The voices of Urban Institute's researchers and staff
May 26, 2015

McJobs are not in our future

May 26, 2015

Many people think that service jobs are mainly low-skilled, low-paid jobs with limited opportunities for advancement. By contrast, they think that manufacturing jobs pay more, are more stable, and permit career advancement. Therefore, the decline in the share of manufacturing jobs and rise in the share of service jobs is looked at with alarm. Jeff Faux, the former president of the Economic Policy Institute, expresses these concerns when he writes in The Servant Economy that our failure to protect manufacturing jobs in the 1980s doomed the middle class. He also predicts that by the end of the 2020s, the real wages of the average American will drop by 20 percent, including a large contraction in professional jobs due to outsourcing.

But, the increase in service jobs has not doomed workers to a future of low-wage, low-skill jobs: As Anthony Carnevale and I show in a new report, the new post-industrial economy is characterized by high-end service jobs in offices, schools, and hospitals.  In our report, we divide employment into the following five groups:

  1. Primary production: manual work in farming, mining, and fishing.
  2. Manual labor in industry: manual work in manufacturing, construction, and transportation.
  3. Office work: coordination and administration in finance and related activities, public administration, and front-office work.
  4. High-skilled services: non-office work in health care, education, and communication.
  5. Low-skilled services: non-office work in retail, food, and personal services.

In this simple division, the first two categories are focused on producing things while the last three capture the growing service activities in our economy. In terms of the service sectors, the share of the US workforce employed in office work was high in 1967 (37 percent of all workers) and rose to greater prominence by 2007, reaching 44 percent of employment. The other big gainer over these years was our high-skilled service sector, mainly in health care and education, which went from 13 percent of employment in 1967 to 20 percent in 2007.

By contrast, our low-skilled service sector of retail and food and personal services—the quintessential McJobs sector—edged up only from 18 to 19 percent from 1967 to 2007. In other words, the vast majority of growth in service activities came from high-end functions that require a highly educated workforce and not the dead-end services that get all the media attention.

The rise in high-end service employment (categories 3 and 4) was accompanied by the decline of the blue-collar functions of manufacturing, construction, transportation, farming, mining, and other manual labor (categories 1 and 2). These blue-collar jobs fell from 32 percent of total employment in 1967 to 17 percent in 2007. The high-end service economy, meanwhile, was responsible for 64 percent of employment in 2007. Furthermore, because these jobs have higher pay, their share of all earnings in the economy reached 75 percent that year. Also, 81 percent of workers with a bachelor’s degree and 91 percent of those with a graduate or professional degree were employed in high-end service jobs in 2007.

These findings should not be a surprise because the physical landscape of our central cities and suburbs is dominated by offices, hospitals, and schools, which are primarily high-end service sector employers. The bottom line is that high-end services are the main drivers of our changing economy and the almost exclusive employer of workers with the most education. This dynamic is likely to continue in the years ahead, while it is unlikely that we will see much of a shift to low-skilled services or significant growth in manufacturing and other blue-collar employment.

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