THE AMERICAN WORKPLACE

WHERE AMERICANS WORK

The Shift to a Service Economy

The American economy has undergone a fundamental shift since the conclusion of World War II (1939–1945) from primarily a goods-producing nation to one that is increasingly service-oriented. According to Joseph R. Meisenheimer II of the Bureau of Labor Statistics (BLS) in “The Services Industry in the ‘Good’ versus ‘Bad’ Jobs Debate” (Monthly Labor Review, February 1998, http://www.bls.gov/opub/mlr/1998/02/art3full.pdf), service industries accounted for just 10% of nonfarm employment in 1945 compared with 38% in goods-producing industries. Since the 1970s the American economy has moved increasingly away from producing goods to providing services, and the service-producing sector has accounted for a growing proportion of workers. In 1970, for example, there were 48.8 million service-providing workers, and 22.2 million people in the goods-producing sector (see Table 2.1), representing a service-to-goods ratio of 2.2 to one. By 2000 the number of workers in the service-providing sector was 107.1 million, compared with 24.6 million in the goods-producing sector, representing a service-to-goods ratio of 4.4 to one. In 2007, according to preliminary statistics compiled by the BLS, workers who provided services (115.4 million) outnumbered workers who produced goods (22.2 million) by a ratio of 5.2 to one.

Service-producing industries include eight subsectors:

• Transportation and utilities
• Information services
• Financial activities
• Professional and business services
• Education and health services
• Leisure and hospitality services
• Other services (ranging from automobile repair shops to religious and political organizations)
• Government

Jobs in the service industry are incredibly diverse, including occupations such as teaching, social work, nursing, food service, retail sales, accounting, data entry, truck driving, and many more. Goods-producing industries include agriculture and related industries, mining, construction, and manufacturing. Jobs in the goods-producing industry include mining, forestry, farm work, construction, assembly-line work, and other manufacturing jobs. However, workers in different industries may have similar occupations, that is, they do similar kinds of work. For example, a buildings and grounds maintenance worker might work at a large manufacturing plant, and therefore be employed in the goods-producing industry, or at a hospital, and therefore be employed in the service-producing industry.

Table 2.1 shows that the number of goods-producing workers in 2007 at 22.2 million was virtually the same as in 1970, whereas the number of workers in the service sector had more than doubled from 48.8 million to 115.4 million. From 1995 to 2006 construction was the only industry in the goods-producing area that consistently employed more workers each year, employing 5.3 million workers in 1995 and 7.7 million workers in 2006. That year, however, was a peak for the construction industry; the BLS reports in Current Employment Statistics Highlights April 2008 (May 2008,http://www.bls.gov/web/ceshighlights.pdf) that between September 2006 and April 2008 construction jobs fell by 457,000 due to the downturn in the housing market. The number of employees working in natural resources and mining fell from a fifty-year industry high of 1.2 million workers in 1981 to 723,000 in 2007. The number of workers in manufacturing remained roughly the same from 1970 (17.8 million workers) through 2000 (17.3 million workers). Since then,

however, this sector has experienced a steady decline in workers. In 2007 only 13.9 million people worked in manufacturing. (See Table 2.1.) The proportion of manufacturing jobs has fallen from 25.1% of all nonfarm jobs in 1970 to 10.1% in 2007.

In 2007 government provided the largest number of jobs in the service sector (22.2 million), followed closely by education and health services (18.3 million jobs) and professional and business services (18 million jobs). The smallest number of jobs in the service sector was provided by the information subsector (3 million jobs). Manufacturing still provided the most jobs in the goods-producing sector (13.9 million jobs), although the number of manufacturing jobs was shrinking while the number of construction jobs was rising. (See Table 2.1.)

