Shifting Economic Foundations

Full Answer Section The shift from manufacturing to services has had a number of impacts on wages and employment levels. On the one hand, wages in the services sector are generally lower than wages in the manufacturing sector. This is because services jobs are often less skilled and require less training. On the other hand, employment levels in the services sector have been growing faster than employment levels in the manufacturing sector. This means that there are more jobs available in the services sector, which has helped to keep unemployment rates low. The relationship between employment levels and wage levels is a complex one. In general, higher employment levels tend to lead to higher wages. This is because when there are more jobs available, workers have more bargaining power and can demand higher wages. However, there are also other factors that can affect wage levels, such as the supply of labor and the demand for goods and services. Overall, the shift from manufacturing to services has had a mixed impact on wages and employment levels in the U.S. Wages in the services sector are generally lower than wages in the manufacturing sector, but employment levels in the services sector have been growing faster. This has helped to keep unemployment rates low, but it has also led to a widening gap between the rich and the poor.  

Sample Answer The U.S. economy started shedding manufacturing jobs and gaining services sector jobs in the 1990s, a trend that has largely continued. There are a number of factors that have contributed to this trend, including:

• Globalization: The rise of globalization has led to an increase in trade between countries. This has made it easier for businesses to outsource manufacturing jobs to countries with lower labor costs.
• Technology: The rise of technology has also led to a decline in manufacturing jobs. Many manufacturing jobs have been automated, which has led to a decrease in the demand for workers in this sector.
• Changes in consumer demand: Consumer demand has also shifted towards services in recent years. This is due to a number of factors, including the rise of the internet and the increasing affluence of the U.S. population.