Many people still tend to think of the U.S. economy as primarily a private-enterprise, manufacturing-based system.But the recent faltering of the economy has prompted a closer look at the kind of system ours has actually become. Below is the first of two articles this month examining a couple of important -- and often misunderstood -- trends shaping the U.S. economy .
The want ads today are full of them: columns of offerings for program analysts and clerks, for medical technicians and teachers, for accountants and data processors and secretaries and public relations experts. You have to look hard for the handful of listings still there for laborers and machinists.
In the federal jobs register, the Agriculture Department is asking for an "employe development specialist." HEW wants a "supervisory impact aide specialist." GSA needs a "position classification specialist." And just about every department, it seems, has an opening for an "equal opportunity specialist." Most of these titles didn't even exist a couple of decades ago.
Taken altogether, the ads point to a very different work force than we used to know, and some say a less productive one. Nowadays, an American worker is less likely to be holding a hammer or hoe than a clipboard or notepad, and is more likely to be doing for someone something that can't be measured well.
It's natural, of course, that America should be moving more toward service-oriented jobs. With affluence has come greater consumer demand for everything from medical care to hairdressing. And the larger and richer they have become, the more that producers, too, have tended to ask for in outside services, including advertising, legal counselling, management consulting and computing.
This trend has satisfied -- and in turn has been fed by -- other important developments in the labor force. The rapid expansion of service employment has opened many opportunities for women. It also has absorbed the swell of graduates from colleges and universities.
But some students of the economy now claim this service evolution -- it also has been called a revolution -- has left America in a productivity lurch. In the current debate over why gains in the U.S. productivity rate have slowed to a near stop, one notion attracting much attention is that we aren't as economically healthy now because many of us hold jobs which produce nothing more substantial than piles of paperwork and airy advice.
The concern is bolstered by two sets fo figures. One shows the stupendous growth in services that has taken place in recent decades:
Over the past 30 years, the number of service-producing jobs has climbed a total of 120 percent, versus 30 percent for manufacturing employment. Put another way, for every new job in manufacturing, more than 5 have opened up in the service-producing industries. Today, 3 of every 5 working Americans are employed in service jobs.
And the gap is widening. The growth of manufacturing jobs has flattened out while private services have been growing even faster than before. Labor Department figures indicate that 86 percent of all job increases since 1970 have been in service industry classes. Services have come to offer the greatest job opportunities for the young in contrast to an earlier era when a majority of those entering the work force found early employment in farm and factory work.
Moreover, if service employment is equated with white-collar and service occupations, the shift away from goods production has been even greater than the industrial classification statistics suggest. This is because there has been a shift of employment within the industry sector from direct production of goods to activities which, if they were not carried out within the firm, would be classified as services.
Another set of figures shows that traditional service jobs generally have registered lower productivity gains than manufacturing jobs. Between 1976 and 1977, for instance, when U.S. productivity as a shole increased an average 1.6 percent annually, the productivity of hotel and motel workers grew merely 0.9 percent. Laundry and cleaning services gained only 0.8 percent. Retail trade workers showed a jump of 2.1 percent between 1967 and 1973, but slumped to 0.8 percent in the period since.
One popular exercise currently making the rounds -- and intended to show that services are the culprit in the productivity slowdown -- involves last year's figures. Productivity in the manufacturing sector climbed 2.7 percent in 1978, up over the year before and well ahead of the nation's dismal average which was less than one percent. This would suggest, or so the argument goes, that the service sector pulled the average down and is to blame for our weakened system.
But it's not that simple. For one thing, never trust a single year's figures to signal a trend. In fact, the trend in manufacturing has been as disturbing as everywhere else -- sharply down. From 1947 to 1966, manufacturing registered productivity gains averaging 2.8 percent. In the last five years, the average has slipped to 1.9 percent.
A second -- and more important -- point in all of this is that, as surprising as it sounds, a big chunk of the millions of service jobs that have been created since World War II haven't had any significant impact on the national productivity rate because they aren't counted by the people in the government who do the counting.
The official productivity numbers reflect only what's been going on in the private sector.Much of the growth in services, however, has taken place outside the private sector -- in government !which now accounts for one out of every six nonfarm jobs) and in such nonprofit fields as health care and education. Standard productivity measures don't apply neatly here.
It is indeed disturbing to Mark and others that we haven't been able to gauge performance in some of the nation's fastest-growing sectors. The Bureau of Labor Statistics continues to fiddle with various measures for the public and nonprofit sectors. It does publish, separately, a figure for productivity in the federal government based on two-thirds of the federal civilian work force. For the past 10 years, that number has averaged 1.3 percent.
If the growth in services can't explain what's been ailing America's productivity, what can? The answer is reflected in distressing trendlines elsewhere -- notably, a falloff in research and development expenditures and capital spending by industry, a sharp rise in the costs of regulation and the end to the farm-to-city migration of workers.
Economists who have studied the trend say there is nothing to be worried about. They say the American economy simply is maturing, and out concepts of what is productive and what isn't are becoming outdated. "We're accustomed to thinking of only jobs that produce goods as being productive," said John Kendrick, professor of economics at George Washington University, in an interview. "But anything that satisfies human want is productive. The growth of services merely indicates that our wants have broadened. It doesn't mean we are less productive."
Sociologist Daniel Bell, in discussing the growth of services, coined the phrase "post-industrial society" and placed the trend in perspective this way: "In pre-industrial societies... life is primarily a game against nature... (In) industrial societies, life is a game against fabricated nature... A post-industrial society is based on services. Hence, it is a game between persons."
For the most part, though, this "game between persons" that now dominates U.S. economic activity has not been well understood. The concept of a service economy generally brings to mind a world of professionals, of high-paid administrative assistants and computer programmers. But contrary to this popular notion, the service paid or more-highly-skilled than the nonservice work force.
Low-paying jobs comprise a disproportionate share of the total. There is also a higher percentage of part-time workers. It is characterized by a larger proportion of women and minority workers and by fewer unions.
The outlook is uncertain. Some say the growth in service jobs has neared its peak, having been checked in the private sector by the rapid development of office technology and in the public sector by the tax revolt.
But a number of old-line manufacturing concerns still forecast further explosions in certain service areas and have moved aggressively to be in position to catch the fallout. General Electric Corp. has expanded its credit company. Westinghouse Electric Corp. Is developing a lucrative repair and maintenance operation. Gulf Oil has jumped into the energy consulting business. And Northrop Corp., the aircraft maker, even mows some lawns in Oklahoma.
"The growth in services has required General Electric to rethink its strategy," said GE Chairman Reginald Jones in a recent interview. But he added a note of caution to the recent rush. "Technologies have begun to move very fast in some of these areas. Markets can disappear quickly, and some of these service games can be quite faddish and whimsical. It's going to take a unique kind of management to run that kind of game."