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Transition Complete : Service Jobs Dominate the Economy

COMEBACK REBUILDING THE U.S. ECONOMY: One of an Occasional Series

September 24, 1987|JONATHAN PETERSON | Times Staff Writer

When Far Eastern competition drove Alan Ungar's clothing factory out of business in the late 1970s, the Los Angeles native was forced to examine his life anew: "I had three priorities," he recalls. "One was to be able to play racquetball every morning. The second was not to have any inventory. The third was to be able to take time off when I wanted time off--and I've gotten all of them."

Ungar, 51, got his wishes by making a jarring about-face in careers. He abandoned the apparel industry altogether, went to school and became a financial planner.

He says now that he stumbled into the field, but actually his choice was influenced by forces that are reshaping the nature of opportunity in the United States. In linking his future to consulting rather than manufacturing, Ungar responded to a reality of America in the late-20th Century: The much-heralded service economy has arrived.

Just as most of the nation's work force once had to adjust from tilling the soil to toiling in factories, a similarly wrenching change is now complete. Some 90% of today's newly created jobs are in the services, where knowledge and information--not steel or automobiles or clothing--are the most highly prized commodities.

Ungar's father, for example, produced soldering irons in Culver City and marketed them across the country. Ungar followed him into manufacturing, taking pride in making quality scarfs at his own local factory for 15 years. But now he earns a six-figure income "with a lot less headaches" in his Woodland Hills office by advising people on how to invest their money to meet their goals.

Approval Not Universal

Under way for more than half a century, the transition to a service economy has reached the point where fully three-fourths of today's 113 million employed persons are classified as working in the service sector, a potpourri of jobs that includes dishwashers, store clerks and nursing home attendants--but also doctors, lawyers, bankers, computer programmers and even government bureaucrats. Essentially everybody who is not in manufacturing, agriculture, construction or mining is a service worker.

The phenomenon has hardly met with universal approval. Some economists and political leaders warn that America's future will be in jeopardy if employment in the great industries that helped make this the richest nation on earth is replaced by service jobs that are low on wages and low on dignity. Others, however, insist the service boom offers superb opportunities of its own.

Whatever the view, the trend toward a service economy appears inevitable even as manufacturing becomes more efficient and more sophisticated, requiring fewer employees but ever more services.

While debate rages about the quality of life that Americans will be able to enjoy in the service-oriented world, important points already can be made:

--Services and manufacturing will continue to rely on each other. Those who work in services, such as computer specialists, can help make manufacturing more productive. Manufacturing also stimulates the demand for services: It buys a range of them--including engineering, finance, accounting, insurance, design, transportation and waste disposal. And it can propel the demand for even more, such as hotels and financial advice, by enhancing the overall wealth of society.

"Services are complements--not substitutes or successors--to manufacturing," argue Stephen S. Cohen and John Zysman in their book "Manufacturing Matters: the Myth of the Post-Industrial Economy."

--Education will play a critical role. Those with a good one can do better than ever before. Those with a poor one are likely to do worse. Those able to manage people, adapt to technological change, think analytically and communicate effectively will maintain a high standard of living. Those lacking such skills risk a lifetime of hardship, in light of increased automation and movement of low-skill jobs to other countries.

--The service economy has emerged during an extraordinary period of stagnating wages, but cannot be blamed for it. Productivity is the key. Gains are needed in order for Americans to resume their long-accustomed progress in income over inflation. But such gains have been harder to achieve in services than in manufacturing.

--Despite skeptics, who worry about a generation of hamburger-flippers and others who toil at the minimum wage, people in service jobs can start at the bottom, move up the ladder and into the middle class.

Job Creation

Since 1970, the work force has expanded to accommodate another 33 million people, including much of the post-World War II baby boom generation and an influx of women and immigrants--an economic tour de force that has left much of the world in awe. Some 13 million of these jobs were spawned since the current recovery began late in 1982. Services were responsible for the bulk of them. The result has been impressive: Today, almost two-thirds of American adults are in the work force--the largest proportion in history.

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