Denver MSA Preliminary Estimates: (Not Seasonally Adjusted) By: Don Pendroy

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1 CES Written Comments for Denver MSA, January 2003 Denver MSA Preliminary Estimates: (Not Seasonally Adjusted) By: Don Pendroy Several important changes that effect CES data users are implemented with the January 2003 data. 1. Beginning with January 2003 data, Colorado CES converted to the new North American Industrial Classification System (NAICS). Jan 2003 NAICS Supersectors As Percent of Total Denver (6 County) MSA Employment 14.50% 0.40% 7.08% 6.53% Natural Resources and Mining Construction 3.92% Manufacturing 8.96% 20.79% Trade, Transportation & Utilities Information Financial Activities Prof. & Business Services 9.73% Educational and Health Services Leisure and Hospitality 5.11% Other Services 14.72% 8.26% Government NAICS replaces the old Standard Industrial Classification (SIC) system. With the conversion to NAICS, SIC-based data will no longer be produced or published. Historical time series have been reconstructed back to 1990 as part of the NAICS conversion process, and may be viewed at the BLS public web site at the following URL: With the January 2003 CES estimates, the final completion of the phase-in for the redesign for the Services Industries is complete. 1

2 This coincides with the conversion of all CES series from Industry coding based on the 1987 Standard Industrial Classification (SIC) system to Industry coding based on the North American Industrial Classification System (NAICS). Below is January from one-year-ago (2002), under the old 1987 SIC Division format. Using January 2002 SIC Division percentages enables a seasonally consistent look at how the new NAICS structure compares to the now obsolete 1987 SIC structure. Denver MSA (5 County) Jan 2002 Production CES Estimates By Division on Old SIC Structure 13.93% 0.55% 7.26% Mining 7.13% 8.37% Construction Manufacturing Trans., Comm., & Utilities 31.12% Trade Finance, Insurance & Real Estate 23.62% Services 8.01% Government To read the NEW NAICS Bulletin from Colorado Labor Market Information go to the URL: To read the Current Employment Statistics technical paper NAICS Changes In CES Publishing: Detail Changes From SIC To NAICS - By Joseph F. Winter, CES Supervisor go to the URL: 2

3 DENVER MSA NAICS SIC detail.pdf NAICS is a New Industry Classification System (Source: NAICS is the product of a collaborative effort between the United States, Canada, and Mexico. Sharing a common classification system allows, for the first time ever, direct comparison of economic data across borders in North America. NAICS is a "clean slate" revision of the system we use to classify establishments by Industry. Unlike previous SIC revisions, the NAICS changes are fundamental. They recognize hundreds of new businesses in our economy, largely in the fast-growing Services Sector. The notice making NAICS effective in the United States was issued in April 1997, and the first NAICS U.S. manual was published in mid NAICS doubles the number of top-level groupings of industrial classification. The highest level of NAICS classification is called the Sector, and corresponds roughly to the Division in SIC. There are 20 broad Sectors in NAICS, compared to only 10 Divisions in SIC. There is increased detail in Services, with new Sectors such as Information; Professional, Scientific, and Technical Services; and Administrative and Support, Waste Management and Remediation Services. There is a new Accommodation and Food Service Sector. NAICS Sectors 11 - Agriculture, Forestry, Fishing, and Hunting 21 - Mining 23 - Construction Manufacturing 22 - Utilities Transportation and Warehousing 42 - Wholesale Trade Retail Trade 52 - Finance and Insurance 3

4 53 - Real Estate and Rental and Leasing 51 - Information 54 - Professional, Scientific, and Technical Services 55 - Management of Companies and Enterprises 56 - Administrative & Support, Waste Management & Remediation Services 61 - Educational Services 62 - Health Care and Social Assistance 71 - Arts, Entertainment, and Recreation 72 - Accommodation and Food Services 81 - Other Services (Except Public Administration 92 - Public Administration NAICS has a different numbering system from the SIC. (Source: The numeric system of NAICS coding has no relationship to that of SIC. The new system provides five levels of classification (compared to four in SIC) in detailed codes that have a maximum of six digits (again, up from four in SIC), and detailed classifications called "U.S. Industry" (instead of "Industry" in the SIC). NAICS was organized such that Industries would be comparable across the United States, Canada, and Mexico at the 5-digit level, called the "NAICS Industry" level. The sixth digit of a NAICS classification 4

