FAQ Friday – What is the difference between occupations and industries?

It’s not uncommon for people to confuse occupations and industries. Both are about fields of work, but they look at work in different ways.

  • Industries are about the type of activity at a place of work — classifying what business, government and nonprofit units do based on their major products or services.
  • Occupations are about what individual workers do — their tasks and responsibilities.

Some occupations are found only in one or two industries, while other occupations are found across many industries. For example, tree fallers and logging equipment operators are almost exclusively found in the logging industry. Stone masons and glaziers are almost exclusively found in some construction industries. Almost all industries have general managers, secretaries and office clerks.

It is particularly easy to confuse industry and occupation where specific occupations are strongly associated with a particular industry — such as doctors, nurses and orderlies being characteristic of the health care industry.

Classification Systems

Federal and state statistical agencies in the United States, Canada and Mexico use the North American Industrial Classification System – NAICS – to classify industries.

NAICS is a hierarchical numerical coding system that begins with broad economic sectors at the top and winnows them down to narrow industries at the bottom. In between there are either two or three intermediate levels. Each level is associated with a numerical code and a title.

Sectors, such as manufacturing, agriculture and construction, are designated by the first two digits in the code. Each establishment is assigned a six-digit code based on its primary products or services. There are 1,084 specific industries.

Industries that have the same first five digits in their code can be “rolled up” into industrial groups. For example, beef cattle ranching – 112111 – and cattle feedlots 112112 – can be rolled into a common cattle-raising group – 11211. In turn, these five-digit groups can be rolled into four-digit collections and the four-digit collections can be rolled into three-digit codes. The cattle-raising group can be combined with dairy cattle and milk product – 112120 – to get a four-digit code. Then, they can be rolled up with chicken and egg, hog, poultry and related. The resulting animal production major group can be combined with growers of grains, beans, fruit, vegetables, cotton, tobacco and peanuts to become a three-digit code – 113 (agriculture) – and then combined with logging, forestry, hunting, fishing and related industries to become 11 (agriculture, forestry, fishing & hunting).

There are 20 major groups:

Federal and state statistical agencies use the Standard Occupational Classification – SOC — to classify workers into 840 occupations. Those occupations then are rolled up into 23 major groups:

One of the best ways to understand occupations is to use O*NET, an online database containing information about occupations and associated skills, abilities, knowledge, work activities, tasks and interests. O*Net is used for career exploration, vocational counseling, finding job skills for résumés or position descriptions and for aligning training with current workplace needs.

— Kathryn.Tacke@labor.idaho.gov, regional economist
(208) 799-5000 ext. 3984