History of the Standard Industrial Classification, by Esther Pearce

http://www.census.gov/epcd/www/sichist.htm[4/5/2011 8:17:06 AM]

EXECUTIVE OFFICE 0F THE PRESIDENT

BUREAU OF THE BUDGET

Washington 25, D. C.

Office of Statistical Standards

July 10, 1957 [sic]

HISTORY OF THE STANDARD INDUSTRIAL CLASSIFICATION

By

Esther Pearce

Standardization of the United States Government Industrial Classification

originated in a recommendation on the subject made at an Interdepartmental

Conference on Industrial Classification held in 1934. This recommendation,

which was transmitted to the Central Statistical Board, suggested that there

should be established continuing committee machinery to explore the problems of

industrial classification of statistical data.

For some time there was further thinking on this subject, and in 1937 the

Central Statistical Board established an Interdepartmental Committee on

Industrial Classification "to develop a plan of classification of various types

of statistical data by industries and to promote the general adoption of such

classification as the standard classificatian of the Federal Government." This

Committee, at its first meeting on June 22,1937, established a Technical

Committee to work on the preparation of the proposed standard classification of

industries.

Standardization in this field was an important objective since various agencies

collecting industrial data used their own classifications, and thus a given

establishment might be classified in one industry by one agency and in another

by a second agency. Such a situation made the comparison of industrial data

prepared by different agencies difficult and often misleading. For example,

production information collected by one agency could not be compared an a sound

basis with employment information collected by another, if both did not conform

to a standard definition of the industry involved.

The project was designed to classify "industry" in the broad sense of all

economic activity; i.e., agriculture, forestry, and fisheries; mining;

construction; manufacturing; wholesale and retail trade; finance, insurance,

and real estate; transportation, communication, electric, gas, and sanitary

services; and services.

The Technical Committee worked first on manufacturing industries, and in June

1938 a list of industries was accepted by the Interagency Committee. This

Committee, at the same meeting, discussed coding problems in nonmanufacturing

fields, and decided to authorize the establishment of subcommittees of experts

in various nonmanufacturing

fields to prepare proposed classifications. The Technical Committee was to: (1)

coordinate the work of the various subcommittees; (2) obtain from Federal and

state government agencies, trade associations, and research organizations

suggestions and criticisms on the drafts of the classification; (3) submit

final reports to the Comm ittee; and (4) continue to direct the work of

considering from time to time whatever changes were recommended by interested

agencies.

The first edition of the Stardard Industrial Classification Manual
History of the Standard Industrial Classification, by Esther Pearce

http://www.census.gov/epcd/www/sichist.htm[4/5/2011 8:17:06 AM]

was put out in duplicated form as follows:

Volume I, Manufacturing Industries

Part 1 - List of Industries., 1938

Part 2 - Description of Industries, 1940

Part 3 - Alphabetic Index of Products, Establishments and Processes, 1939

Part 4 - Alphabetic Index of Products, Establishments and Processes by

Major Groups, 1939

Volume II - Nonmanufacturing Industries

Part 1 - List of Industries, 1939<

Part 2 - Description of Industries, 1940

Part 3 - Alphabetic Index of Products, Establishments, and Services, 1940

Part 4 - Alphabetic Index of Products, Establishments and Services by Major

Groups, 1940

The Manual was prepared by committees of experts in manufacturing and in the

various fields covered by nonmanufacturing.

In the preparation of this Classification, the committees were guided by the

following general principles:

(1) The classification should conform to the existing structure of American

industry.

(2) The reporting units to be classified are establishments rather than

legal entities or companies.

(3) Each establishment is to be classified according to its major activity.

(4) To be recognized as an industry, each group of establishments must

have significance from the standpoint of the number of establishments,

number of wage earners, volume of business, employment and payroll

fluctuations, and other important economic features.

It was decided that atfter the 1939 Standard Industrial Classification had been

used a reasonable length of time, it should be reviewed in the light of

experience, and appropriate revisions made. The project was sponsored by the

Bureau of the Budget, to which the Central Statistical Board had been

transferred. Following the review, the first printed edition of Manufacturing

Industries was published in 1941 and that of Nomanufacturing Industries in

1942.

Toward the end of World War II, it was thought advisable to revise the 1941

classification of manufacturing in order to reflect technological advances in

industry, and to incorporate changes recommended by users of the

classification. As a result, a new edition of Volume I, Manufacturing

Industries, of the Standard Industrial Classification Manual was published in

two parts: Part 1, Titles and Descriptions of Industries, November 1945; and

Part 2, Alphabetic Index, December 1945.

No corresponding revision of Nonmanufacturing was prepared at that time. Such

an undertaking was important, however, both to bring this segment of the

classification up to date and also to achieve consistency in the handling of

borderline cases between Manufacturing and Nonmanufacturing.

This work was undertaken and a revision of Volume II, Nonmanufacturing

Industries, was published in 1949. This, as well as the 1945 Manufacturing, was

based on the same general principles and prepared with the same type of

committee structure as were the earlier issues of the Standard Industrial

Classification Manual.

During the period 1951-1953, the Technical Committee accepted some revisicns,

primarily to have them available for use in the proposed census covering 1953.

Since funds were not appropriated for the census., these changes were never
History of the Standard Industrial Classification, by Esther Pearce

http://www.census.gov/epcd/www/sichist.htm[4/5/2011 8:17:06 AM]

promulgated.

In 1952, the Advisory Council on Federal Reports, an organization of

businessmen who act as advisers to the Bureau of the Budget, undertook a review

of the Standard Industrial Classification. For this purpose, there were 27

committees established with approximately 350 members. During a period of two

years, these committees prepared their reports and submitted them to the

Advisory Council, which in turn submitted them to the Bureau of the Budget.

The reports were considered by the Technical Committee on Standard Industrial

Classiftcation, and questions were raised which were referred to the Industry

Committees. The answers were furnished either in written form, or in joint

Industry Conmittee-Technical Committee meetings. The reports were then

reconsidered by the Technical Committee, and decisions on the revised

Classification were made. In arriving at decisions, results of the 1954 Census

of Manufactures were used to a considerable extent.

The proposed revision of the Classification was cleared with government

agencies, the Industry Committees; and various research, trade, and labor

organizations. Additional changes were made on the basis of this clearance, and

on the basis of a series of conferences with industry representatives who

requested them.

The revised Standard Industrial Classification, combining both manufacturing

and nonmaufacturing industries into one book, was published in July 1957.

A review of the 1957 edition of the Manual, based on data from the 1957

Economic Censuses for all in-scope industries, and appropriate data from the

records of the Social Security Administration, Bureau of Labor Statistics, and

Bureau of Employment Security for all out-of-scope industries was completed in

1962. Amendments adopted as the result of this review were incorporated in a

supplement to the 1957 edition, published in 1963.

Data from the 1963 Economic Census, and other appropriate sources were utilized

for the 1965-66 review of the 1957 edition as modified by the 1963 supplement

which resulted in the present 1967 edition. This edition of the Manual contains

both a numeric index as well as an alphabetic index, and three new appendix

sections, namely (1) Procedures for the Identification and Classification of

Central Offices and Auxiliary Units, (2) Standard Short Industry Titles, and

(3) Changes in the Structure between 1957-1967.