5 may be used differently in the United States, Canada, and Mexico. Below is a comparison of the organizational structures of SIC and NAICS: SIC NAICS Level Code Level Code Division Alpha Sector XX Major Group XX Subsector XXX Industry Group XXX Industry Group XXXX Industry XXXX NAICS Industry XXXXX U.S. Industry XXXXXX At the heart of NAICS is a production-based concept of classification; that is, NAICS classifies each establishment into a detailed Industry based in the production processes it uses. Under the SIC system, some establishments were classified according to production processes, but others were classified using different criteria, such as class of customer. Thus, reclassification under NAICS substantially changes how many and which businesses are included in certain Sectors. Examples of how the production-based concept transfigured industrial classification are readily found in Wholesale/Retail Trade, and in auxiliary establishments. Under the SIC, wholesalers and retailers were classified according to the class of customer they served. Instead, NAICS groups them according to how each establishment operates. Retailers typically sell merchandise in small quantities, using public-oriented methods like mass-media advertising and high-traffic locations. Wholesalers, on the other hand, are often closed to the public, sell goods in large quantities, and use business-oriented sales methods such as specialized catalogs and warehouse locations. Thus, establishments previously considered to be engaged in Wholesale Trade, such as the sale of used auto parts or office furniture, could be considered Retail Trade if they are open to the public. 2. Broomfield County is a new sixth Denver MSA County with release of the January 2003 CES data. Broomfield County (County 014) joins the current five counties (Adams, Arapahoe, Denver, Douglas, & Jefferson) that comprise the Denver MSA. The new Broomfield County contains year 2002 employment of about 25,000 jobs. 5

6 Approximately 83% of the total jobs in the new Broomfield County were previously included in the Boulder/Longmont MSA. Therefore, data users will see the Boulder/Longmont MSA DECREASE by about 20,800 with January 2003 data, while the Denver MSA will INCREASE by about 20,800. Beginning with January 2003 data, the Denver MSA, & the Boulder MSA Total Employment Series are not comparable with any time period before January BLS guidelines are utilized when an MSA re-definition causes employment to shift or and out of an established MSA. When a CES estimated series has a non-economic based change, a series is considered broken when the change is in excess of one-half of one percent (0.5%). Since 20,800 employment left the relatively small Boulder/Longmont MSA, the result was that all private sector series are broken, and Local Government. Only Federal Government, and State Government employment in the Boulder/Longmont MSA maintained an unbroken series. In the Denver MSA, even with its large relative size, a majority of the component series are broken. Because of the MSA area re-definition effecting the Denver MSA, and the Boulder/Longmont MSA, there will not be the normal analysis that compares January 2003 CES employment estimates to the previous month in the Denver or the Boulder MSA. When the February 2003 CES estimates are released, the over-the-month change analysis will return. The over-the-year analysis will not be started again until January 2004 data are released one year from now. 3. Finalization of the probability based sampling for all private Sector employment. (Source: Effective with the release of (state) Current Employment Statistics (CES) data for January 2003, Private Sector employment within Colorado CES estimates will reflect the newly implemented probability-based sample methodology. In June of 1995, the Bureau of Labor Statistics (BLS) announced plans for a comprehensive sample redesign of its monthly payroll survey. The initial research phase for the CES sample redesign was completed in 1997, and the Bureau launched a production test of the new sample design at that time. In June 2000 the first estimates from the redesign were published, for the Wholesale Trade Major Industry Division. In 2001 the next phase was implemented, with the publication of redesign estimates for the Mining, Construction, and Manufacturing Divisions. The third phase of redesign implementation for CES series began with publication of estimates for the Transportation and Public Utilities (TPU), Finance, Insurance and Real Estate (FIRE), and Retail Trade Divisions in year Total Nonag. Wage and Salary Employment (Denver MSA): Total Nonfarm employment for the new six-county Denver MSA in the January 2003 CES estimates was 1,144,000. The addition of the previously mentioned Broomfield County employment, which moved into the Denver MSA, added about 20,800 more employment into the Denver MSA. This 20,800 employment was previously within the Boulder/Longmont MSA before it was shifted into the Denver MSA with the addition of Broomfield County as the sixth Denver MSA County. 6

