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County Business Patterns

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How the Data are Collected (Coverage and Methodology)


UNIVERSE FOR COUNTY BUSINESS PATTERNS

The Business Register is the Census Bureau's source of information on employer establishments included in the County Business Patterns. The Business Register is a multi-relational database that contains a record for each known establishment that is located in the United States, Puerto Rico and Island Areas (American Samoa, Guam, Commonwealth of the Northern Mariana Islands and U.S. Virgin Islands) with paid employees. An establishment is a single physical location at which business is conducted or services or industrial operations are performed. An establishment is not necessarily equivalent to a company or enterprise, which may consist of one or more establishments. A single-unit company owns or operates only one establishment. A multi-unit company owns or operates two or more establishments. The treatment of establishments on the Business Register differs according to whether the establishment is part of a single-unit or multi-unit company.

Single Unit Company

A single-unit company's unique identifier is its Employer Identification Number (EIN). The Internal Revenue Service (IRS) issues an EIN and the company uses it as an identifier to report payroll taxes. All employers are required to have at least one EIN. Because a single-unit company has only one establishment, there is a one-to-one relationship between the company and the EIN. Thus the company, the EIN, and the establishment all reference the same physical location and all three terms can be used interchangeably and unambiguously when referring to a single-unit company.

Descriptive information for a single-unit establishment in the County Business Patterns universe, including geographic location, industry classification, legal form of organization classification, payroll, and employment, come from a variety of administrative record and survey sources. Administrative records filed by EIN are the most common source of information for single-unit establishments, with updates on geographic location and industry classification from Census Bureau conducted surveys.

Multi-Unit Company

For multi-unit companies a different structure connects the company with its establishments via the EIN. Essentially a multi-unit company is associated with a cluster of one or more EINs and EINs are associated with one or more establishments. A multi-unit company consists of at least two establishments. Each company is associated with at least one EIN and only one company can use a given EIN. One multi-unit company may have several EINs. Similarly, there is a one-to-many relationship between EINs and establishments. Each EIN can be associated with many establishments, but each establishment is associated with only one EIN. With the possibility of one-to-many relationships, there must be distinction between the company, its EINs, and its establishments. A unique employer unit identification number identifies each establishment owned by a multi-unit company on the Business Register.

There is less dependency on administrative record sources for multi-unit establishment information because EIN and establishment are not equivalent for multi-unit companies. The Census Bureau's Economic Census (conducted every five years in years ending in ‘2’ and ‘7’) initially identifies multi-unit companies when a company expands to more than one establishment. Establishments for a multi-unit company are identified through the Economic Census and the annual Company Organization Survey (COS). Geographic location, industry classification, payroll and employment come primarily from the Economic Census and the COS. EIN-level administrative payroll and employment data are apportioned to the establishment level in cases of nonresponse or for smaller companies not selected for the COS.

Legal Form of Organization

The Legal Form of Organization (LFO) for County Business Patterns establishments is derived from administrative record sources. County Business Patterns publishes U.S.-level data (starting with 2008) and state-level data (starting with 2010) by the following legal forms of organization: All Establishments, Corporations, S-Corporations, Sole Proprietorships, Partnerships, Non-profits, Government, and Other.

Legal Form of Organization data are published at the U.S-level and state-level for number of establishments, number of employees, first-quarter payroll, and annual payroll, by NAICS industry and employment size class.

Professional Employer Organizations

Historically, the permanent on-site workforce at a business location were paid employees of that establishment. This traditional practice of companies directly hiring employees is still the dominant employer/employee relationship in the United States. However, over the past decade a new workforce arrangement has emerged. Under this new arrangement, a professional employer organization (PEO) or employee leasing company operates in a co-employment relationship with client businesses to provide leased workers and specialized management services. Employee leasing companies are responsible for payroll, including withholding and remitting employment-related taxes, for some or all of the employees of their clients, and also serve as the employer of those employees for benefits and related purposes. Employee leasing is distinct from temporary help service and payroll service.

County Business Patterns has shown a steady increase in professional employer organizations (NAICS 561330), over the past few years. Clearly, the employees are not classified in the predominant industry of the client businesses. Professional employer organizations may pay these employees out of a single payroll office. This may result in the leasing company's employment and payroll data being reported in the county where the payroll office is located, thus distorting the data for that county. In some cases, many thousands of employees may be paid from a single payroll office. Therefore, for geography purposes, employee-leasing establishments may be published in the “statewide” category in states where such payroll offices are located, as these establishments service multiple counties.

