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Service Industry

Service Industry


The United States is predominantly a service economy. As of 2008, service jobs accounted for over 80 percent of total U.S. employment, and current trends indicate that this figure will remain steady or increase continuing into the twenty-first century. The long-term growth of the service industry has prompted a number of questions about this sector of the American economy and the reasons for this trend. Some questions about the growth of the service

industry include: What is the service industry and what types of businesses operate in it? What are the trends in growth for the service industry and the reasons underlying its growth? How is the service sector affected by recessions and economic downswings? What are the human resources issues associated with the service industry? How is offshoring affecting American service jobs? What is expected in the future for the service industry?


In the U.S. economy, jobs can be categorized into sectors, which can then be split into divisions, each of which include various industries. There are two major sectors in the U.S. economy, as identified by the U.S. Standard Industry Classification System: the goods-producing sector and the service-producing sector. The goods-producing sector includes agriculture, forestry, and fishing; mining; construction; and manufacturing. The service-producing sector includes the divisions of (1) transportation, communications, and utilities; (2) wholesale trade; (3) retail trade; (4) finance, insurance, and real estate; (5) public administration; and (6) services. This sixth groupthe services divisionincludes a number of industries (see Table 1).

The service sector is difficult to define and to encompass. There are a number of ways to identify the sector, its divisions, its industries, and the types of jobs within them. The general category of the service division includes a wide variety of industries, but can be categorized into primarily consumer-oriented (providing a service directly

to a consumer), primarily business-oriented (providing a service directly to another business) or mixed (providing services to both businesses and individual consumers).

Alternately, the services division activities can be described by their economic activities as physical, intellectual, aesthetic, and other experiential activities. Physical activities involve working with objects; examples include repairing cars, landscaping, cutting hair, or preparing a meal. Intellectual activities involve providing education or training, such as at a university or trade school. The aesthetic activities entail providing consumers with artistic or visual experiences; museums, theater performances, art shows, and musical performances are examples. Finally, other experiential activities involve providing customers with recreation, such as in amusement and theme parks, zoos, or campgrounds.

A final way in which to categorize services is by what is transformed through the service. A service may transform a physical object, which occurs when something is repaired, altered, or improved. Having an article of clothing custom-made, a room remodeled, or an appliance repaired would involve transforming a physical object. Service division jobs may also change a consumer. Examples of changes to consumers are education, whereby the consumer learns knowledge or skills; health care, in which a person's health is improved; or personal services, such as when a hairstylist cuts a consumer's hair. A change to an organization is a third type of transformation involved in the service industry. For instance, a management consulting firm may make changes to an organization's structure or business processes to improve it. The final set of jobs in this categorization captures those professions in which there is no apparent object. For example, when an attorney provides legal representation to a client, or in professional sports competitions a service is provided, even though no specific object can be identified.


In the early part of the twentieth century, only 30 percent of those employed in the United States were working in services, with the rest in industry or agriculture. However, by 1950, half of the workforce was employed in services. In 1956, for the first time in the history of America's industrial society, the number of white-collar workers exceeded the number of blue-collar workers. By the 1960s, the United States could no longer be characterized as an industrial society but rather as a postindustrial or service society. This trend away from manufacturing towards service continued throughout the last half of the twentieth century. In 1984, the number of jobs in manufacturing was relatively high compared to the number of jobs in the services, but by 1999, the service industry employed about twice as many individuals as manufacturing or government. This largely resulted from the fact

that more than 97 percent of the jobs added to U.S. payrolls from 1990 to 2002 were provided by the service-producing sector.

By the beginning of the twenty-first century, services accounted for approximately 70 percent of the national income and 80 percent of the jobs. This long-term shift from manufacturing to service is expected to continue. As the U.S. Bureau of Labor Statistics (BLS) report on industry trends, Tomorrow's Jobs, put it, Service-providing industries are expected to account for approximately 15.7 million new wage and salary jobs generated over the 20062016 period, while goods-producing industries will see overall job loss.

