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The Impact of the Changeover to NAICS on Employment Data in the Motion Picture Production Industry

The Impact of the Changeover to NAICS on Employment Data in the Motion Picture Production Industry Presentation at the Sacramento Statistical Association Martha Jones California Research Bureau April 15, 2003 Household vs. Establishment Data Household Employment (Unemployment)

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The Impact of the Changeover to NAICS on Employment Data in the Motion Picture Production Industry

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  1. The Impact of the Changeover to NAICS on Employment Data in the Motion Picture Production Industry Presentation at the Sacramento Statistical Association Martha Jones California Research Bureau April 15, 2003

  2. Household vs. Establishment Data • Household Employment (Unemployment) • How many people work in motion pictures? • Current Population Survey (CPS) • Survey taken in households • Captures self-employed • Establishment Data • How many jobs are in motion pictures? • Current Employment Statistics (CES) • Survey taken of payroll employment • Captures multiple job holders

  3. California Motion Picture Production Employment, 1997 • CES Payroll Survey – 1987 SIC • Motion picture & video production and services • SIC 781 141,200 jobs in 1997 • U.S. Economic Census – 1997 NAICS • Motion picture and video production • NAICS 512110 49,762 jobs in 1997 • Postproduction and other movie & video industries • NAICS 512190 15,117 jobs in 1997

  4. Overview of the CES Program • The Bureau of Labor Statistics Current Employment Statistics (CES) Program, also known as the ‘payroll survey,’ is a monthly sample survey with approximately 350,000 reports for businesses nationwide. • CES publishes estimates of employment, hours, and earnings for the Nation, States, and major metropolitan areas each month. • CES series are also input to other key economic indictors, for example the National Income and Product Accounts • CES operates as a Federal/State cooperative. EDD/LIMD

  5. Covered Employment and Wages (ES-202) • Universe for virtually all BLS programs; Unemployment Insurance records; quarterly data. • Very detailed coverage: • 8.2 million establishments • Codes continually verified on a 3-year cycle

  6. NAICS TM Change in the CES seriesImplementation of 2002 NAICS: North American Industry Classification System

  7. Whatis NAICS? • New Industry Classification System • Established in 1997 • Developed in cooperation with our NAFTA partners, Canada and Mexico

  8. What was SIC? The Standard Industrial Classification System (SIC) was: • Developed in the 1930s. Last revised 1987. • Revisions made little change to the original structure • Emphasized manufacturing/goods sectors • A mixture of classification concepts

  9. How Does NAICS Differ from SIC? NAICS: • Emphasizes new and emerging industries, high-technology and service industries • Comparability with Canada and Mexico • Will be regularly maintained, current plans are for revisions every 5 years: 2002, 2007… • Recognizes “national” industries using 6-digit numbering system (659 U.S. industries) • Primary classification utilizes the production process - Example: • Creation of software (Information) • Software duplication (Manufacturing)

  10. Conceptual frameworks for Industry Classification Systems • A supply-side, or production-oriented, concept aggregates according to similarity in the processes used to produce a good or service (i.e. the way in which inputs are transformed into outputs) • Useful for international comparisons and productivity studies • A demand-side, or commodity-oriented, concept yields a system based on the use of the commodity or service. • Essential for analysis of market structure

  11. Example of SIC Production-side Grouping: Sugar Products • SIC 2061 granulated sugar and other sugar products (ex. Molasses) made from sugar cane • SIC 2062 granulated sugar and other sugar products made from sugar beet • SIC 2063 Sugar products made from raw cane sugar

  12. DEMAND GROUPINGS: group together commodities or services that are used together for some purposes or that define market groups. • Nature of substitution and/or price movements • SIC 2061 (sugar cane), SIC 2062 ( beet sugar) • If demand categories used: • These 2 sugar categories would be one SIC category. • Sugar and molasses might be two separate SIC categories. • Marketing relationship (commodities sold together) • SIC 3423, Hand and Edge Tools (sold in hardware store) • SIC 3931 Musical Instruments • SIC 3942 Dolls and Stuffed Toys

  13. SIC: Interaction between production-oriented and market-oriented categories • CANDY: • SIC 2064 Candy & other confectionary products – a market grouping. But a “partial market” because only includes chocolate bars made by producers that do not grind and process cocoa beans. • SIC 2066 Chocolate and Cocoa Products – a production-oriented category. Chocolate bars made by fully integrated chocolate makers.

  14. SIC: inconsistencies with respect to vertical integration These 2 SIC codes have same output: sausages. • SIC 2011 Meat Packing Plants • SIC 2013 Sausages and other prepared meats • SIC 2015 Poultry Slaughtering and Processing

  15. Ideal Industry • Is there a common production process used by establishments in the industry? • Are there common inputs? • Do they constitute their own market category? • Examples: goods – creamery butter; services – architects.