Exclusions and Undercoverage

County Business Patterns covers most of the country's economic activity. The series excludes data on self-employed individuals, employees of private households, railroad employees, agricultural production employees, and most government employees. See below for specific NAICS exclusions. Businesses operating without an EIN, and businesses with an EIN but without employees, are excluded from the County Business Patterns universe.

A certain amount of undercoverage occurs in the universe, primarily with establishments for multi-unit companies. The Census Bureau does not create a multi-unit company structure in the Business Register for very small employers (less than 10 employees) identified in the Economic Census. In addition, the COS is an annual mail survey that includes all multi-unit companies with 250 or more employees. Companies with less than 250 employees are only selected for the COS when administrative record sources indicate the company may be undergoing organizational change and are adding or dropping establishments. Establishments for smaller companies may be missed, as well as establishments for companies not responding to the Economic Census or the COS. The Census Bureau takes much effort to get establishment information for large companies because of their importance to the economy. The Census Bureau does not have any estimates of establishment undercoverage. Coverage of payroll and employment is very good because of the usage of administrative record data.

INDUSTRY CLASSIFICATION OF ESTABLISHMENTS

Industry classification of businesses in the County Business Patterns is according to the current 2012 North American Industry Classification System (NAICS), which includes nearly 1,200 industries. For more information on the 2012 NAICS codes, as well as comparisons between the 2012 and 2007 codes, go to http://www.census.gov/eos/www/naics/. NAICS codes are updated every five years.

The primary source of industry classification is derived from data collected through the Economic Census or through other Census surveys. When this is not available, the Census Bureau uses a hierarchy of administrative record sources to assign a NAICS code, including classifications from the Bureau of Labor Statistics, business birth information, and self-assigned codes from income tax records.

For a small percentage of records, only a partial classification is possible from all sources. For these cases, a complete industry classification is assigned, or imputed, by using a "nearest neighbor" assignment process that assigns the NAICS from an establishment with similar payroll, employment and organizational type with possible constraints. Analysts review the assignments to ensure that anomalies do not occur at the county level. For some multi-unit establishments with a partial classification, a complete code is imputed from another establishment within the same company. The imputation rate for complete codes varies widely during the five-year Economic Census processing cycle, but generally affects small businesses. Completely unclassified records are an even smaller percentage and are tabulated and published separately.

The County Business Patterns series includes the following NAICS sectors:

11 Forestry, Fishing and Hunting, and Agricultural Support Services (NAICS 113-115)
21 Mining
22 Utilities
23 Construction
31-33 Manufacturing
42 Wholesale Trade
44-45 Retail Trade
48-49 Transportation and Warehousing
51 Information
52 Finance and Insurance
53 Real Estate and Rental and Leasing
54 Professional, Scientific, and Technical Services
55 Management of Companies and Enterprises
56 Administrative and Support and Waste Management and 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)
99 Industries Not Classified

Industries Excluded from County Business Patterns

County Business Patterns covers most NAICS industries excluding crop and animal production (NAICS 111,112), rail transportation (NAICS 482), Postal Service (NAICS 491), pension, health, welfare, and vacation funds (NAICS 525110, 525120, 525190), trusts, estates, and agency accounts (NAICS 525920), private households (NAICS 814), and public administration (NAICS 92).

Government Establishments Included in County Business Patterns

Although most government establishments are excluded from tabulation, County Business Patterns includes government sponsored wholesale liquor establishments (NAICS 4248), retail liquor stores (NAICS 44531), book publishers (511130), federally-chartered savings institutions (NAICS 522120), federally-chartered credit unions (NAICS 522130), and hospitals (NAICS 622).

GEOGRAPHIC CLASSIFICATION OF ESTABLISHMENTS

County Business Patterns classifies an establishment by its physical location. Under the usual definition, an establishment or business is a fixed physical location or permanent structure where some form of business activity is conducted. The Economic Census and the COS requests the physical location of each establishment in a company. In addition, administrative record sources provide physical location addresses. In some cases when the physical location is not available geographic assignment is based on the mailing address. When a business relocates, there may be a significant delay until the Census Bureau receives the updated physical location address, particularly for small businesses. This may have an impact on establishment counts at the county level, but this level is not measured.