The three industries within the services division that experienced the most growth in the last decade have been(1) business services, (2) health care, and (3) social services. The business services areas in which the largest number of jobs was gained were personnel supply and computer services. The personnel supply area includes organizations such as temporary employment agencies, traditional employment agencies, and other organizations that supply labor to other companies. The computer services industry includes mass-produced software, custom programming, custom computer systems design, and computer leasing. The primary reason for growth in both of these areas has been changes in business processes.

In the health care industry, there were four components that added large numbers of jobs: offices of physicians and other practitioners, nursing and personal care facilities, hospitals, and home health care. These components gained 430,000 to 1.2 million jobs each between 1990 and 2002. Two main reasons for this increase are new medical procedures, which require additional personnel to perform them, and the increased number of elderly persons in the United States and their requisite health care needs.

The third industry that gained the most jobs in the services division is social services. Social services encompass daycare for children, residential care for the elderly, and other family services; engineering and management services; private education; recreation and amusement; and membership organizations (e.g., houses of worship).

The reasons for growth in the largest growth area of the services divisionthe business-oriented servicescan be linked to three broad economic developments relevant to those services: contractual arrangements, increased construction activity, and changes in technology.

First, contractual labor arrangements, such as outsourcing, have created opportunities in the field of personnel supply (e.g., temporary agencies and employee leasing). This is due primarily to the increased demand for temporary employees from U.S. businesses that want more flexibility in staffing and more control over labor costs. Additionally, as temporary and leasing agencies provide more training for the employees that they place with companies, this has made use of such agencies more attractive to many companies. A related reason for increased demand of such agencies is that many core employees are hired after a stint as temporary employees, which reduces recruitment and staffing costs for the companies utilizing temporary agencies. These contractual labor arrangements have also contributed to the growth of management services, such as consulting and facilities support. Finally, engineering services have changed; many engineers now operate under these new contractual arrangements rather than working for one employer as an employee.

The second major economic development that has led to growth in jobs in business-oriented services is the increase in construction activity. More construction brings higher demand for engineering, architecture, surveying, landscaping, and horticultural services. The third major economic development, improved technology, has driven a higher demand for computer services, such as computer repair, technical support, and software development. Management and engineering services, in the form of consulting, have also grown with this improved computer technology.


The U.S. Bureau of Labor Statistics (BLS) has studied the effects of economic recessions and expansions on the industries in the services division. The common wisdom has been that the service industry resists economic recessions; and to some extent that is true. Typically, the services do not show a decline in employment during the course of a recession. However, the BLS has found that some areas of the service sector are affected by economic downturns, indicated by a slowing of job growth.

Most areas of the services division are cyclical, which means that they are likely to experience slow growth or may even lose jobs during a recession. Engineering and management are the most cyclical areas of the services division and typically lose jobs in the average quarter of a recession. One reason for this is that these types of companies (e.g., management consulting firms, architectural firms, etc.) depend heavily on projects, not on ongoing production, which are likely to be cut back in times of economic recession. Business services are also cyclical, particularly with personnel supply (e.g., employment agencies) and computer services (e.g., custom software creation). Other cyclical areas are in agricultural services, because of the landscaping and horticultural component; automotive services, such as car rentals and repairs; miscellaneous repairs; the lodging industry; personal services, such as laundry, cleaning, and garment services; and motion pictures.

There are five areas of the services division that are deemed at least minimally counter-cyclicalthat is, they

gain jobs more quickly during a recession than in normal times. Health care services are the most counter-cyclical, gaining jobs rapidly during an economic downturn. This is likely due to the nature of this industry; health care is unaffected by recession because consumers see it as a necessity rather than something that can be used less often depending on the economy. Moreover, because much of U.S. health care costs are supplemented by Medicare, Medicaid, and private insurance, this funding is not susceptible to competition with other types of purchases, and the benefits continue to be available to Americans during times of recession and unemployment.

