The North American Industry Classification System in the Current Employment Statistics Program
The Current Employment Statistics (CES) program currently uses the 2017 North American Industry Classification System (NAICS 2017). For information about changes related to the switch from NAICS 2012 to NAICS 2017, see www.bls.gov/ces/naics/naics-2017.htm.
History of Industry Classification
After 60 years of use, the CES program retired the Standard Industrial Classification (SIC) system and replaced it with NAICS. NAICS is the product of a collaborative effort between the United States (U.S.), Canada, and Mexico. A classification system shared across the three countries allows direct comparison of economic data across borders in North America.
NAICS codes are not related to SIC codes; rather NAICS is a completely redesigned way of coding industries. NAICS recognizes hundreds more businesses than SIC did, largely in the fast-growing service sector.
The U.S. Census Bureau issued a notice, available at www.census.gov/eos/www/naics/federal_register_notices/notices/fr09ap97.pdf, making NAICS effective in the U.S. in April 1997 and published the first U.S. NAICS manual in mid-1998. The Bureau of Labor Statistics (BLS) did not transition to the first version of NAICS, NAICS 1997. Instead, NAICS 2002 was the first version implemented by BLS, and the CES program converted from SIC to NAICS in June 2003. Reviews of NAICS are scheduled every 5 years; NAICS 2012 is the most current version. See table 1 below for NAICS conversion implementation dates in the CES program. For information about how NAICS revisions impact other BLS programs, see www.bls.gov/bls/naics.htm.
SIC to NAICS Comparison
NAICS has twice the number of aggregate industry groupings as SIC. The highest level of NAICS classification is called the sector, and corresponds roughly to the division in SIC. There are 20 broad sectors in NAICS, compared to only 10 divisions in SIC. Table 2 displays NAICS sectors; table 3 displays SIC divisions. The conversion to NAICS increased detail in services, with new sectors such as information; professional, scientific, and technical services; and administrative and support and waste management and remediation services, and established a new sector, accommodation and food services.
For purposes of analysis, the U.S. Economic Classification Policy Committee aggregated NAICS sectors into groupings called "supersectors." The CES program publishes data for the supersectors that are within the scope of the CES program; excluded are agriculture and private households. All publically-owned establishments are classified in government. Further information regarding industry grouping in CES is available at www.bls.gov/web/empsit/cestn.htm#section2a.
The numeric system of NAICS coding has no relationship to that of SIC. The new system provides five levels of classification (compared to four in SIC) in detailed codes that have a maximum of six digits (up from four in SIC) and detailed classifications called "U.S. Industry" (instead of "Industry" in the SIC). NAICS is organized such that industries are comparable across the U.S., Canada, and Mexico at the 5-digit level, called the "NAICS Industry" level. The sixth digit of a NAICS classification may be used differently in the U.S., Canada, and Mexico. Table 4 below is a comparison of the organizational structures of SIC and NAICS.
1 Xs denote digits.
Series ID Structure
The structure of the series code under NAICS for CES (as used for the LABSTAT database) is slightly different from the CES series codes used under SIC structure. The survey abbreviation for the NAICS series is "CE" and the survey abbreviation for the SIC series is "EE." In addition, the industry code under NAICS expanded to six digits, as opposed to four digits under SIC, to handle the longer NAICS code.
NAICS classifies each establishment into a detailed industry based on the production processes it uses. Under the SIC system, some establishments were classified according to production processes, but others were classified using different criteria, such as class of customer. Thus, reclassification under NAICS substantially changes the number and composition of businesses included in certain sectors. Examples of how the production-based concept transformed industrial classification are found in wholesale and retail trade and in auxiliary establishments. Under SIC, wholesalers and retailers were classified according to the class of customer they served. Instead, NAICS groups them according to how each establishment operates. Retailers typically sell merchandise in small quantities, using public-oriented methods like mass-media advertising and high-traffic locations. Wholesalers, on the other hand, are often closed to the public, sell goods in large quantities, and use business-oriented sales methods such as specialized catalogs and warehouse locations. Thus, establishments previously considered to be engaged in wholesale trade, such as the sale of used auto parts or office furniture could be considered retail trade if they are open to the public. Auxiliary establishments, which provide services such as warehousing, personnel, or data processing to other organizations within the same company, are classified in the same industry as their parent companies under the SIC. NAICS, however, classifies these establishments according to the services they provide.
