The United States Census Bureau has updated the North American Industry Classification System (NAICS) codes. This update will be reflected in the Creative Vitality™ Suite web tool effective April, 2015. Every five years, the Census Bureau reevaluates industry definitions and makes adjustments based on their analysis of changes in the economy. The Census Bureau update combines some creative industries into new industry categories that are more reflective of today’s economy.
NAICS Codes Removed/NAICS Codes Added
Following are two lists: One contains a list of NAICS codes that have been removed from the system and the second contains a list of new industries. Please note that the new industries generally reflect a combining of several old NAICS codes into new codes.
*Only 29.2% of “electronic stores” revenues are included. Please see “Impact on the Creative Vitality Index” below.
Rationale for the Change in NAICS Codes
The changes in the NAICS codes largely reflect the impact of technological changes on long-time industries. For example, the old code that includes “Prerecorded Tape, Compact Disc and Record Stores” has been highly impacted by streaming and other means of delivering content. These changes are well known. The appropriateness of replacing this set of activities by “electronic stores” may be open to debate, however, economic measures rooted in such stores arguably better illustrate activity in the area of transactions related to music and video than do now dated industry categories such as record stores.
The Creative Vitality™ Suite will attribute 29.2% of “electronic stores” as “creative” based on employment ratios published by the United States Bureau of Labor Statistics’ Complete Employment Statistics (CES) program. In a notice of changes regarding the 2012 NAICS update, record stores and photography stores were reported to contribute 29.2% of employment to the electronic store industry. The CES provides a monthly economic indicator of national economic trends, unemployment rates, and inputs to many gauges of the US economy.
Impact on the Creative Vitality Index
The transition to the new NAICS codes will impact the Creative Vitality™ Index (CVI). Two industries, camera stores (443130) and record stores (451220), have been combined into a new industry: electronic stores (443142). Beginning with 2011, the CV™Suite team will retroactively update the index to include the new industry electronic stores code and remove the decommissioned codes. Based on the employment ratios published by the Complete Employment Statistics (CES) program, we will only include 29.2% of “electronic stores” revenues within the index calculation because this percentage of revenues estimates our previous CVI indicators, camera and record stores sales. Our analysis of the impact indicates that these changes will result in only minimal changes to CVI values at the state level. State CVI values will increase by an average of 0.03 points, however, the range of changes to the overall index value is estimated to be between +0.15 and -0.24.
Impact on Creative Industries Revenues
The change in NAICS codes will, on average, prompt an increase of approximately $3 billion in revenues per state. The median increase is $900 million, meaning 50% of the states will see an increase higher than $900 million and 50% will see an increase lower than $900 million. Economic growth in the year 2013 and the addition of the new NAICS codes contribute to the overall increase in creative industry revenues.
Historical Changes in Data Streams
Changes in the composition of long-term data streams take place from time to time. They occur because the activities that the data are documenting change. For example:
- The Dow Jones Industrial Average was launched in 1896 with 12 companies, the index now includes 30 companies. The number and mix of types of companies included in it has changed over time to reflect contemporary industry–for example, technology companies. Some of the companies that were once included in the index, such as US Leather, Nash Motors, and Woolworth, illustrate how industries change.
- The United States government’s official year has changed twice, once in 1843 and again in 1976. The 1976 changes required the adjustment of a quarter of a year because the start of the year changed from July 1 to October 1 leaving those three months in limbo. Needless to say, this accounting for a now missing quarter of a very large organization prompted immense adjustments to be made by a very large number of people.
- The NAICS system is reevaluated every five years and is regularly adjusted. The system was introduced in 1997, adjusted for the first time for 2002 data forward, for 2007 data forward, and adjusted again for 2012 forward data. Future changes can be expected. In spite of these changes the system remains one of the best nationally available measures of creative industry activities in the United States.