“Service Industries Are Growing Our Economy and Increasing Our Global Competitiveness”

March 12, 2007

When we look at the issue of globalization and the rapid economic rise of countries like India and China, critical questions about the continued competitiveness of the U.S. economy are raised.  Are there industries where we still have a comparative advantage?  Can we compete with countries that have more than a billion people?  Will the power of our innovation maintain our global economic leadership? 

These are complicated questions that demand a thorough analysis of our economy, our strengths and weaknesses, and the policies we are pursing.  I’ve explored some of these very issues in recent weeks.  Here on this Floor I have discussed the very strong, positive indicators we have that the U.S. economy is thriving because of its engagement in the worldwide marketplace.  Because of the complexity of these issues, we need a rigorous, open and honest debate.  But today I want to talk about an economic issue that is not complicated.  A matter of benefits that is so clear and widespread, that it may be the one single globalization issue that is too simple to refute. 

And that is the issue of our services industry.  Services have become absolutely crucial to our economic growth, employment and international trade.  This industry represents nearly 80% of both economic output and private employment in this country.  Services are essential inputs into the production of virtually all products that we make, sell, buy and consume.  The price and quality of services influence costs and productivity in all other sectors of the economy, including manufacturing and agriculture. 

Because our economy has come to rely on efficient, innovative and effective services, the industry has grown to become the largest part of our economy.  Services account for 78% of private sector GDP, or $8.5 trillion.  

This tremendous growth can be seen in our workforce as well.  Since 1993, services have added roughly 25 million new jobs to our economy, and the Bureau of Labor Statistics (BLS) predicts that virtually all new employment in the U.S. over the next half-decade will be in services. 

While the issue of job creation is absolutely critical to the strength of our economy, the issue of job quality is absolutely critical to standards of living.  Again, the service industry is at the cutting edge, creating jobs that pay very well.  Services jobs pay an average of $51,045 annually.  In many service industries, ranging from professional services, management services, wholesale trade, transportation and warehousing, finance and insurance, information services, and others, the average compensation levels are much higher. 

These are the types of jobs that constantly offer the opportunity to learn new skills, develop expertise and continue to climb the economic ladder.  These are not the “hamburger-flipping jobs” that the service industry has been maligned as.  These are high-quality, high-paying jobs that offer the chance of advancement and an ever-increasing quality of life.  And they are the backbone of our economy. 

Just as the service industry has thrived here at home, it is tremendously competitive in the worldwide economy. 

U.S. financial services, express delivery, telecommunications, entertainment and audiovisual services and IT are achieving exceptional success around the globe.  With 95% of the world’s consumers outside of the U.S., their presence in foreign markets is crucial to their global competitiveness.  Today, the U.S. is the world’s largest service exporter.  U.S. services exports have reached nearly $400 billion annually, with a trade surplus of approximately $66 billion. 
Our services companies have built this record even though faced with high and complex barriers in many key foreign markets.  The service sector remains one of the most tightly closed and controlled industries within our trading partners around the world. 

The removal of these barriers is crucial to our continued competitiveness.   As services become more liberalized, they will have an even more powerful effect on the competitiveness of our entire economy.  When it comes to the issue of globalization, services are a clear example of American competitive advantage and global leadership. 

Some facets of the globalization debate involve complex issues and challenges that require a great deal of careful consideration and analysis for us to fully understand them.  But the U.S. service industry stands out as a clear, irrefutable example of how the U.S. economy thrives through global engagement.  And it is a powerful and compelling indicator of how much our economy has to gain by expanding that engagement with the rest of the world’s consumers, producers, workers and investors.

I urge my colleagues on both sides of the aisle to continue to pursue an economic agenda that empowers U.S. companies and entrepreneurs to harness the power of the worldwide marketplace to grow our economy here at home.