The health care industry is one that is truly counter-cyclical; however, there is no strong consensus as to why this is. There is some evidence that health actually improves during economic recessions in the reduced use of tobacco and through improvements in diet and exercise. Thus, the demand for health care is unlikely to be driving the growth of this industry. Rather, some experts believe that the health care industry benefits from higher unemployment rates during a recession, because more people are likely to pursue jobs in the health care industry when unemployment is high. Because this industry tends to have many job vacancies, a recession may create a higher supply of employees to fill these jobs.

The other counter-cyclical service sector groups, as identified by the U.S. Bureau of Labor Statistics, are not truly counter-cyclical, in that they do not show statistical significance of this characteristic. However, they are likely to be less cyclical than the other areas of the service sector. One of these ostensibly counter-cyclical areas is private education, which is in higher demand when more people are unemployed due to an economic recession. That is, if people can't find jobs, they tend to go back to school, resulting in higher demand for teachers and administrators in public education. The other areaschild day care, amusements and recreations, and private colleges exhibit their counter-cyclical tendencies because they tend to have fairly unattractive, low-paying jobs, which people are less likely to take in strong economic conditions, but more likely to take when the unemployment rate is high. A higher unemployment rate means that more attractive job opportunities in other industries are less available, and people must turn to less attractive jobs. Labor shortages in these lower paying industries are likely to be high in times of economic expansions, and thus these areas are less likely to be cyclical in their nature.


As jobs in the U.S. economy shift from the goods-producing sector to the services sector, so do many of the tasks involved in successful human resource management.

Job analysis, recruitment and selection, training, performance appraisal, compensation, and labor relations are all likely to be affected by this current trend towards increased services jobs. There are a few specific concerns for human resources in the service industry. Job analysis, which involves gathering information to understand how to successfully perform a job, is likely to be conducted differently in service jobs than in manufacturing jobs. Because much of service work is knowledge work, in which job activities are less observable, this may mean differences in the way that job analysis is conducted. In service jobs, observation of job tasks may not be as useful as interviewing job incumbents or using a standardized form such as the Position Analysis Questionnaire.

Recruitment and selection practices in the services sector are as varied as the types of positions in this sector. The areas that are counter-cyclical or non-cyclical, however, may require stronger or more creative recruitment practices. As mentioned previously, many of the job areas that grow during economic recessions do so because there are fewer attractive job options available. Thus, during strong economic conditions, these areas (i.e., health care, day care, amusement and recreation, and private colleges) may have difficulty recruiting job applicants, and may need to be more innovative in their approach. During strong economic times, this may also mean that these counter-cyclical areas may find a lack of suitable job candidates, which may mean that selection criteria are changed, such that some skills are trained by the organization rather than having them present upon hire.

Training in the services sector may require increased attention to technology skills, as many service sector jobs now require the use of computers. Even entry-level retail jobs make use of computer technology for inventory and sales, and the ability to use these machines is critical. Additionally, customer-service skills are a crucial training need in many service industry jobs; thus, this type of training is likely to increase in value in service jobs.

Performance appraisal in the service sector is likely to be different than in the goods producing sector. While a physical accounting of performance through measuring production is possible in manufacturing and similar industries, it is less possible in service jobs. There may not be observable outcomes in service sector jobs. Thus, appraising performance by measuring behaviors is more appropriate for this sector. Additionally, outcomes other than production can be measured in service jobs: customer satisfaction, sales in a retail location, or other outcomes can be meaningful ways to measure performance.

Compensation in the goods-producing sector can be specifically linked to productivity (e.g., actual goods produced), but tying compensation to outcomes in the

services sector may be more difficult. Some outcomes are easy to measure, such as in the number and value of homes sold by a real estate agent, but others are more difficult to assess, such as the degree to which a customer service representative has successfully resolved a customer's problem. Thus, compensation that effectively rewards and motivates employees must be based on a performance appraisal that reliably and accurately captures performance. Human resources managers should use caution when developing rewards based on outcomes; a poorly designed incentive system may result in employees aiming for outcomes at the expense of customers. For instance, if a car repair shop pays employees for each new set of brakes they install, employees may begin to try to sell brakes to customers who don't need them in order to receive extra pay.

