Service economy?

The standard image of the U.S. economy is one of two mega-sectors: manufacturing and services. This is both is outdated and misleading. It is still basically based on Colin Clark’s 1940’s division of the economy into primary, secondary and tertiary. Over the years this has been simplified to goods versus services as the extractive industries (primary) have been lumped with the manufacturing (secondary) industries. This classification has been commonly used to declare that the U.S. has become a service economy.
However, using this framework to measure employment shows that the U.S. has been a “service” economy for 100 years. Employment data on agriculture/fishing/mining (primary), manufacturing, construction and services shows the US jumped from directly from agriculture to services. We were never a majority manufacturing economy. Manufacturing peaked at around 27% of total employment in 1920 (30% for combined manufacturing & construction) with services at the same time comprising around 41% of total employment.
Employment 1840-1960.png
That most people work in service industries tells us little about the structural changes occurring in the economy. This is why I am publishing employment data as tangible-producing and intangible-producing. See my see most recent posting and my new report Employment in tangible-producing and intangible-producing industries: Preliminary findings and methodology.

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