The Dominant Service Sector

 

·         The service sector will be one of the main sources of employment and output between 2004 and 2014, according to Bureau of Labor Statistics’ (BLS) projections released in November 2005.  Employment in the service sector will increase by 19% between 2004 and 2014, while employment in the goods-producing sector is expected to remain unchanged.  Overall economy-wide employment is expected to increase by 13%.[i]

 

·         The service sector employed 110.4 million people in 2004.  The Bureau of Labor Statistics projects that in 2014, the service sector will employ 129.1 million people.[ii]

 

·         More than three out of four jobs (75.8%) in the U.S. economy are accounted for by the service sector.  By 2014, this dominance is expected to increase, with 78.5% of total employment being accounted for by the service sector.[iii]

 

The Service Industry:  Creating Most Jobs

 

·         With the exception of construction, the 20 industries with the largest occupational growth between 2004 and 2014 are all in the service sector.

 

·         The service sector is expected to create 18.7 million jobs between 2004 and 2014.  The goods-producing sector is expected to lose 30,000 jobs in the same time period.[iv]

 

·         Within the service sector, educational services, health care and social assistance services, and professional and business services represent the industry divisions with the strongest employment growth.  All three are expected to grow at an annual average rate that is more than double the expected rate for the economy as a whole.  Educational services is expected to add 898,000 new jobs; health and social services is expected to add 4.3 million new jobs; and professional and business services, 4.6 million jobs.  Altogether these three groups account for nearly half the total increase in employment expected by 2014.[v]   In 2004, about one in four jobs was in one of these three sectors.[vi]

 

·         With a 5.2% projected average annual output growth rate, information is the fastest growing sector in the economy.[vii]  This sector provides publishing, Internet, cable and telecommunications services.  The software publishing industry is expected to be the nation’s second fastest growing employer by 2014, with a projected annual growth rate of 5.3%.[viii]  Employment in this sector is expected to increase 68%, more than five times the 13% growth projected for all industries combined, by 2014.  Professional and related occupations within this industry are projected to increase by 74%.[ix]

 

·         Health services employed 13.8 million people in 2004.[x]   The health services sector is comprised mostly of health practitioners’ offices, private hospitals, and nursing and residential care facilities.  Combined with the social assistance sector (which includes individual and family services, community services, vocational rehabilitation, and child day care services), this sector is expected to account for more than one out of every five new jobs created by 2014.[xi]

 

·         The industry group expected to be the largest source of output growth in the service sector is professional and business services.  Jobs in this group are projected to increase at a 2.5% annual rate, to 20.9 million in 2014, up from 16.4 million in 2004.[xii]

 

·         Educational services is another of the fastest-growing industries, with jobs in this sector increasing at a 2.9% annual rate (a total increase of 33% from 2004–2014).  This amounts to an increase from 2.7 million jobs in 2004 to 3.6 million in 2014.  The majority of this sector’s employment growth will be due to the rapid expansion of enrollments at postsecondary institutions, as the children of baby boomers continue to reach college age.   Additionally, there are greater-than-average numbers of workers over the age of 45 in nearly all of the occupations in this industry, so it is likely that a surge in retirements will create large numbers of job openings in addition to those due to employment growth.[xiii]

 

·         The number of jobs in community and social service occupations is expected to increase by almost 21% between 2004 and 2014.  Personal and homecare aides are expected to increase by 41% and social and human service assistants are expected to increase by almost 30% from 2004–2014.  Employment of professionals is expected to increase by over 53%.[xiv]

 

Offshoring High Tech Jobs

 

Due to the increasing exodus of highly skilled jobs overseas — similar to the disappearance of factory jobs — the vast majority of occupations expected to experience the largest job growth from 2004–2014 are low-wage service occupations.  Missing in the lineup are the high tech and knowledge jobs that government and business economists projected would replace the manufacturing jobs.  The 2002–2012 projections showed a vast drop-off in the expected number of new high-tech jobs compared with the 2000–2010 projections; however, the latest projections show a slight shift in the other direction.

• Seven of the 10 occupations expected to experience the largest job growth over the next decade are low-wage, non-tradable service occupations that do not require a college degree.[xv]

• In the 2000–2010 employment projections, 1.5 million high tech jobs were expected to be generated over 10 years by the seven most rapidly growing occupations.  In contrast, for the 2002–2012 projections, BLS revised this estimate down to only 106,000 new high tech jobs.  For the 2004–2014 projections, the expected growth in the number of high tech jobs (among the seven fastest-growing occupations) has rebounded only slightly, to a projected 126,000.[xvi]

• Comparing the 10 most rapidly growing occupations, between the projections for 2000–2010 and those for 2004–2014, we find an annual reduction of 128,900 anticipated high tech jobs.[xvii]

• Both unemployment and long-term unemployment are rising more steeply among well educated workers.  Between 2000 and 2003, unemployment among workers with college degrees rose 95%, compared to a 40% rise among those with a high school diploma, or less, and 74% among those with some college.[xviii]

 

Women:  Overrepresented and Underpaid

 

Women constitute the majority of workers in the service industry.  In 2005, almost 70% of the employees in education services were women, as were 86% of social assistance employees, and nearly 77% of hospital employees.[xix]

 

The median weekly earnings of men in the service sector industries exceeded those of women by up to 39% (professional and technical services) in 2003.[xx]

 

Women earn less than their male counterparts even in occupations where women are the vast majority.  For example, in 2005, male nurses (who represent only 8% of the field) earned almost 9% more than female nurses,[xxi] while male elementary, middle, and secondary school teachers earned nearly 12% more than their female counterparts, despite representing only 26.6% of these occupations.[xxii]

 

Unions in the Service Sector

 

In 2005, unions represented significant numbers of service sector employees, especially in education (38% of all employees; 48% of elementary and secondary school employees), public administration (35%), and transportation (33%).  Many of these are professional employees.[xxiii]

 

Service Sector Trade is Crucial

 

The United States is a net exporter of services.  In 2005, services exports increased to $380.6 billion, up from $344.4 in 2004.[xxiv]

 

In 2004 the United States was the largest exporter of commercial services, accounting for 15% of all global commercial service exports.  This global share is almost twice that of the United Kingdom, the second largest exporter of services.  The U.S. was also the largest importer of commercial services, representing over 12% of all global commercial service imports.[xxv]

 

The service sector industries have become extremely important to the nation’s trade balance.  In 2005 the trade balance was -$716.7 billion.  The service sector trade surplus of $66 billion offset over 9% of the goods trade deficit.[xxvi]

 

The largest service sector exports are travel and tourism, royalties and license fees, and transportation (including freight and port services).[xxvii]