by Doug Short
Financial Sense
The Department of Labor’s Bureau of Labor Statistics has monthly data on employment by industry categories reaching back to 1939. At the highest level, all jobs are divided into two categories: Service-Providing Industries and Goods Producing Industries. The adjacent chart illustrates the ratio of the two categories since 1939.
In 1939 service providing industries employed more people than goods producing, 62.9% to 37.1%, a ratio of 1.7-to-1. World War II triggered a surge in goods-producing employment and an accompanying reduction in services. But following the war, we’ve seen a steady tilt toward services. The ratio is now 6.3 services jobs for every goods-producing job. The key drivers of this secular trend have been the growth of automation that reduces the need for human labor and the offshoring of goods production.