Labor unions originally grew in prominence in goods-producing jobs but now also represent many employees in the service industry. Although labor union membership has declined overall in recent decades, unions are still a presence in both manufacturing and service jobs. For instance, the Service Employees International Union (SEIU) is the largest growing union in North America, representing employees in areas of health care (e.g., nurses and nursing home employees), public services (e.g., school teachers and other government employees), building services (e.g., janitors and security guards), and industrial and allied employees (i.e., services in industrial companies). The SEIU has actually grown in membership over the years, from 625,000 members in 1980 to approximately two million in 2008, and this growth has coincided with the increase of jobs in the services industry. Many service sector employees seek representation from a union due to concerns about pay, benefits, and job security that may not be as strong as in some other areas of the economy.


One topic that is becoming increasingly important to the services division of the U.S. economy is offshoring. Offshoring occurs when U.S. jobs and production are relocated to a foreign country. Offshoring can be contrasted with outsourcing, which occurs when a company contracts with another company to perform part of their work, but does not necessarily shift to a foreign country.

India has gained many U.S. service sector jobs through offshoring in recent years. Much of this is due to India's focus on becoming more prominent in the world in their information technology capabilities. Additionally, many Indians now pursue higher education to give them skills that prepare them for jobs in which there is a labor shortage. For instance, many U.S. employers are now hiring Indian call center agencies to provide customer service to clients in North America. Calls from overseas (e.g., American) customers are routed to an Indian call center, where an Indian employee who speaks English (often with little Indian accent) assists the customer with his or her computer problem or other customer service need. Since skilled Indian employees cost far less than similarly skilled American employees, offshoring for this job is very attractive to American companies wanting to cut costs. Author Paul Davies notes that the annual cost in 2003 of an American employee in a U.S. call center was about $43,000, but that a similarly skilled Indian employee cost about $6,200.

Offshoring began receiving a large amount of media attention during the mid-2000s, and it has been a subject of increasingly-intense debate from 2004 onward. Prior to that period, levels of job losses in the service sector due to offshoring were small relative to total U.S. employment. One study indicates that an estimated 103,000 jobs moved offshore in 2000, while another estimates that the loss in service jobs due to offshoring was about 75,000 per year from February 2001 to October 2003. However, that began accelerating in the mid-2000s. A May 2004 report indicated that roughly 830,000 U.S. service jobs would be offshored by the end of 2005 and that by 2015 there would be a cumulative job loss of 3.4 million jobs and respective wage loss of about $151 billion. In 2007, a Princeton economist warned that an estimated 35 to 40 million U.S. jobs are threatened by the ability of workers in India and other countries to provide comparable work electronically.

Even with the high level of media attention, there is significant disagreement about the actual effects of offshoring. While some economists issue dire warning about the threat of offshoring, others contend that offshoring does not represent a significant threat to U.S. jobs; some experts even claim that outsourcing is good for U.S. jobs by leading to increases in pay, higher productivity, and lower domestic inflation. While the debate continues, the increase in media coverage of this issue has caught the attention of U.S. lawmakers, as Congress and state legislators have focused attention on the issue and have even introduced legislation to limit offshoring.


The U.S. economy has experienced a long-term shift from goods-producing jobs to service-sector jobs. While expansion of service-providing industries is expected to continue well into the future, projected growth varies among different types of service jobs. The major occupational groups expected to see large increases in employment in the United States are in computers, construction, health-care, personal care, and business operations. Healthcare is

expected to lead the way during the period from 2006 to 2016. According to the BLS, healthcare occupations are expected to make up 7 of the 20 fastest growing occupations, the largest proportion of any occupational group. Other areas of rapid growth include the social assistance industries and the professional, scientific, and technical services industries.

