What is the North American Industry Classification System (NAICS)?
NAICS is the product of a cooperative effort on the part of the statistical agencies of the United States, Canada, and Mexico. Employers with similar production processes are classified in the same industry. NAICS focuses on how products and services are created.
- What Are the Basics About Industry Codes?
- How Can an Employer Request a NAICS Code Change?
- Where Can I Learn More?
What Are the Basics About Industry Codes?
There are many programs within EDD that produce or use data by industry. Most use the Quarterly Census of Employment and Wages (QCEW) (also called "ES-202") as a critical data source. Through the year 2000, QCEW data were produced using the Standard Industrial Classification (SIC) system. Beginning with the release of QCEW data for 2001, the program switched to the NAICS as the basis for the classification of industry.
Compared to SIC, NAICS identified hundreds of new, emerging, and advanced technology industries. NAICS also reorganized industries into more meaningful sectors--especially in the service-providing segments of the economy. For example, the Information industry group brought together units that turn information into a commodity with units that distribute the commodity and others that provide information services. Similarly, Professional, Scientific, and Technical Services was created to combine establishments engaged in activities where human capital is the major input.
Other advantages of NAICS are its international comparability, consistency, and adaptability. NAICS was developed in cooperation with Canada and Mexico. NAICS provides for comparable statistics among the three North American Free Trade Agreement (NAFTA) trading partners. NAICS defines industries according to a consistent principle: businesses that use similar production processes are grouped together. NAICS is reviewed every five years, so classifications and industry information adjust to changes in our economy.
Most historical EDD data with industry codes, such as the QCEW and Current Employment Statistics (CES) official estimates of employment by industry, were recreated based on NAICS. Those data typically go back to 1990 on a comparable NAICS basis. As NAICS codes are updated, historical CES data are adjusted to be consistent with the updated codes.
How Can an Employer Request a NAICS Code Change?
The Employer Classification Unit at LMID is responsible for assigning and reviewing NAICS codes. In the event an employer does not agree with our coding determination or has not received an assigned NAICS code, they can request an update by writing a letter on their company letterhead. The individual who signs the letter must be authorized agent of the employer.
The following information must be included in the letter:
- State Unemployment Insurance account number (SEIN #).
- Physical business address if it differs from the mailing address.
- A brief statement asking for a review of your business activities and to change the assigned NAICS code or issue a newly assigned NAICS code.
- A detailed description of the business activity and services or products provided.
- A contact name and their phone number in the event we have additional questions.
We will review your request, make any necessary changes, and follow-up with you in writing within 10 working days. For your business purposes, all updated or newly assigned NAICS codes can be used immediately.
Please fax your written request to (916) 262-2549.
Where Can I Learn More?
The following are resources that you can access for complete and detailed information about NAICS.
U.S. Census Bureau's website: This website contains FAQs and a wealth of information on NAICS. It offers the ability to search for an industry code. You can access that site at http://www.census.gov/eos/www/naics.
U.S. Bureau of Labor Statistics website: This website offers Industries at a Glance with listings in alphabetical and numerical order, as well as descriptions and national data. This website can be accessed at http://www.bls.gov/iag.