In Employer Costs for Employee Compensation—December 2007 (March 12, 2008, http://www.bls.gov/news.release/pdf/ecec.pdf), the BLS reported that average wages in goods-producing industries in December 2007 were $20.62 per hour, and the average wages in service industries were $18.18 per hour. The difference is even more pronounced when factoring in the cost of benefits such as paid leave, insurance, and retirement. The average cost per hour worked to employers in goods-producing industries when taking benefits into account was $30.94; the average cost per hour to employers in service industries was $25.30.

Because average wages, including benefits provided, are higher in manufacturing than in services, some observers view the shift in employment from goods-producing to service-providing as a change from “good” to “bad” jobs. Meisenheimer, however, found that many service industries equal or exceed manufacturing and other industries on measures of job quality, while some service industries could be viewed as less desirable by these measures.

Meisenheimer stressed the importance of examining more than just average pay when assessing the quality of jobs in each industry. Within each industry, there are jobs at a variety of different quality levels. The quality of service-industry jobs is especially diverse, encompassing many of the “best” jobs in the economy along with a substantial share of the “worst.” Thus, employment shifts away from manufacturing and toward services can, but do not necessarily, signal deterioration in overall domestic job quality.

Movement of Work

Whereas a generation ago many of the goods sold in the United States had been produced by American workers, the labor market in the early twenty-first century presents a different picture. In an effort to maximize profits, many companies now “outsource” production (pay another company to manufacture something that its workers once made) or move work “offshore” (relocate the manufacture of an item from the United States to an overseas location where labor and material costs are cheaper).

According to Sharon P. Brown of the Bureau of Labor Statistics in “Mass Layoff Statistics Data in the United States and Domestic and Overseas Relocation” (December 2004, http://www.bls.gov/mls/mlsrelocation.pdf), 6,181 layoff events occurred during 2003, affecting approximately 1.2 million workers. Fifteen percent of these layoff events were permanent, due mainly to company restructuring. These closures affected 210,903 workers. The industries that were most affected were those involved in the manufacture of computer and electronic products, machinery, textiles, and clothing. In addition, overseas relocation of business affected 13,000 workers in manufacturing industries in 2003 (representing 9% of all layoffs). More than 40% of these relocations were to Mexico.

Two years later, in Extended Mass Layoffs in 2005 (September 2006, http://www.bls.gov/mls/mlsreport997.pdf), the Bureau of Labor Statistics reported that there were 277 mass layoff events involving movement of work resulting in the layoffs of 53,628 workers in 2005. These numbers represented a drop of about 25% from 2004, when there were 366 mass layoff events involving 73,217 workers. The location where the work was moved in 2005 was identified in 259 cases. Out-of-country moves accounted for about 35% of these 259 mass layoff events and resulted in the layoff of 12,030 workers. Two-thirds of the time the work had moved to either Mexico or China.

At-Home Work

Between 1960 and 1980 the number of Americans working at home steadily declined, largely reflecting a drop in the number of family farmers as many gave up farming in the face of dropping profitability. In addition, many professionals, such as doctors and lawyers, left their home offices and joined group practices or larger firms in office buildings. This trend was reversed by 1990, according to the U.S. Census Bureau (“Increase in At-Home Workers Reverses Earlier Trend,” March 1998, http://www.census.gov/prod/3/98pubs/cenbr982.pdf), which reported a 56% increase over 1980 (to 3.4 million) in the number of people who worked at home most of the time.

Data from the BLS in Work at Home in 2004 (September 22, 2005, http://www.bls.gov/news.release/pdf/homey.pdf) indicated that in 2004, 15.1% of employed workers worked at home at least once per week, up from 14.9% in 2001. (These figures are not comparable to the earlier Census figures, which counted only people who worked at home most of the time). Nearly half (49.3%) of these people were not paid for their work at home; 16.2% of them were paid. A third (33.7%) were self-employed and worked at home in a home-based business. More than 4.6 million Americans conducted a home-based business as their primary occupation and worked exclusively at home, according to the BLS.

