What is Standard Industrial Classification?

Mary McMahon
Mary McMahon

Standard Industrial Classification (SIC) was a classification system used in the United States between 1937 and 1997 to collect statistical information on business activities. It was replaced by the North American Industry Classification System (NAICS), but some organizations continue to use SIC codes. The Securities and Exchange Commission, for example, has retained SIC codes in its publications and discussions of economic issues, and it is not uncommon to see Standard Industrial Application codes in a variety of publications.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

In the 1930s, manufacturing and industry were booming in the United States, and the government recognized that keeping statistics was critically important to allow the government to track economic growth and progress. It developed Standard Industrial Classification as a way of fitting every business in the United States into a category. The categorizations could be used for things like comparing different industries, looking at economic performance in different states, and identifying trends in American industry, such as the emergence of woman-owned businesses.

Each Standard Industrial Classification has four digits. The first two digits broadly represent the major industrial category, while the second two create a subtype. 0800, for example, is forestry, and some branches within the forestry industry can be identified with different two digit codes to replace the “00.” Some examples of SIC codes include 2732 for book publishing, 3821 for laboratory apparatus, and 7800 for the motion picture industry.

Using Standard Industrial Classification, the United States Census and other agencies which keep and track statistics can keep accurate data about the types of businesses in the United States. Rather than having to sort through records by hand to look for video rentals, for example, someone can enter “7841” to bring up data about video rental stores across the United States.

NAICS, an outgrowth of Standard Industrial Classification, covers all of North America, not just the United States. Six digit NAICS codes break down industries into progressively smaller classifications just like the SIC code, and this information can be used for a variety of purposes.

Complete lists of SIC and NAICS codes are available from several government agencies, along with conversions for people who want to know what the NAICS replacements for older SIC codes might be. Being able to convert can be useful when people want to compare statistics from different years, or when they want to be able to interpret data published with SIC codes from within the framework of NAICS.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a wiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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