NCPA - National Center for Policy Analysis

Pay For Service-Sector Jobs Surpasses Manufacturing

March 23, 1999

In the 1980s, some economists predicted that the increase in service-sector jobs would have a negative impact on the U.S. standard of living -- because they paid less than traditional manufacturing jobs.

Now, the Bureau of Labor Statistics reports that wages in the service sector surpassed those in manufacturing for the first time last May.

  • Overall, service jobs in every category but retailing pay about 10 percent more than manufacturing, according to Federal Reserve Bank of Dallas economist Michael Cox.
  • Harvard University's James Medoff reports that roughly 1.5 million high-paying service jobs were created last year in industries such as insurance, telecommunications and computer services -- even as 234,000 well-paid manufacturing jobs were being eliminated.
  • Some economists maintain that the manufacturing sector isn't declining -- but simply producing more goods with fewer workers, thanks to productivity improvements.
  • Research indicates that service jobs are also beginning to compare favorably to those in manufacturing when rated on the basis of health benefits and pension coverage -- although health benefits vary considerably among service industries.

Some analysts see a parallel between today's manufacturing- versus-services debate and another clash at the start of the Industrial Revolution. Then, the issue was manufacturing versus agriculture.

Source: John Berlau, "More Than Just Flipping Burgers," Investor's Business Daily, March 23, 1999.


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