Introduction

WHAT IS THE ECONOMIC CENSUS?

The economic census can be defined as the systematic measurement of the following:

Almost all economic activity in the U.S. (During the 1997 Economic Census, approximately 97 percent of the Gross Domestic Product (GDP) was covered. Only agriculture [1.6 percent of GDP] and a few other activities [1.2 percent of GDP] did not fall under the purview of the 1997 Economic Census.)

Major business activity in Puerto Rico, the Virgin Islands of the United States, Guam, and the Commonwealth of the Northern Mariana Islands.

■ Business activity within the scope of special programs, including the Survey of Minority-Owned Businesses, Survey of Women-Owned Businesses, Business Expenditures Survey, Vehicle Inventory and Use Survey, and Commodity Flow Survey.

The economic census is the major economic statistical program of the United States. It constitutes the chief source of data about the structure and functioning of the Nation's economy, and provides the foundation and framework for a host of other statistical endeavors by public and private sector alike.

LEGAL AUTHORITY

The 1997 Economic Census was carried out by the U.S. Census Bureau, an agency of the U.S. Department of Commerce, under the authority granted by Title 13, United States Code-Census. (Appendix A shows Title 13, United States Code.) Title 13 directs the Census Bureau to conduct economic censuses every 5 years, for years ending in "2" and "7." The title's language also makes response mandatory by business firms or individuals queried by the census, establishes penalties for noncompliance, and requires that the Census Bureau maintain the confidentiality of the information provided by individual respondents.

THE EVOLUTION OF THE ECONOMIC CENSUS

The economic census has come a long way since 1810, when a few questions on manufacturing activity were added to the population census schedule.

2 Chapter 1

The U.S. Constitution requires that a census of population be carried out every 10 years to apportion representation of each state in the U.S. House of Representatives. Even as delegates to the Constitutional Convention discussed various provisions James Madison-principal author of the Constitution-urged that the census be used for more than a head count. Nothing came of his initial recommendations until 1810, after he had become President. In that year, the census collected data not only on the population, but also some data on manufacturing establishments. Questions were asked about

WHAT'S NEW ABOUT THE 1997 ECONOMIC CENSUS?

The North American Industry Classification System (NAICS)

The 1997 Economic Census collected, tabulated, and disseminated the bulk of the data in terms of the new North American Industry Classification System (NAICS). (Chapter 3, Introduction of the North American Industry Classification System (NAICS) describes the new system in detail). The NAICS was developed after extended negotiations among the United States, Canada, and Mexico. This international effort was undertaken to create an integrated industrial classification system for use throughout North America, providing comparable economic statistics for all three national economies. The 1997 Economic Census was the first major statistical activity conducted by one of the three signatory nations to collect and publish data in terms of the new system.

In addition to providing comparable statistics, the NAICS was designed to articulate a consistent conceptual system for classification. Since industrial statistics require that information on outputs and inputs be used together, it was agreed that the NAICS measures of economic activity would be "production-based." Carving the economic activity into 20 sectors, instead of the 10 sectors used by the Standard Industrial Classification (SIC) system, the NAICS provided a more detailed and accurate measurement of industrial activity in the United States. This level of detail within NAICS was particularly true for industries providing services. For example, gone was the old "Services" sector, as such, and in its place was a host of far more specific industrial classifications for the services that- today-account for 34 million jobs. The SIC, developed in the late 1920s, was appropriate for measuring a manufacturing-based economy. The NAICS is more suited to a services and information-oriented economy.

The NAICS divides economic activity into these sectors: Agriculture, Forestry, Fishing, and Hunting; Mining; Utilities; Construction; Manufacturing; Wholesale Trade; Retail Trade; Transportation and Warehousing; Information; Finance and Insurance; Real Estate and Rental and Leasing; Professional, Scientific, and Technical Services; Management of Companies and Enterprises; Administrative and Support, Waste Management and Remediation Services; Educational Services; Health Care and Social Assistance; Arts, Entertainment, and Recreation; Accommodation and Food Services; Other Services [except Public Administration]; and Public Administration.

U.S. Census Bureau, 1997 Economic Census