County Business Patterns publishes county data for Louisiana (parishes) and Alaska (organized boroughs, city and boroughs, municipalities, and census areas) as the equivalent of a county. The independent cities in Virginia, and the cities of Baltimore, MD; Carson City, NV; and St. Louis, MO, are treated as separate counties.

Employers without a fixed location within a state (or of unknown county location) are included under a “statewide” classification at the end of the county tables. This incomplete detail causes only slight understatement of county employment.

DATA WITHHELD FROM PUBLICATION

In accordance with U.S. Code, Title 13, Section 9, no data are published that would disclose the operations of an individual employer.

Noise Infusion

County Business Patterns continues to apply the Noise Infusion method of data protection that began in 2007. Noise infusion is a method of disclosure avoidance in which values for each establishment are perturbed prior to table creation by applying a random noise multiplier to the magnitude data (i.e., characteristics such as first-quarter payroll, annual payroll, and number of employees) for each company. Disclosure protection is accomplished in a manner that results in a relatively small change in the vast majority of cell values. Each published cell value has an associated noise flag, indicating the relative amount of distortion in the cell value resulting from the perturbation of the data for the contributors to the cell. The flag for ‘low noise’ (G) indicates the cell value was changed by less than 2 percent with the application of noise, and the flag for ‘moderate noise’ (H) indicates the value was changed by 2 percent or more but less than 5 percent. Cells that have been changed by 5 percent or more are suppressed from the published tables. Additionally, other cells in the table may be suppressed for additional protection from disclosure or because the quality of the data does not meet publication standards. Though some of these suppressed cells may be derived by subtraction, the results are not official and may differ substantially from the true estimate.

The number of establishments in a particular tabulation cell is not considered a disclosure; therefore, this information may be released without the addition of protective noise. For an introduction to the noise confidentiality protection method, see Using Noise for Disclosure Limitation of Establishment Tabular Data [PDF] by Timothy Evans, Laura Zayatz, and John Slanta in the Journal of Official Statistics (1998).

Noise infusion was first applied to CBP data in 2007. Prior to 2007, data were protected using the complementary cell suppression method.

RELIABILITY OF DATA

Payroll and employment data are tabulated from administrative records for single-unit companies and a combination of administrative records and survey-collected data for multi-unit companies. They are not subject to sampling error, but are subject to nonsampling errors, which can be attributed to several sources: inability to identify all cases that should be in the universe; definition and classification difficulties; errors in recording or coding the data obtained; and other errors of coverage, processing, and estimation for missing or misreported data.

The accuracy of these tabulated data is determined by the joint effects of the various nonsampling errors. No direct measurement of these effects has been obtained except for estimation for missing or misreported industry classifications; however, precautionary steps were taken in all phases of the processing to minimize the effects of nonsampling errors.

Employment data are missing from approximately 12 percent of incoming administrative payroll records. For these records, employment is imputed as the average employment of the two adjacent quarters. If this is not possible employment is imputed using average wage data for the prior year for the EIN, if available. If it's not available, an employment figure is imputed based on the average wage for the industry and geographic area. Quarterly payroll is edited by comparing with reported data from other quarters over a two-year period to determine any anomalies and potential misreporting. Suspected missing payroll and extreme values are imputed based on company reporting patterns. The Census Bureau imputes payroll for less than one percent of all incoming administrative payroll records.

Establishment payroll and employment for multi-unit companies is collected through the Economic Census and the COS. Data for companies not included in the COS or not responding to the survey are imputed from administrative record data by taking company level administrative payroll and employment and breaking it down to the establishment level by best estimates of the size of each establishment in the company. If some establishments have reported payroll and some do not, the breakdown is performed with the difference between the administrative data at the company level and the total reported amounts.


QUESTIONS?

For frequently asked questions (FAQs) visit Ask.Census.Gov or click the FAQs tab at the top of the screen. This link will open a new page within this window. Enter 'CBP' or 'County Business Patterns' into the search box to narrow the results.

For more information, contact the County Business Patterns staff at (301)763-2580 or by email.

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Source: U.S. Census Bureau | County Business Patterns | (301) 763-2580 | Last Revised: May 29, 2014