FAQs (Ask Dr. NAICS)

Regular users of NAICS codes might find the information here occasionally useful for their own use. Where I think it shines is as a point of reference for less regular users. For instance:

How do the NAICS codes affect federal procurement and regulatory activities, such as those carried out by the Environmental Protection Agency, the Occupational Safety and Health Administration (OSHA), the Department of Defense, and the General Services Administration?

NAICS was developed for use in the collection, tabulation, presentation, and analysis of statistical data that show the economic status of the United States. The NAICS categories and definitions were not developed to meet the needs of procurement or regulatory applications. However, other Federal agencies, trade associations, and regulation boards have adopted NAICS to use for procurement and regulatory purposes even though it is not well suited to meet their specific needs. The U.S. Census Bureau has no formal role as an arbitrator of classification decisions outside of Census Bureau programs. For questions regarding other agencies' uses of the NAICS system, contact the specific agency. For access to a list of Federal government agencies, visit www.usa.gov/Agencies/Federal/All_Agencies/index.shtml.

High Tech by NAICS and SIC Code

Occasionally, I've gotten questions about "technology" or "high tech". While we can get reports, there is no one business code that encompasses such a broad category.

The AeA, formerly the American Electronics Association, "uses 45 SIC codes to define the high-technology industry." The organization recognizes that "these 45 SIC codes do not comprehensively cover the entire high-tech industry as the structure of the SIC system is limited. In an effort to produce solid statistics, AeA's definition consists of SIC codes that fall into three broad categories -- high-tech manufacturing, communications services, and software and computer-related services. It does not include broad categories if the high-tech portion does not represent a clear majority. Also, AeA's definition does not include many 'related' industries, such as biotechnology, engineering services, and research and testing services."

Likewise, "the 49 NAICS codes that AeA has chosen for its definition of high tech." The BLS ALSO has its list of NAICS Codes here.

Why doesn't the SEC use NAICS?

My old friend Jennifer Boettcher decided to investigate this question, since:
According to the Office of Management and Budget (OMB), all federal offices must use NAICS for federal statistical reporting purposes. Continued use of SIC for nonstatistical purposes is usually left to the discretion of the agency. Some statutes may refer to SIC -- these are being addressed. For example, the HSR Premerger Notification Rules mentioned SIC, but that was easily remedied by using notices in the Federal Register, such as the one allowing the change from SIC to NAICS in 2001.

Unfortunately, when she contacted the Securities and Exchange Commission (SEC) about why she never got a satisfactory answer: "We will take that under advisement".

The division responsible for choosing which industrial classification system
to use is the Division of Corporation Finance. She spoke with a staff member at the Division about why the SEC has not converted. The main reason given was that it would require too much work for the Office of Information Technology to change. He said there were no immediate plans to covert from SIC to NAICS. When I asked about the new IDEA software to replace EDGAR, he said IDEA is still in the concept phase. She asked him to put NAICS into the concept.

When other federal government agencies converted to NAICS:

Census Bureau: started in 1997 and completed in 2002
IRS: 1998 (in 2003, 95.9% of Partnership tax receipts used NAICS. Proving companies and accountants have adopted NAICS)
SSA: 1999 (employer establishments to assign establishment’s activities)
SBA: 1999 (SBA assigns small business size standards to NAICS codes)
FTC: 2001 (looking at anti-trust premerger issues)
BEA: 2003 (looking at the National Income and Product Accounts)
BLS: 2004 (labor, wages, PPI, etc are measured using NAICS)
EPA: 2006 (connecting Toxic Release Index to NAICS)

Learn more about NAICS
Sorry for the delay in reporting back.

The SIC/NAICS thing

An interesting conversation arose on a listserv I monitor about someone doing industry research at the SIC level. This led to conversations about why. I wrote:
NAICS was supposed to supersede SIC as of the 1997 Economic Census.
SIC, last updated in 1987, won't be revised, but NAICS will, every five years (2002, 2007).
That said, a lot of data are still in SIC.
Someone noted that the business analysts, all "recent business school grads", are only being taught SIC, not NAICS.
Others noted the D&B Market Identifiers File 516 database on Dialog uses both NAICS and SICs but other D&B products on Dialog only use SICs, as does the print D&B Industry Norms/Key Business Ratios.
The SEC still uses SIC codes, though "value-added vendors allow for searching by NAICS.

So why does SIC linger? One vendor reportedly suggested that while the government pushed for NAICS, the private sector is still happy with SICs. Companies such as D&B and RefUSA have each developed extended codes; e.g. SIC 7389-11, which differ from each other, of course.

I suspect that SIC will eventually shrink away, but may take a while. As one librarian noted: "Despite any residual warm feelings for SIC codes--extended or otherwise--that we may have, the SIC manual has no future. The Feds (OMB) are not going to revise it, whereas the NAICS codes will be updated every five years. As the years go by SICs will get more and more out of date. One only has to look at earlier SIC manuals to see how certain industries wither and flourish over the decades since the first one in 1939."

Occupational wage data

The Bureau of Labor Statistics has occupational wage data for sector, 3-, 4- and 5-digit NAICS (North American Industry Classification System) industries.

Data is for the nation, region, state, and MSA levels.

A Question of SIC and NAICS Codes

Question I see on a listserv: Been working with a group here this week. They're trying to update some data on some commercial loans and are asking me to verify SIC/NAICS for them. Come to find out that through D&B.com you can get SIC's, but they are listing NAICS codes. Patron also wants NAICS codes, especially for the companies where D&B's code doesn't match what they already had internally.
Problem is some of these businesses are pretty small.... Any ideas on sources of NAICS codes for small companies. (Have already tried Ward's
too....)

So I write: You might try Reference USA, available in many public and state libraries, which lists both SIC and NAICS codes for the companies listed.
If the company's not in there, and you have the SIC, you could do the conversion using this site, though it'll be tricky because many of the conversions aren't one-to-one.
Hope this is useful.

And I think I'm done. No such luck:

Some folks have been kind enough to point out the government site where you can move from SIC to NAICS. Our problem is that we have a conflict between the SIC in the patron's internal system and the information we're getting from D&B. The folks in the office don't always know exactly what the company does, so it would be hard for them to determine it themselves.
They'd like a source to go straight to the NAICS.....

I reply: "They'd like a source to go straight to the NAICS....."

If I understand your statement correctly, it seems that you are looking for the "standard" NAICS code. But look at the link here, particularly questions 5 and 6. It's quite possible that - and I'm making the example up - that D&B will assign IBM the NAICS code for computer manufacturer, Hoover will select software manufacturer, and Reference USA something else.
Which one is right? Based on the way information is gathered, perhaps all of them.

If I were doing your project, I'd decide that the either the client list is correct or the D&B list is correct, then fill in the holes, because you're not likely to find the consistency you seek, in my experience.

I was happy to get some confirmation from another librarian:
I agree. I have not ever ended up using the NAICS codes as much as my Library school professor promised I would, but I learned exactly what you are saying, had it drilled into my head, and then experienced it in some practice too: that for both SIC or NAICS, or really any classification system, there is some arbitrariness(?), maybe even a great deal of it. Further, for some it is the directory that does the assigning of the classifications and for some it is the company itself that checks a box (for example) assigning them to themselves. So much room for variables. Never going to be perfect. Must do what you suggested and just dive in and start.

So, now here's MY question: when you're looking for a primary SIC/NAICS code for a business - and recognizing that some will have multiple codes - what do YOU use?