Technological advances are driving both automation and increases in efficiency and productivity in service-related industries. Automation, which has contributed to the decline of manufacturing jobs, is expected to contribute to the loss of certain kinds of service jobs as well. For example, according to the BLS, the installation of self-checkouts and other forms of automation are expected to lead to a loss of over 100,000 cashier jobs between 2006 and 2016. Duties that involve personal interactionsuch as executive secretaries and administrative assistants cannot be easily automated, while clerical duties that involve working with business records can either be automated or streamlined enough to be performed by other workers. As the BLS points out, The difference between the office and administrative occupations that are expected to experience the largest declines and those that are expected to see the largest increases is the extent to which job functions can be easily automated or performed by other workers. For example, while the customer service field is expected to add over half a million new jobs by 2016, the positions of stock clerk and order filler are expected to see a decline of over 130,000 jobs during the same period.

The services sector is distinct from the goods-producing sector in the U.S. economy, and includes a very wide variety of industries and jobs. The number of jobs in the services sector has been growing in recent years, and data from the U.S. government indicate that this trend will continue. While many service sector jobs are believed to be recession-proof, only some areas of that sector are truly counter-cyclical, and some are simply noncyclical, meaning that they resist job loss during times of economic downturn. As service sector jobs increase in number, there are new concerns for managing human resources, one of which is the issue of offshoring, which is increasing slowly.

SEE ALSO Human Resource Management; Outsourcing and Offshoring; Service Factory; Service Operations; Service Process Matrix


Brunelli, Mark. Report: Offshore outsourcing helps U.S. job market. CIO News, 15 April 2004. Available from:,289142,sid182_gci959840,00.html.

Davies, Paul. What's This India Business?: Offshoring, Outsourcing, and the Global Services Revolution. Yarmouth, ME: Nicholas Brealy Publishing, 2004.

Dresang, Joel. Economist warns of off-shoring U.S. jobs. JS Online, 16 November 2007. Available from:

Fitzsimmons, James A., and Mona J. Fitzsimmons. Service Management: Operations, Strategy, and Information Technology. 4th ed. Boston: McGraw-Hill, 2004.

Garner, C. Alan. Offshoring in the Service Sector: Economic Impact and Policy Issues. Economic ReviewFederal Reserve Bank of Kansas City 89, no. 3 (2004): 537.

Goodman, Bill, and Reid Steadman. Services: Business Demand Rivals Consumer Demand in Driving Job Growth. Monthly Labor Review, April 2002.

Goodman, William C. Employment in Services Industries Affected by Recessions and Expansions. Monthly Labor Review, October 2001.

McCarthy, John C. 3.3 Million U.S. Service Jobs to Go Offshore. WholeView TechStrategy Research, 11 November 2002.

Study: Offshoring of U.S. jobs accelerating. Associated Press, 18 May 2004.

Tomorrow's Jobs. U.S. Department of Labor, Bureau of Labor Statistics. Available from:

Zandi, Mark. Off-Shoring Threat. DismalScientist, 24 October2003.

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Service Industries


Every year the service industries make significant contributions to the U.S. economy. These contributions appear in a myriad of ways such as a letter carrier delivering the mail, a physician treating a patient, or an airline pilot transporting passengers to their destinations. Taken on an individual basis, these service providers are only a small part of a very big picture. When the service industries as a whole are examined, however, their critical role in the everyday lives of millions of people and businesses throughout the United States and abroad becomes evident.


The U.S. Department of Commerce's Bureau of Economic Analysis (BEA) offers a broad definition of service industriesservice industries provide products that cannot be stored and are consumed at the time and place of purchase. Typically, the "products" sold by the service industry providers are intangible and thus little if anything physical is involved in the transactions. For example, an airline company may sell tickets allowing passengers to occupy seats on an airplane while it flies from one city to another. Upon the completion of the flight, the passengers deplane with no more than what they boarded the flight with, but are indeed in a different location from where they started. In other instances, transactions within the service industries may result in the delivery of something tangible.

