More People Work in Offices and Provide Services

WHY IS THIS IMPORTANT?While the old economy was fundamentally organized around standardized mass production, the New Economy is organized around flexible production of goods and services. To the extent our trade, tax, and employment policies do not reflect this new reality, economic growth will suffer.

THE TREND: The New Economy is a high-tech, services, and office economy. This is not to say that mass production manufacturing is unimportant, or that the United States produces fewer manufactured goods or food (in fact we produce more than ever). But higher rates of productivity growth in manufacturing and agriculture have meant that almost 93 million workers (80 percent the workforce) do not spend their days making things-instead, they work in jobs that require them to move things, process or generate information, or provide services to people.

Within both manufacturing and services, technology companies have become more important. High-technology industries' share of value-added in manufacturing has grown from 18 percent in 1970 to 24 percent in 1994.⁹ High-tech companies' output has increased as a share of GDP from 5.5 percent in 1990 to 6.2 percent in 1996. But while the jobs and income produced by the high-tech sector are important, it is the high-tech products and services that are helping to transform the rest of the economy.

Since 1969, virtually all the jobs lost in goods production and distribution sectors have been replaced by office jobs. The tools most Americans use are now more likely to be faxes, copiers, telephones, or PCs than riveters, lathes, or forklifts. In the New Economy, where competitive advantage increasingly stems from customization, design quality, and customer service, more of the value-added is produced in offices.¹⁰

THE DATA:

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Index Home | Introduction
SECTION I | SECTION II | SECTION III
Productivity Paradox | Knowledge Economy
Nine Myths | Data Sources | Endnotes | The Authors

The Progressive Policy Institute (PPI)
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