#2 - Your next job will likely be in services.
As our national economy evolves beyond competitive advantages in basic commodity production and even manufacturing, we’re seeing a mature service economy emerge as the new goliath. The West is by no means exempt from this trend, as the graph below illustrates. Seventy percent of all net new jobs created in the West between 1970 and 2000 were in service and professional industries.
Source: U.S. Department of Commerce, 2004. Bureau of Economic Analysis, Regional Economic Information system (REIS CD-ROM). Washington, D.C.
What are services? Some economists define services broadly as all output that does not come from the three goods-producing sectors: natural resources and mining, manufacturing, and construction. We use the term "services and professional" to underscore the important point that services consist of a combination of high-paying and low-paying professions, mixing physicians with barbers and hotel workers with architects and financial consultants.
Since services account for as many as nine out of ten new jobs created in the United States today, the important point is less that service employment is up, but rather what types of service jobs are increasing. According to economist Lester Thurow, “The real issue is not the growth of services but whether the economy is making a successful transition from low-wage, low-skill industries… to high-wage, high-skill industries.”
The table below compares the scale and wages of various service-providing and goods-producing industries for the West.
Source: U.S. Bureau of Labor Statistics, 2004. Quarterly Census of Employment and Wages (CEW). Washington, D.C.
Goods-producing sectors account for 21 percent of employment in the West, and on average they have higher wages than service-providing jobs. Service-providing jobs make up 79 percent of the employment base and pay less on average. However, fast-growing sectors like professional and business services pay even better than goods-producing sectors.
Additional Resources
- For a big-picture look at the post-industrial development of the United States economy, see Lester Thurow’s The Future of Capitalism (New York: William and Morrow and Company, 1996).
- Ray Rasker offers a good summary on the evolving service economy in the article, “Your Next Job Will be in Services. Should You be Worried?” Chronicle of Community 2000 Vol.3 No. 2.
- A more academic and in-depth treatment of the service economy can be found in Sven Illeris’ The Service Economy: A Geographical Approach (Hoboken: Wiley, 1996).