Covered Employment

Local Area Unemployment

Personal Income (BEA) - U.S., State, County

Gross Domestic Product (BEA)

Economic Forecasting

Current Employment Statistics

Occupational Employment Statistics

Job Creation/Destruction•Size Class Dynamics•Business Survival Rates

Geocoded Establishments

Occupational Employment Statistics

Occupational Safety and Health Statistics

Current Employment Statistics

National Compensation Survey

Industrial Price Program

Occupational Safety and Health Statistics

Programmatic Uses

Benchmarking(Employment Base)

General Economic Uses

Quarterly Census of Employment &

Wages Data (QCEW/ES-202)

Analytical Uses Sampling

Mass Layoff Statistics

State Revenue Projections

Job Openings & Labor Turnover Survey

Job Openings & Labor Turnover Survey

Local Economic Development Indicators

• Clusters Analysis• Shift Share• Industry Diversity Indexes• Location Quotients

Federal Funds Allocation$206 Billion

(HUD, USDA, HCFA/CHIP)

Minimum Wage Studies

Uses of Quarterly Census of Employment

and Wages Data (QCEW/ES-202)

Local Economic Impact Response Planning

Local Government Services Planning

Census Bureau• Improve CPS After 2000 Census• LEHD / LED• Industry Code Sharing (3.3 M)• County Business Patterns

Local Transportation Planning

State/local industry employment & wages

UI Benefit ratesUpdated as of 2/22/2006

Quarterly Press Releases, Annual Employment & Wages

REMY and Input-Output Tables

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QCEW Program

Fed/State Cooperative Statistical Program Program started with the passage of

Federal Unemployment Tax Act (FUTA)

BLS provides funding, deliverables, manuals, guidelines, and methodologies to State agencies

States collect & edit data (decentralized approach)

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QCEW Statistics

4th Quarter 2006 Stats:•8.9 Million establishments•135.9 Million employment•$1.516 Trillion Wages

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Data Coverage

• 98 Percent of all non-farm salary Workers in the U.S.

• 45 Percent of U.S. Agricultural Workers.

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Data Sources for the QCEW Program

•Primary Administrative Records of the State

Workforce Agencies - UI Tax departments.

•Secondary Supplemental forms designed by BLS to

meet additional program statistical needs. These are administered by the State LMI staff.

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QCEW Data Collection Forms

• Status Determination

• Quarterly Contribution Report

• Annual Refiling Survey (ARS)

• Multiple Worksite Report (MWR)

• Report of Federal Employment & Wages

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Status Determination Form (SDF)

• Used to determine an employer’s liability for Unemployment Insurance

• Basis for initial assignment of industrial, geographic and ownership codes

• Mandatory for employers to file• Initial source of UI Tax and physical

location addresses

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Purpose of ARS

Review and Update (if necessary)

•Mailing & Physical Location addresses

•County code•Single/multi-worksite status•Industry code (NAICS)

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Annual Refiling Survey (ARS)

About the Form:• BLS designed (standardized)• Mandatory in 23 States• 1/3 of Universe reviewed annually

(historically)• Sample based on 7th & 8th digit of EIN• Verification System• Minimum 75% response rate in units

or 80% employment for States

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Forms and Descriptions

No changes will be made to the current ARS forms • Multiple choices on the forms for splits,

regular descriptions for the rest Special industry descriptions created for

split industries

• Ask for percentages of sales/receipts on split industries Companies have the opportunity to describe

their economic activity if the provided industry descriptions are not accurate

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State Training

Provided training to all States• On-line computer based training in the

month of September for State industry coders All changes described in the Federal

Register Notices ARS form design System Changes to monitor changes

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ARS and Dual Coding

• Only 2007/1 will be ‘fully’ dual coded• Every active 2007/1 record must have both a

2002 and 2007 code

• Start – The beginning of the ARS• After creating the FY 2007 control file (Mid-

October)

• Stop – The end of 2007/1 processing• Final submittal of 2007/2

• Who – The establishments in the split industries

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Program Manager Meeting

QCEW provides data to other BLS statistical programs who use NAICS• Describe 3 files that will be created to capture the

revision 2002 based changes

• Does not include any 2007 revision

Revision changes• Uses only 2007/1 date to show the impact of the revision

Total changes• Uses 2006/4 and 2007/1 • Includes all changes: Non-revision adjustments and Revision

changes

• 3 files will capture all program needs

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Final Analysis

Use the data from the 3 files to determine the impact of the revision

On both a QCEW and BLS program base Additional BLS program meeting for future

revisions• 2012 will be the next NAICS revision

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Implementation of the NAICS 2007 Revision

in Bureau of Labor Statistics ProgramsFor additional information contact:

Michael A. SearsonSearson.Michael@bls.gov202.691.6469

Amanda ChadwickChadwick.Amanda@bls.gov202.691.5486

U.S. Bureau of Labor StatisticsPostal Square Building2 Massachusetts Ave., NESuite 4840Washington, DC 20212-0001www.bls.gov