It’s old news that employment has shifted and continues to shift from manufacturing jobs to service jobs. During the 1980s, service jobs surpassed manufacturing jobs in terms of U.S. employment to make up more than 70% of the economy and become the leading sector contributing to the country’s GDP today.
(Source: Stevenson, W. J. (2007) Operations management (9th Ed.) McGraw-Hill Irwin: New York )
So why has this shift occurred? What does this mean for workers in the manufacturing industry? Should we be concerned?
The shift from manufacturing to service jobs is caused by many factors, the two most important being increased productivity and outsourcing. With increasing technology, many manufacturing jobs have been replaced by machines or robots, which are able to increase output without the need for more workers. Also, outsourcing helps companies cut costs by sending tasks overseas to low-cost countries.
Although last year’s unemployment rate was at a low of 4.6% and 1.8 million jobs were added to the economy, debate continues about whether or not these newly created jobs will leave displaced manufacturing workers better off when they pursue a new job. On the one hand, last year the hospitality and leisure industry added approximately 353,000 jobs, averaging $9.60 an hour. But the average manufacturing job in 2006 paid $16.82. This outlook is bleak for manufacturing workers who may have to start out at the bottom, making far less money and foregoing benefits. On the other hand, there is promise of growth in jobs that pay higher-than-average wages. For instance, 153,000 financial jobs were created last year, averaging $18.79 per hour. Even so, workers will need training to compete for the higher-paying jobs, making it difficult for those workers to get back on their feet. If displaced manufacturing workers are worse off in their new service jobs, this may mean a lower standard of living for them and their families. Even though the debate is unsettled, this issue should be of concern (Schoen).
Schoen, J. W. (2007, January 5). “Latest jobs report is a tale of two sectors.” MSNBC Interactive . Retrieved January 8, 2007 from http://www.msnbc.msn.com/id/16457835/.html