Employment Trends - Services -where More And More People Work

This graphic shows the component elements of the fastest growing economic sector in the U.S. — the Services Producing Sector. Each component industry is shown as a percent of the total Services Producing Sector's employment. In each of the years shown, "services" is the dominant component, rapidly gaining relative share of employment in the Services Producing Sector, reaching nearly 50% by 2000. The elements that make up "services" are discussed in this panel further below. The growth rates of these components, measured in employment, are shown below. The values are annual, compounded growth rates in employment.

Sector Component	Growth 1980-1990	Growth 1990-2000
Transportation and Public Utilities	1.2	2.0
Wholesale Trade	1.6	1.3
Retail Trade	2.7	1.7
Finance, Insurance, and Real Estate	2.7	1.2
Services	4.6	3.8

In the first decade of this period, Services led in annual growth of employment, followed by Retail Trade and Finance, Insurance, and Real Estate (F.I.R.E.), growing at equal rates. In the second, most recent decade, Services has continued its strong advance, followed by Retail. The F.I.R.E. component's growth rate had dropped behind that of both Transportation and Wholesale Trade.

The 1980s saw many and significant innovations in mass merchandising; it was also the era when large parts of the public became involved in the stock market, through mutual funds and 401k retirement plans; Financial Services flourished. In the 1990 to 2000 period, the Transportation and Public Utilities industry shows strong growth; this is at least in part explained by the popularity of just-in-time inventory programs, which stimulated transportation early in this period; later in the period came Internet-related delivery activities. In that connection it might be noted that postal employment also increased strongly, although the postal service is classified as government.

Services, the most rapidly growing component, requires disaggregation. It is too diverse for general explanation. The following table shows the industries that make up this component in two years of the Economic Census, 1992 and 1997. Growth rates are annual, compounded rates.

Employment (in thousands) and Growth (in % and Rank)

Industries in Services	1992	1997	Annual Growth -%	Growth Rank
Hotels and lodging	1,489	1,686	2.5	8
Personal services	1,218	1,303	1.4	10
Business services	5,542	8,652	9.3	1
Automotive repair	864	1,094	4.8	6
Miscellaneous repair	428	419	-0.4	12
Amusement	1,382	1,810	5.5	3
Health care -for profit	4,453	5,520	4.4	7
Legal services	924	956	0.7	11
Social Services -for profit	505	662	5.6	2
Engineering services	2,271	2,932	5.2	4
Museums, zoological gardens	66	84	4.9	5
Health care -not-for-profit	5,565	5,759	0.7	11
Social services, not-for-profit	1,407	1,586	2.4	9
Membership organizations	511	172	-19.6	13
Total	28,617	34,632	3.9

The table shows the leading industries within the services aggregation; they are shown in bold type. All the industries are ranked by growth. The growth of the leader, Business Services, and the 4th ranked, Engineering Services, is in part explained by the popularity of "outsourcing," whereby activities that once were inside manufacturing or other industries, as part of the overhead (and classified as manufacturing, transportation, etc.) are now performed as services.

The other rapidly growing services are genuine "social indicators" rather than "business indicators." For-profit social services also reflect an outsourcing effect. Privately operated prisons come to mind. Amusement includes professional sports, fitness facilities (serving the Baby Boom as it grows a little thicker in the middle), and theatrical and music producers and production services, stimulated by the growth in cable TV, a voracious consumer of product for a proliferating number of channels.

In the last panel we observed that we are getting more "profit-making." Within the services category, health care for profit ranks 7th, health care not-for-profit 11th in employment growth. Similarly, social services for profit rank second, not-for-profits 9th. It is somewhat troubling that, at least in the five-year period shown, membership organizations have seen a most dramatic decline in compounded annual growth in employment, nearly 20% a year. This category includes some 22,000 associations of all kinds. Are we growing less social, less community-minded?

Sources: U.S. Bureau of Labor Statistics. "Employees on nonfarm payrolls by major industry, 1950 to date." Online. Available: http://www.bls.gov/ces/home.htm. January 2002. Data for the breakdown of services is from the Economic Census, 1992 and 1997. U.S. Bureau of the Census. Statistical Abstract of the United States, 2000. Table 1299. p. 770.