In Work at Home in 2004, the BLS also reported that in May 2004 women (15.4%) were more likely than men (14.9%) to do work related to their primary employment at home each week. However, a larger percentage of all men who did work at home were self-employed (37.6% of men and 29.4% of women), while a larger percentage of female wage and salary workers did paid work at home (17.8% of women and 14.7% of men) and unpaid work at home (51.4% of women and 47.3% of men).

White people were more likely than any other group to work at home as part of their primary job, according to the BLS in Work at Home in 2004. Over 16% of white workers usually worked at home, compared with 12.7% of Asian workers, 7.9% of African-American workers, and 7.1% of Hispanic workers. This difference may be partly due to the fact that the more educated a worker was, the more likely he or she was to do work at home. African-American and Hispanic workers were less likely than whites or Asians in 2004 to have attained a bachelor's degree or higher.

The BLS also reported in Work at Home in 2004 that people in management, professional, and related occupations were more likely to work at home as part of their primary occupation than were people in other occupations. Nearly three out of ten (29.2%) people who worked in management, business, and financial operations occupations usually did work at home each week, and 27.4% of people in professional occupations did so. On the other hand, people working in service occupations (6.2%), sales and office occupations (12.2%), natural resources, construction, and maintenance occupations (7.9%), and production, transportation, and material moving occupations (2.7%) were much less likely to work at home as part of their primary employment.

WHEN AMERICANS WORK

Compared with other countries with advanced economies, workers in the United States have a long work year, due in part to a lack of legally mandated, employer-paid vacation time. Such paid vacation time is common in many countries in Europe. In 2006, according to the U.S. Department of Labor in A Chartbook of International Labor Comparisons: The Americas, Asia-Pacific, Europe (January 2008 http://www.dol.gov/asp/media/reports/chartbook/2008-01/chartbook.pdf), only South Koreans (2,305 hours per year) and Mexicans (1,883 hours per year) averaged more hours worked per year than Americans (1,804). These figures contrasted sharply with such European countries as the Netherlands (1,391 hours), Norway (1,407), France (1,564), and Germany (1,436). (See Figure 2.1.)

In 2007, as the BLS reported in Employment and Earnings (January 2008, http://www.bls.gov/cps/cpsaat23.pdf), 107.9 million Americans out of the total nonfarm laborer population of 140.3 million (76.9%) were working fulltime (defined as thirty-five hours or more), while the remaining 32.4 million workers (23.1%) were working fewer than thirty-five hours per workweek (defined as part-time). The average part- and full-time workweek in 2007 was 39.2 hours per week, while the average full-time employee worked 42.8 hours per week. (See Table 2.2.) In that year, according to the BLS in Employment and Earnings, 27.3% of all nonfarm workers spent 41 hours per week or more on the job, and 41.9% of agricultural workers labored more than 41 hours per week.

Men tended to work longer hours than women. In 2007 men averaged 41.7 hours per workweek, while women averaged 36.1 hours. Of persons who worked full-time, men averaged 44.1 hours per workweek, and women averaged 41 hours. (See Table 2.2.)

People in some occupations worked longer than people in others. For example, in 2007 transportation and material-moving workers labored an average of 40.6 hours per week; the average number of hours among those who usually worked full-time was 44 hours. Workers in management, business, and financial occupations also worked fairly long hours. They averaged 43.5 hours per week in 2007, and 45.3 hours if they usually worked full time. People in construction and extraction occupations, however, worked shorter hours. They averaged 40.2 hours per week, up to 41.5 hours if they usually worked full-time. (See Table 2.2.)