NAICS Conversion Methods
NAICS conversions to CES series are based on the employment change from an old NAICS code to a new NAICS code using individual reporter-level data from the Longitudinal Database (LDB). The LDB is compiled by the Quarterly Census of Employment and Wages (QCEW) and serves as the CES sample frame and the anchor for the annual CES benchmark, as well as the starting point for NAICS conversions. Reports on the LDB are assigned both an old NAICS code and a new NAICS code during NAICS conversion years. CES uses these old and new NAICS codes to assign CES industry codes and then calculated ratios of employment moving from old CES industry codes to new CES industry codes as a result of NAICS changes.
CES Industry Ratios
Each report on the LDB is linked from its old NAICS code to an old CES industry code and from its new NAICS code to a new CES industry code based on the new NAICS structure. Some CES industries will not change from old to new CES industry codes, and are, therefore, not assigned ratios during the NAICS conversions. For instances where reconstructions are necessary, ratios of employment moving from old CES industries based on old NAICS codes to new CES industries based on new NAICS codes are calculated for March of the benchmark year in which the change will take place. The March LDB employment is summed by old CES industry based on old NAICS codes and by new CES industry based on new NAICS codes. Forward ratios are created by dividing the amount of each old NAICS-based CES industry moving to a new NAICS-based CES industry by its total for the old CES industry. Reverse ratios are created by dividing the amount of each old NAICS-based CES industry moving to a new NAICS-based CES industry by its total for the new CES industry. For more information about the most recent CES NAICS conversion and ratios, see www.bls.gov/ces/naics/naics-2017.htm. Ratios for the most recent CES NAICS conversion are available in table 4 for AE and table 9 for non-AE on that page. Reverse ratios for the most recent CES NAICS conversion are available in table 5 for AE and table 10 for non-AE on that page.
CES Historical NAICS Reconstructions
AE series are published at a more detailed level than non-AE series. Forward ratios are held constant and applied to each monthly CES employment estimate for the entire history of the series, usually back to 1990, to determine the amount of employment moving from an old CES industry to a new CES industry. Average weekly hours and average hourly earnings are recalculated by applying forward ratios to the amount of old total hours and old total payroll to move the correct amount of hours or earnings into the new CES industry. Total hours and total earnings are then averaged using the new employment levels. More information about the calculation of CES estimates for employment, hours, and earnings estimates is available in the CES Technical Notes under Estimation Methods.
CES historical series that have been reconstructed are aggregated according to normal CES aggregation procedures. CES aggregation procedures are outlined in the CES Technical Notes at www.bls.gov/web/empsit/cestn.htm#section6d. All of the employment moving from one CES industry code to a new CES industry code must be accounted for in this movement. Because all of the old employment is being assigned to a new CES industry, any changes to the most detailed level of employment will net out at aggregate levels. However, averge hours and earnings estimates can change at aggregate levels as their underlying employment levels change.
Conversion from an old NAICS structure to a new NAICS structure can affected CES industries in several ways. Some CES series are converted as a whole from their old NAICS industry code to their new NAICS industry code. Some CES series are combined with other series because their underlying NAICS codes are combined. Other CES series are split into more detailed CES series because their NAICS codes are changed to accommodate new distinct industries. Finally, some CES series are no longer published at the same level of detail under a new NAICS structure. Examples of each of these changes for the most recent NAICS conversion are outlined on the Notice of Series Changes with Update to NAICS 2017 page at www.bls.gov/ces/naics/naics-2017.htm.
CES Series Published Under NAICS
Publication of CES series under NAICS began with the release of May 2003 data on June 6, 2003. CES no longer produces or publishes SIC-based data; however, the SIC database is available with data through April 2003. For a table of currently published CES series, see www.bls.gov/web/empsit/cesseriespub.htm.
Annual Updates Affecting CES Published Series
All CES series are evaluated annually for sample size, coverage, and response rates. This review may result in changes to the published series. Information regarding the most recent annual review can be found at www.bls.gov/web/empsit/cesnewseries.htm.