  16. Implementing Production-oriented Grouping in the Services Sector Measurement difficulties: • Defining measures of output • Heterogeneity and quality change in outputs • Collecting data from small employers

  17. What is the NAICS Structure? 20 sectors (21 counting Nonclassified Establishments) 1,182 industries (US) 178 more than under SIC system 6-digit numbering system

  18. NAICS/SIC Structure NAICS 2-digit Sector 3-digit Subsector 4-digit Industry Group 5-digit NAICS Industry 6-digit U.S. Industry SIC Division Letter 2-digit Major Group 3-digit Industry Group 4-digit Industry

  19. NAICS Structure As with SIC, more digits = more detail Code 51 512 5121 51211 512110 Title Information Motion Picture and Sound Recording Motion Picture and Video Motion Picture and Video Production Motion Picture and Video Production

  20. NAICS Alternate Aggregation Tree

  21. What are some of the important changes in NAICS? • Manufacturing restructured • Redefinition of wholesale/retail • Creation of information sector • Creation of management sector • Reorganization of SIC “services” division • Classify auxiliaries by activity

  22. Creation of Information Sector • New Industries: - Cellular and other Wireless Telecommunications- Telecommunications Resellers- Internet Publishing and Broadcasting - Internet Service Providers- Web Search Portals • Rest created from:Manufacturing: Publishing TCPU: Broadcasting & Communications Services: Motion Picture & Sound Recording Information Services & Data Processing Libraries

  23. Creation of Management Sector • Management of Companies and Enterprises (55) is separated out. • Under SIC, corporate headquarters were not distinguished from the industry within which their establishment was classified.

  24. Classify Auxiliaries by Activity • Auxiliaries will be classified by primary activity • Under SIC, were classified according to the establishment they served • Example: Amazon books, Clorox bleach Example of an auxiliary:Warehouse (separate location) for amanufacturing establishment Under NAICS, the warehouse will be classified in Warehousing and Storage, not Manufacturing

  25. Reorganization of Old “Services” Division

  26. Implementation Timing Across Agencies • Phase in by statistical agencies • Completion of implementation by 2005

  27. Current Employment Statistics (CES) • Publication by BLS and states • State & Area: March 2003 • National: June 2003 • Maintain continuity at “Total Nonfarm” level • Retain logging, despite reclassification to agriculture

  28. CES Times Series Reconstruction • State & Area • 1990-2000 for all Employee series(state option: 1991 start) • NO Hours & Earnings reconstruction (H& E will start as of January 2001) • National (Employment and Hours & Earnings) • 1939-2000 for “Super Sector” • 1990-2000 for detail • Possible reconstruction methods: • By firm code, with imputation (1991-2000) • Ratio-based reconstruction (all years possible)

  29. Breaks in Time Series - CES • Expect lots of breaks in series • Effect on series depends upon level of aggregation • CES Preliminary Research: • 4-digit SIC level 75% will convert directly • 3-digit SIC level 50% will convert directly • 2-digit SIC level 25% will convert directly

  30. Reconstruction Methodology • First quarter 2001 UI universe micro-data were dual coded with SIC and NAICS • Ratios were established from this dual-coded file, mapping employment from SIC series to NAICS counterparts • Reconstruction: Ratios are applied to existing CES series to form NAICS-based series.

  31. Advantages of Methodology • Provides basis for comprehensive reconstruction at minimal cost • Preserves overall CES seasonal patterns • Preserves CES time series properties; no outliers or level shifts

  32. Current NAICS/SIC ratios may not be appropriate historically Potential for distorting trends in rapidly growing or declining industries Additional NAICS historical review undertaken for these industries, including comparisons to UI longitudinal micro-files which have been NAICS-coded back to 1990 Limitations of Methodology

  33. Example: Motion Picture Production1987 SIC to 2002 NAICS SIC 781 Production • Motion Picture & Video Production • SIC 7812 = NAICS 512110 • Services Allied to Production • SIC 7819 split between many NAICS codes

  34. Motion Picture Example: SIC to NAICS Ratios

  35. California Motion Picture & Video Production CES Employment: 2002 NAICS vs. 1987 SIC

  36. California Motion Picture Production Employment, 1997 • CES Payroll Survey – 1987 SIC • Motion picture & video production and services • SIC 781 141,200 jobs in 1997 • U.S. Economic Census – 1997 NAICS • Motion picture & video production • NAICS 512110 49,762 jobs in 1997 • CES Payroll Survey – 2002 NAICS • NAICS 512110 116,600 JOBS IN 1997

  37. References Motion Picture Production in California March 2002 http://www.library.ca.gov/crb/02/01/02-001.pdf Martha Jones mjones@library.ca.gov 916-653-6742

  38. More information http://www.census.gov/epcd/www/naics.html Clarification memos at: http://www.census.gov/epcd/www/naicsdoc.htm#issues

  39. CES Contacts and Additional Information • BLS NAICS page: http://www.bls.gov/bls/naics.htm • CES State and Area: http://www.bls.gov/sae/home.htm • CES National: http://www.bls.gov/ces/cesnaics.htm

  40. Federal Register Notices

  41. EDD: Employment by Industry http://www.calmis.ca.gov/htmlfile/subject/indtable.htm

  42. EDD: Information on NIACS http://www.calmis.ca.gov/htmlfile/programs/naics.htm

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