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The employment shift to services:
where did it come from?
The decline in manufacturing employment associated with the recent recession, coupled with the continued growth of services, has renewed interest in the distribution of employment among the three major sectors—agriculture, goods-producing, and service-producing industries. While the U.S. economy has been a "service economy" for more than 30 years, the increasing shift from goods production to services has raised fears about a possible national "deindustrialization."1 These fears have been manifest in speculation on many aspects of employment policy, ranging from the impact of earnings and potential economic growth to the future of work.
Much of the current discussion has focused on the potential negative consequences of the continuing shift of employment to services, ignoring the fact that, in the past, such growth has been closely associated with economic progress and the rise in per capita GNP. The association has been so strong that the growth of the services sector often has been considered an indicator of the stage of economic development, and the relative importance of the three major sectors has been used to demarcate different stages of that development. Since the work of Allen Fisher and Colin Clark in the 1930's, it generally has been assumed that economic development results in a shift of employment from agriculture to good-producing industries and finally to services.2
Although the movement away from agricultural employment can be readily explained by the combination of rising productivity and limited appetites, the cause of the changing relationship between the goods-producing and service-producing sectors remains more complex and problematical.
This excerpt is from an article published in the April 1984 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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1 For more discussion of this topic, see James Cook, "You mean we have been speaking prose all these years?" Forbes, Apr. 11, 1983, pp. 142-49; and Barry Bluestone and Bennett Harrison, The Deindustrialization of America (New York, Basic Books, 1982).
2 Colin Clark, The Conditions of Economic Progress (London, McMillan, 1940); and Allan G.B. Fisher, The Clash of Progress and Security (London, McMillan, 1935). For a dissenting view, see Joachim Singlemann, From Agriculture to Services (Beverly Hills, Sage Publications, 1978).
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