Industry Classification Updates Affecting CES Published Series
NAICS 2012 to NAICS 2017 Conversion
With the release of January 2018 data on February 2, 2018, CES updated the national nonfarm payroll series to NAICS 2017 from NAICS 2012. The conversion to NAICS 2017 resulted in minor content and coding changes within the retail trade, information, financial activities, and professional and business services sectors, as well as a number of consolidated series within the durable goods, retail trade, and information sectors. Several industry titles and descriptions also were updated. All employee (AE) series are published at a more detailed level than all employee hours and earnings (AE AWH and AE AHE), production employee (PE), women employee (WE), or production employee hours and earnings series (PE AWH and PE AHE), collectively called non-AE series. The non-AE series were sometimes unaffected or affected at a less-detailed level than the AE series.
Further information about the NAICS 2017 conversion for both the AE and non-AE series is available at www.bls.gov/ces/naics/naics-2017.htm.
The full concordance between NAICS 2012 and NAICS 2017 codes is available through the U.S. Census Bureau at www.census.gov/eos/www/naics/concordances/2017_to_2012_NAICS.xlsx.
NAICS 2007 to NAICS 2012 Conversion
With the release of January 2012 data on February 3, 2012, CES updated the national nonfarm payroll series to NAICS 2012 from NAICS 2007. The conversion to NAICS 2012 resulted in minor content changes within the manufacturing and the retail trade sectors, as well as minor coding changes within the utilities and the leisure and hospitality sectors. Several industry titles and descriptions also were updated. All employee (AE) series are published at a more detailed level than all employee hours and earnings, production employee, women employee, or production employee hours and earnings series, collectively called non-AE series. The non-AE series were sometimes unaffected or affected at a less-detailed level than the AE series.
Further information about the NAICS 2012 conversion for both the AE and non-AE series is available at www.bls.gov/ces/naics/naics-2012.htm.
The full concordance between NAICS 2007 and NAICS 2012 codes is available through the U.S. Census Bureau at www.census.gov/eos/www/naics/concordances/2012_to_2007_NAICS.xlsx.
NAICS 2002 to NAICS 2007 Conversion
With the release of January 2008 data on February 1, 2008, the CES national nonfarm payroll series updated to NAICS 2007 from NAICS 2002. The conversion to NAICS 2007 resulted in minor definitional changes within manufacturing, telecommunications, financial activities, and professional and technical services. Several industry titles and descriptions also were updated.
Further information about the NAICS 2007 conversion is available at www.bls.gov/ces/naics/naics-2007.htm.
The full concordance between NAICS 2002 and NAICS 2007 codes is available through the U.S. Census Bureau at www.census.gov/eos/www/naics/concordances/2007_to_2002_NAICS.xls.
SIC 1987 to NAICS 2002 Conversion
With the release of May 2003 data on June 6, 2003, the CES national nonfarm payroll series underwent a number of changes. The basis for industry classification changed from SIC 1987 to NAICS 2002. NAICS replaced the SIC system. The CES survey published national data on a NAICS 2002 basis with the release of May 2003 data on June 6, 2003. SIC-based data is no longer produced or published; it is still available but is not updated past April 2003.
Further information about the NAICS 2002 conversion is available at www.bls.gov/ces/naics/naics-2002.htm.
The full concordance between SIC and NAICS 2002 codes is available through the U.S. Census Bureau at www.census.gov/eos/www/naics/concordances/2002_NAICS_to_1987_SIC.xls.
Using the Census NAICS Web Page
More information about NAICS is available through the U.S. Census Bureau at www.census.gov/eos/www/naics/index.html. The site includes NAICS search tools for NAICS 2002, NAICS 2007, NAICS 2012, and NAICS 2017, concordances between NAICS updates, and more.
The NAICS search boxes allow keyword and code searches. Enter the keyword or code in the search box on the left of the page and click the appropriate search button. Keyword search results are listed in ascending NAICS code order and include all NAICS codes with the keyword in the description. Code search results are listed in ascending NAICS code order and include all NAICS codes that begin with the code entered. More detailed, related NAICS codes will display if the code entered is less than six digits. Further information about a NAICS code is available by clicking on the NAICS code hyperlink.
Concordances identify direct relationships between classification systems and are available on the left of the main page under "Downloads/Reference Files/Tools" via the "Concordances" link. (Note: Other tools, including full NAICS manuals, are available within this section as well.) The Concordances page includes a table of recent concordances. Click the "XLSX" hyperlink next to the appropriate concordance to open the file.
Last Modified Date: September 27, 2019