Economic history has shown that, as an economy develops, so does its service sector. This is certainly true for the United States, one of the most highly developed countries in the world and certainly a service economy. According to the U.S. Bureau of Labor Statistics, service-providing jobs account for more than 70 percent of nonfarm payrolls in the country, while goods-producing jobs account for less than 15 percent of jobs. In the 1940s, both sectors were tied at little above 40 percent, with government jobs accounting for the remainder of jobs.
There are two main reasons for this shift: productivity gains and globalization. As capital and goods began flowing freely across borders, it became cheaper to produce goods in parts of the world with lower labor costs and import them. This is how the United States gradually moved away from producing goods and how China became the world’s manufacturing hub, making anything from smartphones to television sets.
Last year, the United States imported around $3.1 trillion worth of goods, with Mexico, China and Canada accounting for more than 40 percent of that total. Among the top imported goods are cars, pharmaceuticals and all kinds of technology, be it smartphones, computers or semiconductors. Experts have warned that all of these products would likely become significantly more expensive if president-elect Donald Trump went through with his proposed tariff plans.