For example, every year millions of Americans purchase tax-preparation software on a compact disk (CD) that facilitates the completion of annual federal and state tax returns. The basis for the inclusion of such transactions within the service industry is that the BEA allows tangible items to be included, provided that any tangible

U.S. gross domestic product and service industry product
billions of dollars
Year Gross domestic product Service industry product Percentage of GDP from service industry
source: 2005 Ecomomic Report of the President.
1960 $526.4 $217.9 41.4%
1970 $1,038.5 $481.9 46.4%
1980 $2,789.5 $1,322.5 47.4%
1990 $5,803.1 $3,113.7 53.7%
2000 $9,817.0 $5,425.6 55.3%
2003 $11,004.0 $6,384.7 58.0%

item(s) offer minimal contribution to the total cost of the service. In the case of the tax software, the cost of the CD is likely to be extremely low. The item of value in this instance, and what the purchaser is truly paying for, is the programming electronically stored on the CD that allows for easier completion of what can become a very arduous annual task.


Within the United States, for-profit businesses, not-for-profit organizations, and the government all provide services. Of these, for-profit businesses are the largest providers of services, followed by the government, and then not-for-profit organizations. Critical in the determination of which sector provides such services are questions such as:

  • Can the service be profitably offered for sale?
  • Are sufficient levels of services provided by the for-profit market?
  • Can nonpaying third parties be excluded from benefiting from the provision of the service?
  • Is the service of such vital importance that it must be provided?

Provision of services by for-profit businesses typically occurs where a service can be profitably sold and third-party nonpayers do not directly benefit from the sale. Examples of such include health care, information technology, residential care, and amusement and entertainment services. In instances where the provision of a service to all, regardless of their ability to pay, is of vital importance to society's welfare, the government frequently steps in. Public education and national defense are examples where the government feels that taxpayers and nontaxpayers

Total U.S. employment and service industry employment, 1992, 2002, and projected for 2012
Year Total employment (in thousands) Service industry employment (in thousands) Service industry as percentage of total
source: Department of Labor, Bureau of Labor Statistics (BLS).
1992 123,325 87,510 71.0%
2002 144,014 108,513 75.3%
2012 165,319 129,344 78.2%

alike should have access to these services. The government also offers services where it feels the for-profit sector may not be sufficiently self-policing, for instance, with the U.S. Food and Drug Administration and the U.S. Securities and Exchange Commission.

In those areas where services cannot be profitably offered for sale and the government cannot provide sufficient levels of services, nonprofit organizations frequently step forward to fill the void. Some such organizations, for example, may provide assistance to persons during times of environmental disaster or hardship, and some health-care organizations treat all people regardless of their ability to pay.


The economic importance of the service industries can be measured in several ways. One such way is to examine the proportion of the economy's total productivity or gross domestic product (GDP) stemming from the service industry. A second way is to examine the percentage of the labor force employed within the service industries. A third way would be to consider the role that services play in international trade.

A country's GDP represents the total value of all final goods and services produced within that country during the course of a year. According to BEA data reported in the 2005 Economic Report of the President and shown in Table 1, U.S. GDP in 2003 totaled $11 trillion. Of this of amount, nearly $6.4 trillion stemmed from the productivity within the service industries.

The importance of the service industry in terms of its contribution to GDP continues to grow each year. In 1960 services accounted for just over 41 percent of the total U.S. GDP, as shown in Table 1. By 1990 the service industry's contribution to GDP had swelled to over 50

Predicted fastest growing industries, 20022012
Industry 2002 Employment (in thousands) 2012 Predicted Employment (in thousands) Percentage change 20022012
source: Department of Labor, Bureau of Labor Statistics (BLS).
Software Publishers 256.0 429.7 67.9%
Management, scientific, and technical consulting services 731.8 1,137.4 55.4%
Community and residential care facilities for elderly 695.3 1,077.6 55.0%
Computer Systems design 1,162.7 1,797.7 54.6%
Employment Services 3,248.8 5,012.3 54.3%
Individual, family, community, and vocational rehabilitation facilities 1,269.3 1,866.6 47.1%
Ambulatory health care services 1,443.6 2,113.4 46.4%
Water, sewage, and other systems 48.5 71.0 46.4%
Internet Services 528.8 773.1 46.2%
Child Care Services 734.2 1,050.3 43.1%

percent and in 2003 it surpassed 58 percent. If this trend were to continue, by 2010 more than $3 out of every $5 of final goods and services produced would stem from the service industries.


