Introduction

Today more than half of the labor force in the United States is employed in what are traditionally conceived of as service industries. Ever since statistical measurements of the distribution of the labor force were first undertaken, the percentage in the service industries has been rising. In 1870, little more than 19 percent of the labor force was so employed, but by 1965 it was approximately 55 percent, making the service sector today the dominant source of employment in the economy. This change has received a great deal of attention as a typical characteristic of an affluent society.

In this chapter we shall explore briefly some of the general institutional changes that have accompanied this redistribution of occupational employment. Of necessity, our discussion will be highly selective and incomplete, not only because of the inadequacies of the model, but in this case more particularly because our knowledge of the economic characteristics of the service sector is deficient. Unlike manufacturing, agriculture, and other sectors that have been analyzed and explored at length by economists, the service sector has received comparatively little attention.

We have defined the service industries in the same way as Fuchs to include wholesale and retail trade, finance, insurance, real estate, general government (including military), and activities comprising professional and personal repair services. Perhaps the most evident characteristic of such a listing is its heterogeneity. It embraces industries of rapid productivity growth and slow productivity growth, industries which are large and industries which are small.