Home Labor Market Information What is NAICS

What is 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, as opposed to SIC which focuses on what is produced. Using NAICS yields significantly different industry groupings than those produced using SIC. Due to these differences in NAICS and SIC structures, NAICS data will not be directly comparable to the SIC based data for earlier years.

Why is NAICS Better Than SIC?

  • Relevance: NAICS identifies hundreds of new, emerging, and advanced technology industries. NAICS also reorganizes industries into more meaningful sectors--especially in the service-providing segments of the economy.

    Data users will be able to work with new NAICS industrial groupings that better reflect the workings of the U.S. economy. For example, a new industry sector, called the Information sector, brings together units that turn information into a commodity with units that distribute the commodity and units that provide information services. Information's major components are publishing, broadcasting, telecommunications, information services, and data processing. Under the SIC system, these units were spread among the manufacturing, communications, business services, and amusement services groups. Another new sector of interest is the Professional, Scientific, and Technical Services sector. This sector is comprised of establishments engaged in activities where human capital is the major input.

  • International Comparability: 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.

  • Consistency: NAICS defines industries according to a consistent principle: businesses that use similar production processes are grouped together.

  • Adaptability: NAICS will be reviewed every five years, so classifications and industry information will adjust to changes in our economy.

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How to 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.

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When Did California Data Change?

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, ES-202 data were produced using the Standard Industrial Classification (SIC) system. Beginning with the release of ES-202 data for 2001, the program switched to the 2002 version of NAICS as the basis for the classification of industry.

Based on NAICS Classification: Quick Query by Geography  |  QCEW Data Search Tool

The official estimates of employment by industry (officially the Current Employment Statistics or CES program) are published by NAICS on a monthly basis.  These data are available for the State, Metropolitan Areas, and counties.

The projections of employment by industry and occupation incorporated NAICS codes with the release of the 2002-2012 California data.

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Where Can I Learn More?

The following are resources that you can access for complete and detailed information about NAICS and its implementation and its effect on labor market data.

"Implementing the NAICS at BLS" – This paper, written by James A. Walker and John B. Murphy of the BLS, outlines how NAICS came about, its hierarchical structure and comparisons in selected industries between the old SIC coding system and new NAICS.

"A First Look at Employment and Wages using NAICS" – This paper, written by David R Hiles of the BLS, focuses on how the data are affected by the new coding system. He includes data tables and also information on how to look at the employment and wage data under the new coding structure.

U.S. Census Bureau's Web site: This website contains a wealth of information on NAICS and contains links to lists of new industries, new sectors, benefits, "Ask Dr. NAICS", and links to other sites that will be of great use in learning about NAICS. You can access that site at www.census.gov/epcd/www/naics.html.

U.S. Bureau of Labor Statistics Web site: This website contains much of the information that BLS collects. You can get nationwide data as well as by state. It also allows you to view a variety of data under the new NAICS and also the latest national numbers such as the current unemployment rate. This website can be accessed at www.bls.gov.

Please contact BLS at (800) 562-3366 if you have additional questions.

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