The importance of the service industries can also be seen both in the level of employment within the industry and as a percentage of total employment. Total employment and service industry employment for 1992 and 2002 as well as the levels forecasted by the U.S. Department of Labor's Bureau of Labor Statistics (BLS) for 2012 are shown in Table 2.

In 1992 more than 87 million people were employed within the service industry and by 2002 this number had risen to nearly 109 million. By 2012 the BLS expected nearly 130 million persons would be employed in the service industry. More astonishing than the absolute number of persons employed in the service industry is the large and growing percentage of total employment emanating from the service industry. In 1992 nearly 71 percent of all employment was within the service industry. By 2002 more than 75 percent of employment was within the service sector. The BLS forecasted that this percentage would continue to grow, with more than 78 percent of all employment within the service industry by 2012.

Export and import of goods and services, 19902003
Year Goods exports Goods imports Service exports Service imports
source: 2005 Economic Report of the President.
1990 $367.2 $469.7 $188.7 $142.7
1995 $533.9 $697.6 $245.8 $152.1
2000 $784.3 $1,243.5 $311.9 $232.3
2003 $721.7 $1,307.3 $309.9 $243.3

Based on the BLS data shown in Table 2, from 1992 to 2012 the total level of employment in the United States was forecasted to increase by approximately 42 million. For the same period, the BLS estimated that service industry employment would increase by 41.8 million. In other words, the service sector was forecasted to be responsible for 99.6 percent of all employment growth from 1992 to 2012.

While the service industry overall is growing substantially, some areas are growing at faster paces than others because of changes in the economy or the country's demographics. Table 3 provides a listing of the ten industries forecasted to have the fastest-growing employment from 2002 to 2012.

The information sector of the service industry is the fastest-growing sector in the economy. Included within this sector is the software publishing industry that is anticipated to be the nation's fastest-growing employer through 2012. Also within this sector is the quickly growing Internet services and data processing industry. The professional and business services industry is another that is expected to experience substantial gains in employment. Within this industry, the employment services sector is experiencing the greatest expansion as companies seek out ways to reduce labor costs and provide greater flexibility in terms of staffing. The gradual but continued aging of the population, together with medical advances that have extended life expectancies, have resulted in the health services industries also exhibiting large growth in employment.


A final point that raises the importance of the service industries within the United States can be found when looking at international trade data. The United States maintains a very large balance of trade deficit due to the importation of large amounts of goods relative to the amount of exportation of goods, as can be seen in Table 4. The balance on services, however, shows a surplus, with the United States exporting more services than it imports.


Berman, Jay M. (2004, February). Industry output and employment projections to 2012. Monthly Labor Review, 127 (2), 5879.

The Economic Report of the President. (2005). Washington, DC: Government Printing Office.

Hecker, Daniel E. (2004, February). Occupational employment projections to 2012. Monthly Labor Review, 127 (2), 80105.

Su, Betty (2004, February). The U.S. economy to 2012: Signs of growth. Monthly Labor Review, 127 (2), 2336.

Alan G. Krabbenhoft

Amy Lynn DeVault

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service industries

service industries A loosely defined group of labour-intensive economic activities centred around finance, sales, distribution (transport, retailing, wholesaling), and a plethora of businesses and professions giving personal care in various forms. Optimistic theories of industrialization speak of the rise of a future service (or service-dominated) economy. More sanguine interpretations regard a large service sector as symptomatic of deindustrialization or of the salience of finance over industrial capital. See also INDUSTRIAL SECTOR.

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service industry

serv·ice in·dus·try • n. a business that does work for a customer, and occasionally provides goods, but is not involved in manufacturing.

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Personal Services

Personal Services


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