Recent Changes in the National Current Employment Statistics Survey

Morisi, Teresa L., Monthly Labor Review

The conversion of the survey to the North American Industry Classification System (NAICS) will provide statistics that better reflect today's high-technology and service-providing industries; other important changes are a shift to a probability-based sample and the incorporation of concurrent seasonal adjustment

The Current Employment Statistics (CES) survey for the national series underwent a number of important changes with the release of May 2003 preliminary data on June 6 of that year. First and foremost, the CES survey converted to the 2002 North American Industry Classification System (NAICS) from the 1987 Standard Industrial Classification System (SIC). With the release of national data in June 2003, all CES data--both the current and the historical series--are now based on NAICS.

The CES survey also completed the transition to a probability-based sample design from a quota-based sample design. Yet another change to the national series was the introduction of concurrent seasonal adjustment, in which seasonal factors are calculated each month to produce seasonally adjusted data series.

This article covers changes as they occurred in the national CES series. The Bureau of Labor Statistics has a separate CES State and Area program that provides employment, hours, and earnings statistics for States and metropolitan areas. (1) The State and Area program converted to NAICS with the release of preliminary January 2003 data in March 2003. (2)

Overview of the CES program

The CES survey is a sample survey of business establishments that is conducted each month. Preliminary national data are released 3 weeks after the reference period. Businesses report the number of employees, hours worked, and earnings of workers on their payrolls who received pay for the pay period that includes the 12th day of the month. The CES program then calculates estimates of the number of nonfarm jobs, average hours, and earnings by industry for the Nation, States, and major metropolitan areas. Estimates from the CES survey are benchmarked once a year to universe counts provided by the Covered Employment and Wages program (commonly known as the ES-202).

The CES program publishes estimates of all employees, women workers, and production workers in the goods-producing industries and nonsupervisory workers in the service-providing industries. In addition, average weekly hours, average hourly earnings, and average weekly earnings of the production or nonsupervisory workers are calculated; other derivative series are also published. CES data serve as timely statistics that are widely followed and much anticipated as indicators of current economic trends.

Difference between NAICS and SIC

NAICS is an improvement over the SIC system, which was last revised in 1987. NAICS varies from the SIC system chiefly in its method of classification and coding structure; it also provides a comparable industry classification system for the countries of North America.

A new classification system for the NAFTA trading partners. NAICS is a new industry classification system that was devised by the statistical agencies of the United States, Mexico, and Canada. NAICS provides industry comparability among the North American Free Trade Agreement (NAFTA) trading partners. The developers of NAICS also sought to provide comparability with the two-digit level of the International Standard Industrial Classification (ISIC), Revision 3.

The U.S. Economic Classification Policy Committee represented the United States in the negotiations with the other countries. The committee, which was established by the Office of Management and Budget and was directed to create a new industry classification system, consists of members from the Census Bureau, the Bureau of Economic Analysis, and the Bureau of Labor Statistics.

Classification based on production processes. NAICS is based on a unifying classification concept: establishments should be grouped together according to their production processes. Under the SIC system, establishments were not grouped together on the basis of any single economic concept; rather, they were grouped together in accordance with various of their characteristics, such as inputs used in production, or by type of customer. An example of this approach to production-oriented classification is that retail bakeries were found in retail trade under the SIC system. Under NAICS, by contrast, retail bakeries are found in manufacturing, along with commercial bakeries. Both types of establishments share similar production processes, so both are found within food manufacturing in NAICS.

NAICS emphasis on new, emerging, service-providing, and high-tech industries. One goal in creating NAICS was to recognize industries that are new, emerging, or considered to be high-technology industries. The SIC system, which was developed in the 1930s and was last updated in 1987, did not recognize these industries; in fact, a criticism of the system is that it does not reflect the current economy.

In NAICS, a sector for the production and distribution of all types of information includes new classifications for industries in telecommunications and industries that came about due to the emergence of the Internet, such as Internet service providers and Internet-only publishing and broadcasting. In addition, a number of high-tech industries, such as semiconductors and electronic components manufacturing and cellular and other wireless carriers, are identified in NAICS.

Another goal in the development of NAICS was to provide increased detail in the service-providing area; this detail is reflected in the large number of sectors now found there: of the 19 nonagricultural sectors in the system, 16 are found in the service-providing area.

Coding structure. NAICS uses a six-digit coding structure to classify establishments. The first two digits represent the sector, the third digit the subsector. The fourth digit designates the industry group, the fifth the NAICS industry. The sixth digit represents the national industry and is used for detail that is specific to individual countries. For most sectors, comparability between the three countries is found at the five-digit level.

Sectors and supersectors. Within the nonagricultural portion of NAICS, there are 3 sector groups in the goods-producing domain and 16 in the service-providing area. The Economic Classification Policy Committee has further aggregated NAICS sectors into groupings called supersectors. The CES program has reconstructed data for the national series back to 1939 for the sectors, supersectors, and higher aggregations listed in exhibit 1. Under NAICS, the CES program has aggregations for durable goods and nondurable goods within manufacturing, as it had under the SIC system. The CES program continues to classify all publicly owned establishments in government, with aggregations by Federal, State, and local government ownership.

NAICS 2002. The first version of NAICS was NAICS 1997, a version that was not implemented by BLS programs. The second version, NAICS 2002, is the version that the CES program and all other BLS programs will use to classify their data. (3) NAICS 2002 incorporated increased comparability among the United States, Mexico, and Canada for the construction sector, as well as increased detail in the information sector for Internet-related activities and more U.S. detail within retail trade. In addition, the United States restructured wholesale trade to incorporate the differences between merchant wholesalers, business-to-business electronic markets, and wholesale trade agents and brokers.

The U.S. Economic Classification Policy Committee and its counterparts in Canada and Mexico plan to reevaluate the NAICS structure for possible revisions every 5 years. Currently, the committee is considering revisions for 2007.

Change in treatment of auxiliary units. Auxiliary units are worksites within a company that serve primarily other establishments within that company. Auxiliary units provide services such as management or warehousing for the parent company. Under the SIC system, auxiliary establishments carried the code for the primary activity of the parent. For example, a warehouse for a manufacturer of power tools was coded power driven handtools, even though it was not actually manufacturing the tools, but was engaged solely in warehousing them. Under NAICS, this establishment would instead receive the code for general warehousing and storage. Thus, under NAICS, the information the establishment provided to the Bureau would be included, not in statistics for manufacturing, but in data for the warehousing industry. Also, NAICS has a brand-new sector 55, management of companies and …

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Publication information: Article title: Recent Changes in the National Current Employment Statistics Survey. Contributors: Morisi, Teresa L. - Author. Journal title: Monthly Labor Review. Volume: 126. Issue: 6 Publication date: June 2003. Page number: 3+. © 1999 U.S. Bureau of Labor Statistics. COPYRIGHT 2003 Gale Group.

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