U. S. Bureau of Labor Statistics Implementation of the NAICS 2007 Revision in Bureau of Labor Statistics Programs Amanda Chadwick Michael Searson

2 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

3 Federal Register Notices March 11, 2005 – 70 FR Contains the decision for 12 industry splits, 7 direct changes, 15 title changes and 1 number change March 16, 2006 – 71 FR additional industry split

4 What is included? 13 Splits based industries that split into more than one based industry 7 Directs 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

5 Splits One-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 – Real Estate Investment Trusts (REITs) 1 split industry has 7 possible 2007 codes – Laboratory Apparatus and Furniture Manufacturing

6 The 13 Split 2002-Based NAICS Codes Other Vegetable (except Potato) and Melon Farming All Other Miscellaneous Crop Farming Men’s and Boy’s Cut and Sew Apparel Contractors Women’s, Girls’, and Infants’ Cut and Sew Apparel Contractors All Other Plastics Products Manufacturing Rubber Product Manufacturing Use All Other Rubber Product Manufacturing Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing Laboratory Apparatus and Furniture Manufacturing Internet Service Providers Real Estate Investment Trusts (REITs) Human Resources and Executive Search Consulting Services Research and Development in the Physical, Engineering, and Life Sciences Estimated National total – 67,000 establishments

7 Directs One-to-One Relationships Internet Publishing and Broadcasting Paging Cellular and Other Wireless Telecommunications Telecommunication Resellers Cable and other Program Distribution Other Telecommunications 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

8 Milestones/Timeline January Decision to combine the NAICS 2007 Revision with the 2007 ARS March Federal Register with NAICS Update for 2007 Notice released March Second Federal Register with NAICS Update for 2007 Notice released August NAICS 2007 Revision (N7R) State training October ARS Begins October Dual Coding Begins (Varies State to State)

9 Milestones/Timeline Continued January 2007 – Meet with BLS Programs on data conversion May /4 Data to National Office - Early look at N7R changes via the future NAICS fields on the EQUI file End of July /1 Data to National Office End of August files become available November Dual Coding Ends (Varies State to State) January 2008 – Final analysis of 2007 NAICS revision

10 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

11 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 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 rates Updated as of 2/22/2006 Quarterly Press Releases, Annual Employment & Wages REMY and Input-Output Tables

12 QCEW Program Fed/State Cooperative Statistical Program l Program started with the passage of Federal Unemployment Tax Act (FUTA) l BLS provides funding, deliverables, manuals, guidelines, and methodologies to State agencies l States collect & edit data (decentralized approach)

13 QCEW Statistics 4 th Quarter 2006 Stats: 8.9 Million establishments Million employment $1.516 Trillion Wages

14 Data Coverage 98 Percent of all non-farm salary Workers in the U.S. 45 Percent of U.S. Agricultural Workers.

15 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.

16 QCEW Data Collection Forms Status Determination Quarterly Contribution Report Annual Refiling Survey (ARS) Multiple Worksite Report (MWR) Report of Federal Employment & Wages

17 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

18 Purpose of ARS Review and Update (if necessary) Mailing & Physical Location addresses County code Single/multi-worksite status Industry code (NAICS)

19 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

20 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

21 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

22 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

23 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

24 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

25 Implementation of the NAICS 2007 Revision in Bureau of Labor Statistics Programs For additional information contact: Michael A. Searson Amanda Chadwick U.S. Bureau of Labor Statistics Postal Square Building 2 Massachusetts Ave., NE Suite 4840 Washington, DC