7 Effective with the introduction of the new NAICS based January 2003 data, the Denver MSA total employment series cannot be compared to any prior published Denver MSA employment. In the technical jargon of the economist, the series is officially broken. Denver MSA January 2003: Employment of NAICS Supersectors (000s) Natural Resources and Mining Construction Manufacturing Trade, Transportation & Utilities Information Financial Activities Prof. & Business Services Educational and Health Services Leisure and Hospitality Other Services Government Natural Resources and Mining: Employment in January 2003 is 4,600. The new Natural Resources and Mining NAICS Supersector contains employment mostly comprised of Logging, Oil and Gas Extraction, and Mining (Except Oil and Gas Extraction). The new NAICS publication structure has some loss of detail since Mining is no longer published as a separate industry. Construction: The Construction Supersector remains essentially the same as under the old SIC Division configuration, and has employment of 81,000 in January. The three component Sectors remain the same. Construction of Buildings had employment of 14,600. The Heavy and Civil Engineering Sector reported employment of 9,300. The large Specialty Trade Contractors Sector reported employment of 57,100 in January. Manufacturing: The new Manufacturing Supersector employment under NAICS is 74,700 in January, with the Durable Goods Sector contributing 45,700 and the Non-Durable Goods Sector reporting 29,000 of the total. Non-durable Goods Manufacturing lost most of Printing and Publishing employment, as this component moved to the new NAICS Information Supersector. 7

8 Trade, Transportation, & Utilities: Trade, Transportation, & Utilities contains 237,800 jobs for the Supersector. Retail Trade, which comprises about one half of this Supersector with 123,700 jobs, declined under NAICS, from employment levels it had under SIC. Retail Trade was a Division with year 2002 annual average employment of 203,600 under the old SIC structure. The Wholesale Trade Sector has January 2003 employment of 64,200. The Durable Goods Subsector has employment of 39,400 and Non-durable Goods Subsector now has employment of 20,200. Under the old SIC structure, Telecommunications was a component of Transportation, Communications and Utilities. Under the new NAICS structure, Telecommunications has moved to the Information Supersector. Another source of employment decline in the Trade, Transportation, & Utilities Supersector is the movement of Eating and Drinking Establishments out of Retail Trade, and into the Leisure and Hospitality Supersector. Information: Information is a new NAICS Supersector employing 58,500 in January 2003, which is made up of Telecommunications employment of 27,500 and Publishing Industries employment of 14,000. Financial Activities: The Financial Activities Supersector has a January 2003 employment level of 94,500. The Credit Intermediation & Related Activities Sector has employment of 30,300. Insurance Carriers and Related is another significant Sector of Financial Activities, with employment of 26,000. Real Estate and Rental and Leasing: The Real Estate Subsector, with employment of 17,400 makes up 70% of this Sector s 24,700 jobs as of January Professional and Business Services: This new NAICS Supersector is both large and economically diverse, with employment of 168,400. Professional, Scientific, and Technical Services is the largest Sector, with 82,100 employment. Administrative and Support, and Waste Management Services is also a large portion with a 70,800 employment level. Architectural, Engineering & Related with 21,800 jobs, and Computer Systems Design & Related Services with 20,300 jobs are the next two largest Sectors. Management of Companies and Enterprises, Employment Services, and Services to Buildings are other significant Sectors in Professional and Business Services. 8

9 Educational and Health Services: Educational and Health Services contains 111,300 jobs as of January 2003, and is dominated by health care related employment. The Ambulatory Health Care Services Sector contains employment of 41,300. This number reflects employment in all of the various doctor, dentist & other health care professional offices in the Denver MSA. Hospital Employment in the MSA is currently at 23,100. The Social Assistance Sector contains 15,400 jobs, and Educational Services (private) contributes 15,800 to the total. Leisure and Hospitality: Leisure and Hospitality employment stands at 102,500 as of January The bulk of the jobs in this Supersector are found in the 78,900 currently in the Food Services and Drinking Places Sector. Other Services: Other Services has employment of 44,800. It contains employment from the Repair and Maintenance Services Sector with 12,900 jobs, and the Personal and Laundry Services Sector with 12,200 jobs. Government: Total Government employment within the Denver MSA in January 2003 was 165,900. Local Government employment of 106,000 comprises 64% of total Government employment. Federal Government employment is 30,700 and State Government employment is 29,200. Produced By: State of Colorado: Bill Owens, Governor Colorado Department of Labor & Employment: Jeffrey M. Wells, Executive Director Labor Market Information: Alexandra E. Hall, Director Current Employment Statistics (CES): Joseph F. Winter, Supervisor Contact Information: Visit the CES Home Page: Phone: Labor Market Information (303) These Current Employment Statistics data and any accompanying analysis are in the public domain and, with appropriate credit, may be reproduced without permission. Please reference, Source: Colorado Department of Labor and Employment, Labor Market Information. 9