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 51211049,762 jobs in 1997 –Postproduction and other movie & video industries –NAICS 51219015,117 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. TM NAICS Change in the CES series Implementation of 2002 NAICS: North American Industry Classification System

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

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

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 a manufacturing establishment Under NAICS, the warehouse will be classified in Warehousing and Storage, not Manufacturing

25. Reorganization of Old Services Division 1987 SIC2002 NAICS Services Accommodation and Food Services Real Estate & Rental & Leasing (pt) Professional, Scientific, Technical Services Administrative & Support & Waste Management & Remediation Services (pt) Educational Services Health Care and Social Assistance Arts, Entertainment, and Recreation Other Services (except Public Administration

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 level50% will convert directly –2-digit SIC level25% 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. Limitations of Methodology 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

33. Example: Motion Picture Production 1987 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 SIC to NAICS Employment Ratios for 4-Digit SIC Series BLS SIC Tabulating Code SIC Industry BLS NAICS Tabulating Code NAICS Industry SIC to NAICS Employment Ratio 80-7819 Motion picture production and services50-512110 Motion picture and video production67.2 80-7819 Motion picture production and services60-541214Payroll services15.7 80-7819 Motion picture production and services50-512190 Misc. motion picture and video industries7.3 80-7819 Motion picture production and services31-334610 Magnetic media manufacturing and reproducing4 80-7819 Motion picture production and services70-711510 Independent artists, writers, and performers2.3 80-7819 Motion picture production and services60-561310 Employment placement agencies2 80-7819 Motion picture production and services55-532490 Office equipment and other machinery rental and leasing1.2

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 51211049,762 jobs in 1997 CES Payroll Survey – 2002 NAICS –NAICS 512110116,600 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 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 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