Show IBA S SONS SON'S ON II CHANGE IN US U.S. ECONOMY By Babson's Baboons Incorporated Incorporated Wellesley Hills Mass When this country was first founded ours was an agrarian society meaning that most of our production and employment employment employment employ employ- ment was in agriculture In Inthe Inthe Inthe the late and early we changed over to an Industrial industrial Indus indus- trial society Now during the 1960 s we have become the worlds world's s first service economy This is with reservations however how how- ever For while more than half of our work force is employed employed em em- by the service segment of our economy with production production production tion as the standard we are still an industrial society e Defining A Service Defining the service sector Is rather difficult It is gen gen- accepted that it consists of the intangibles Intangibles Intangibles-i.e. 1 e insurance insurance ance retail trade finance ance whereas the industrial sector produces the tangibles tangibles auto auto automobiles mobiles steel and the like Using a broad definition the service economy is made up of a wide variety of personal professional and business services services services ser ser- vices retail and wholesale trade repairs finance insurance insurance insurance ance and government Service Productivity Although the service economy has expanded greatly great great- ly in terms of employment it has lagged far behind both agriculture and industry In terms of productivity Automation Automation Automation Autom Autom- In the factory and ori on on the farm has boosted productivity productivity ti ity in these areas tremendously tremendously but there has been only limited automation in the service service ser ser- vice sector The computer has heightened productivity of the larger service industries but has had little effect on the smaller smaller size size businesses which make up over 90 per cent of the total industry And it is difficult to see how the local barber beautician or Insurance insurance ance salesman can improve on his output Hence while the service segment will undoubtedly undoubtedly edly enjoy improved productivity productivity in the future it It will be bee limited Economic Significance Employment and income Ina in ina a service economy are quite different than in an industrial economy Employment in the former is relatively stable when compared to that of the industrial worker throughout the business cycle The consumer consumer con con- sumer can put off buying a anew anew anew new automobile Indefinitely but cannot react the same way when he needs a doctor In Ii Inthe Inthe the future the fluctuation o of total unemployment will be milder due to the growth of the service economy Average wages In the service service ser ser- vice sector are lower than in inthe inthe inthe the industrial There are several several sev sev- eral reasons for this among them productivity unionization union union- Iza and the general employment employment em em- mix There is very little littie organized labor in the basic service industry owing to the characteristically small smal number of persons employed employee In each company Recently however the services do seem to be getting more organized Teachers sanitation person person- nell police and firemen have joined forces to demand belter bet bet- better better ter wages This trend has been gaining momentum and th the future results will be a closing dosing clos dos ing of the gap between their wage structure and that fo for workers in industry The fact that the service industry Industry industry In in- does not require strong physical endurance has resulted result result- ed in a high proportion of women and older people in the work force who have historically historically faced wage discrimination Recent regulations which forbid discrimination based on sex sett or age will wll Jl bring higher wages for these people Service Industry Reaching Peak Employment in the service area which has grown rapidly rapid rapid- ly over the past 30 years will continue this trend but at a slower rate Technology will advance productivity but its potential is limited by the inherent inherent in in- herent personalization of the Industry Income has been im im- im- im proving and will continue to as long as the demand for services ser ser- services vices continues People are demanding demanding de de- manding more and more different different different dif dif- ferent services such services such as interior interior in in- decorating income tax assistance and medical attention atten atten- tion which tion-which which will account for formost formost formost most of the future growth Inthe in inthe inthe the industry We are now a service economy in terms of employment and should remain remain re reo main so to an even greater degree in the future But we will still be an industrial economy economy ec ec- onomy when production is the basis for comparison |