As reported by the BLS in American Time Use Survey—2006 Results (June 28, 2007, http://www.bls.gov/news.release/pdf/atus.pdf), the majority of full- and part-time employees (83.5%) worked on an average weekday in 2006. (See Table 2.3.) On those days, they worked an average of 7.99 hours. About a third of all full- and part-time employees (34.8%) worked on an average Saturday, Sunday, or holiday. Those who worked on these days tended to average shorter hours of work (5.43 hours). The more educated a worker, the more likely he or she was to work on weekends or holidays (38.9% of them did), reflecting the tendency of workers in high-responsibility positions to work longer hours and do work at home. In fact, 21.1% of employed persons in that year worked at home on an average

day, averaging 2.64 hours per day. While only 5.5% of employees without a high school diploma worked at home on an average day, 37% of those with a bachelor's degree or higher did. (See Table 2.4.)

Many employees are working longer hours by skipping or shortening their lunch breaks. The National Restaurant Association reported (in “What's for Lunch? A Survey of Full-Time Employees,” 2002) that 40.6% of the surveyed

workers reported they did not leave the office for a lunch break. Forty-five percent reported they had less time for lunch than they ever had. A frequently expressed motivation for staying on the job was a fear of being downsized.

An earlier study by BLS economists Philip L. Rones, Randy E. Ilg, and Jennifer M. Gardner (“Trends in the Hours of Work since the Mid-1970s” Monthly Labor Review, April 1997) attributed growth in the share of workers reporting very long workweeks to a shift in employment toward high-hour, increased responsibility occupations such as managers, professionals, and certain sales workers. Robert Whaples of Wake Forest University reported in “Hours of Work in U.S. History” (EH.Net, August 15, 2001, http://eh.net/encyclopedia/article/whaples.work.hours.us) that while hours of work fell over the course of the twentieth century, well-educated men and women, who theoretically are in higher-responsibility positions and paid by salary, not by the hour, are working longer hours than other workers.

There are some indications that as work hours decrease, the amount of time spent in leisure and recreation is increasing. The BLS reported in American Time Use Survey—2006 Results that people aged fifteen and older spent, on average, about 4.77 hours per weekday and 1.36 hours per weekend day and holiday on working and work-related activities in 2006. The amount of time spent on leisure approached the amount of time spent on work each weekday. The average American spent 4.54 hours per weekday on leisure and sports, including socializing, watching television, or participating in exercise or sports. Although about 56.2% of Americans aged fifteen and older did work-related activities each weekday, almost everyone (95.9%) took part in some kind of leisure or sports activity.

This discrepancy is partly due to the inclusion of students and retirees in these counts. (See Table 2.5.)

Survey of Workers Hours

Of the respondents to an August 2005 Gallup Poll, 45% reported that they worked between 35 and 44 hours per week; 30% worked between 45 and 59 hours per week; and 9% worked more than 60 hours each week (Joseph Carroll, “Workers Describe Jobs, Pay, and Hours,” September 13, 2005, http://www.gallup.com/poll/18499/Workers-Describe-Jobs-Pay-Hours.aspx). These numbers

had fluctuated somewhat over the previous fifteen years but had not changed significantly in a manner that indicated a decided trend except at the high end, where fewer workers were reporting that they worked 60 hours or more. In a poll conducted during July 1991, for example, 44% of workers said that their typical workweek was between 35 and 44 hours; 27% worked between 45 and 59 hours per week; and 13% worked more than 60 hours per week. In 1991 the median workweek (half of respondents said they worked more, and half said they worked less) was 43.4 hours and the average workweek was 40 hours. In 2005 the median workweek of those surveyed was 41.9 hours, and the average workweek was 40 hours.

As to the flexibility of their work schedule, respondents to an August 2007 Gallup Poll were generally satisfied. Sixty-eight percent of respondents indicated that they were completely satisfied with the flexibility of their hours. (See Figure 2.2.) Another 22% indicated they were at least somewhat satisfied; and only 9% were dissatisfied with the flexibility of their hours. The percentage of those who were completely satisfied had increased markedly from those surveyed in July 1991. At that time only 39% of respondents reported that they were completely satisfied with the flexibility of their work schedule.

