The Economic Census: Overview
by the Pennsylvania State Data Center
Volume 1, Number 1 June 1999
This is the first of a series of reports on the Economic Census.
Background
Economic data has become so integrated into decision making and keeping tabs on the
economy that it is difficult to imagine how government and businesses operated without it.
But economic data was not collected until the mid-1800's despite some earlier debate and
attempts at collection. And it piggybacked on the Decennial Census until the 1900's. The
Economic Census is really a recent venture.
In developing the U.S. Constitution, a recommendation was made by James Madison that the
document require more than a 'counting of heads' for reapportionment. This "counting
of heads," of course, became the Decennial Census in Article 1, Section 2 of the
Constitution. However, it was not until James Madison was president in 1810 that the
government tried to expand the questions it asked. In this year, the Census tried to
collect information on manufacturing establishments and asked a single question to
determine how many households were engaged in agriculture. Of course, at that time, over
80 percent of the population was engaged in agriculture.
Coverage of economic activities was expanded in 1840 and in subsequent censuses to include
mining and some commercial activities, but it met with limited success. In 1902, Congress
established a permanent Census Bureau and directed that a census of manufacturing be taken
every five years. The 1905 Census of Manufacturing become the first census taken
separately from the Decennial Census. The first census of business covered retail and
wholesale trade and construction industries. It was taken in 1930 and covered calendar
year 1929. It 1933 it was broadened to include some service trades.
The 1954 census was the first fully integrated Economic Census. It used consistent
reporting time periods, concepts, definitions, classifications and reporting units across
economic sectors. This was also the first Census taken by mail. Until 1976, the Census of
Agriculture was taken in years ending in "4" or "9"; the economic
census was taken in years ending in '2' or '7.' Public Law 94-229 set the foundation for
the Census of Agriculture to be taken in the same years as the Economic Census.
The range of industries has continued to expand as the economy has grown. Other surveys
were added as special projects to measure progress and address needs. The Census of
Transportation was added in 1963 and the Census of Construction initiated in 1967. The
Survey of Minority-Owned Business Enterprises and Survey of Women-Owned Businesses were
added in 1969 and 1972, respectively.
In addition, the classification of businesses has evolved over the years. The North
American Industrial Classification System will be implemented with the release of the 1997
Economic Census. This replaces the previously used Standard Industrial Classification
System. NAICS also will be used by both Canada and Mexico.
Additional surveys provide frequent data. County Business Patterns, import and
export data, Business Expenses, Vehicle Inventory and Use Survey, Commodity
Flow Survey and Characteristics of Business Owners are very useful.
Conducting the Census
Work begins several years prior to actually conducting the Economic Census. Staff from
various areas of the Bureau must determine the size and format of questionnaires, wording
and sequence of questions, design, technical issues, and many other items. Tens of
thousands of hours are expended. House and Senate subcommittees must approve the
questionnaires. The Office of Management and Budget gives final approval.
There appears to be lag time between when the data are released and the year on which the
data are based. This is due in part to the Economic Census being based on calendar years.
Therefore, data cannot be collected until the calendar year ends. Processing the data also
takes time. For instance, data for the 1997 Economic Census were collected for the 1997
calendar year. The collection of data occurred in January of 1998. Data will released in
1999. This will be earlier than in previous censuses, thanks to electronic dissemination
of these data.
In late December 1997, the Census Bureau mailed questionnaires to more than 5 million
businesses. The due date was February 12, 1998. Businesses are required by law to respond,
and penalties may be imposed for those that do not, in accordance with Title 13 of the
U.S. Code, sections 131, 191 and 224. Small businesses are not sent questionnaires.
Administrative records from the Internal Revenue Service and Social Security
Administration are used to collect data on non-employers and small single-establishment
companies. Using these records reduces the burden on small businesses and the cost for the
Census Bureau.
Questions Asked of Businesses
The questions asked of businesses meet several criteria. First, the questions must fall
under the authority granted to the Census Bureau. Second, the data must provide
information needed. And last, excessive burden should not be placed upon respondents. They
should be able to provide reasonably accurate answers without encountering a great deal of
time and effort.
Of course, the funds available to the Census Bureau affect the number of questions that
can be asked. In the past few years, funding has been reduced.
In general, the Economic Census asks several key statistics of each organization: number
of establishments or companies; number of employees; payroll; and measure of output
(sales, receipts, revenue, value of shipment or value of construction work done). Some
questions may vary in the amount of detail collected from sector to sector.
Confidentiality
In accordance with U.S. Code Title 13, no data are published that would disclose the
operations of an individual establishment or business.
Access to data provided is restricted to sworn Census Bureau employees. Anyone who
breaches this confidentiality requirement is subject to fines and imprisonment.
Why It is Important
Economic data measures the nation's economy. But it has many other uses, particularly at
the more local levels.
Business start-ups or expansions
Before beginning a new operation or expanding into new areas, business owners evaluate the
need and the competition.
Determine market share
Businesses compare their sales to census totals for their industry or areas to make plans
and evaluate performance.
Business to business marketing
Firms supplying goods and services to other businesses use census data to target
industries for marketing. Manufacturers look at statistics on materials consumed to learn
about industries that use their products.
Operating ratios
Businesses compare their operating ratios to census averages to see how they measure up to
the competition.
Targeting sales
Companies use census data to lay out territories, allocate advertising, and locate new
stores or offices.
Monitor business activity
Important measures of economic activity, including monthly retail sales and the gross
domestic products (GDP), are based on census data. Associations and news media study
census data to find key business facts and project trends.
Public policy and economic development
Legislators use census data in the preparation and evaluation of new laws. States and
local governments monitor census data to understand their economic base and to help them
focus efforts to attract new businesses, retain existing firms and maintain local tax
bases.
Research
Consultants and researchers use census data to analyze changes in industrial structure and
location.
Important Dates
December 1997
Economic Census
Questionnaires Mailed to More than 5 Million Companies
February 12, 1998 Questionnaires Due
1st Quarter 1999 First 1997 Economic Census Data Released
June 2001
Final
Data Released