Flexible Schedules

An increase in flexible work schedules was widespread across demographic groups, occupations, and industries in 2004, according to the BLS in Workers on Flexible and Shift Schedules in May 2004 (July 1, 2005, http://www.bls.gov/news.release/pdf/flex.pdf). In May 2004, 28.7% of white workers had flexible work schedules that included at-home work, compared with 19.7% of African-Americans and 18.4% of Hispanics.

The BLS also reported in Workers on Flexible and Shift Schedules in May 2004 that about 44.7% of executives, administrators, and managers, 52.4% of workers in computer and mathematical occupations, 47.5% of workers in life, physical, and social science occupations, and 38.1% of sales workers were able to vary their work hours. However, only 21.2% of those employed as service workers, 13.1% of workers in education, training, and library occupations, and 12.4% of production workers

had such flexibility. Among private-sector employees, the proportion of workers with flexible schedules was much higher in such service-producing industries as financial activities (37.7%) and professional and business services (37.6%) than in goods-producing industries (24%). In the public sector, flexible schedules were more common among federal and state government employees (28.8% and 28.4%, respectively) than workers in local government (13.7%), which includes public elementary and secondary schools.

Shift Schedules

According to 2004 BLS data in Workers on Flexible and Shift Schedules in May 2004, 84.6% of full-time wage and salary workers had regular daytime schedules; 14.8% worked on alternative schedules, including evening shifts, employer-arranged irregular schedules, night shifts, and rotating shifts. According to the BLS, 4.7% of those who worked alternative shifts worked evening shifts, 3.2% worked night shifts, 3.1% worked employer-arranged irregular schedules, and 2.5% worked rotating shifts.

As indicated by the May 2004 data, shift work was most common among workers in service-oriented occupations, such as food preparation and serving (40.4%) and protective services (50.6%; police, firefighters, and guards), and among those employed in production, transportation, and material moving occupations (26.2%). Shift work in 2004 tended to be lowest for managers and professionals (7.6%) and those in natural resources, construction, and maintenance occupations (7.5%).

Women (87%) were more likely than men (82.7%) to work regular daytime shifts in 2004, and men (16.7%) were more likely than women (12.4%) to work alternative shifts, such as evening or night shifts, according to the BLS research. African-American shift workers (20.8%) were

more likely to work an alternative shift than shift workers who were white (13.7%), Asian (15.7%), or Hispanic (16%).

Multiple Jobs

In 2007, 5.2% of workers aged sixteen and older held multiple jobs, according to the Bureau of Labor Statistics in Employment and Earnings. The proportion of women holding more than one job (5.6%) was higher than that of men (4.9%). Of women, those who were single (6.3%) and widowed, divorced, or separated (6.5%) were more likely than married women (5%) to have more than one job in 2005. Among men, however, those who were single (4.3%), or divorced, widowed, or separated (4.6%), were less likely than married men (5.3%) to have multiple jobs. (See Table 2.6.) This difference may have to do with the traditional view that upon marriage, men's primary responsibility is to take financial responsibility for the family, while women's primary responsibility is to do the work in the home.

Part-Time Work People work part-time for various reasons. The BLS reported in Employment and Earnings that in 2007, 4.4 million of the total 32.4 million part-time workers (13.6%) took part-time work due to economic conditions. The most common economic reasons cited by workers were slack work or business conditions (2.9 million workers, or 8.9% of all part-time workers) and the ability to find only part-time work (1.2 million workers, or 3.7% of all part-time workers). Most workers, however, cited noneconomic reasons. More than 6.2 million (19.2% of all part-time workers) worked part-time because they were in school or vocational training; 5.7 million (17.7% of all part-time workers) cited family or personal obligations, other than child-care; and 2.2 million workers (6.8% of all part-time workers) said that retirement or a limit on earnings required by social security led them to work part time. Other noneconomic reasons cited were child-care problems and health problems. (See Table 2.7.)

PRODUCTIVITY

Productivity, measured in output per worker hour, increased every year between 1998 and 2007, according to the Bureau of Labor Statistics in Productivity and Costs (February 6, 2008, http://www.bls.gov/news.release/archives/prod2_02062008.pdf). In 2007 productivity had increased 1.6% over the previous year. (See Table 2.8.) Productivity growth had reached a high in 2002 of 4.1% growth over the previous year. It hit a low point of growth in 2006, when it had grown only 1% over the previous year. Changes in productivity do not reflect an increase in labor per hour, however. Jerome A. Mark of the BLS explained in “Problems Encountered in Measuring Single and Multifactor Productivity” (Monthly Labor Review, December 1986, http://www.bls.gov/opub/mlr/1986/12/art1exc.htm) that these changes reflect the interrelationship of factors such as technological changes, capital investment, utilization of capacity, economies of scale, new ways of organizing production, changes in management practices, as well as changes in efforts of the workforce.

Perceived

In fact, some measures show that workers are spending less time actually working while at work. The widespread use of the Internet and e-mail at work provides employees with ample opportunities to waste time on the job. An August 2007 Gallup Poll reported by Joseph Carroll (September 6, 2007,http://www.gallup.com/poll/28618/US-Workers-Say-They-Waste-About-Hour-Work-Each-Day.aspx) found that the average American worker reported wasting about an hour at work each day. Only one in four (26%) said they waste no time at work each day; another quarter (25%) said they waste less than an hour. A slightly larger proportion (29%) said they waste an hour each day, 11% admitted to wasting two hours each day, 3% said they waste three hours each day, and 4% confessed that they waste at least half their workday, four hours or more.

The same workers stated that their coworkers, on average, waste more time than they do—about an hour and a half—each day. Only 31% of workers surveyed said that their coworkers waste no time or less than an hour each day. Aquarter (25%) reported their coworkers waste an hour, one in five (20%) believe their coworkers waste two hours, and 12% said their coworkers waste three hours or more at work each day.

WORK STOPPAGES

Following the terrorist attacks on New York City and Washington, D.C., on September 11, 2001, the BLS reported significant disruptions to local economies and an increase in layoffs, particularly in the last quarter of that year. The rate of layoffs tapered off by the first quarter of 2002 to lower than 2001 levels. This trend continued through the third quarter of 2006, although layoffs were up slightly in 2007. In that year, there were a total of 5,170 layoff events with a total of 931,053 “separations” (workers who were laid off), up from 4,885 layoff events and 935,969 separations the year before. However, in 2006, there were a higher number of initial claims for unemployment insurance than in the following year (951,102 in 2006 and 865,227 in 2007). (See Table 2.9.)

Displaced Workers

Displaced workers are defined as people twenty years and older who lost or left jobs because their plant or company closed or moved, because there was insufficient work for them to do, or because their position or shift was abolished. According to the BLS in Worker Displacement, 2003–2005 (August 17, 2006, http://www.bls.gov/news.release/pdf/disp.pdf), 3.8 million workers aged twenty and over had been displaced between January 2003 and December 2005. Of these, 69.9% had found other employment, 13.4% had remained unemployed, and 16.7% had left the labor force (leaving the workforce means that a worker is no longer actively seeking work or receiving unemployment benefits). These figures differed by gender. Women were less likely to be employed (65.6%) than men (73.5%), were less likely to be unemployed (13.1%) than men (13.6%), and more likely to have left the labor force (21.3%) than men (12.9%). (See Table 2.10.)

Manufacturing, with 1.1 million worker displacements, accounted for the largest proportion of displacements in January 2004 (28.4%), as reported in Worker Displacement, 2003–2005. Workers in some occupations were more likely to have found work than in others. Although 76.9% of people in installation, maintenance, and repair occupations and 76.8% of people in professional occupations had found new work, only 59.4% of people in production occupations had found new work. These figures represent the general decline of the manufacturing sector and the rise of certain service occupations, such as those in management and the professions.