TIP Strategies is a privately held Austin-based economic development consulting firm committed to providing quality solutions for public and private‑sector clients.
This blog is dedicated to exploring new data and trends in economic development.
We have presented the following chart to clients on multiple occasions to demonstrate the shifting prominence of different sectors in the US economy (in terms of employment) over time.
From our perspective, one of the most significant trends visible here is the decline of manufacturing relative to other industries. Since 1970, total manufacturing employment has fallen from nearly 18 million to just over 11 million jobs. At the same time, health services, along with professional and business services, have emerged from relatively small employment sectors to major drivers.
While the chart does tell a story about the relative influence of each sector in terms of employment, the employment numbers are not contextualized in terms of total U.S. population. In particular, questions about the steady increase in government employment prompted us to revisit the visual in order to adjust for the growth of the size of the U.S. economy overall to create a more nuanced view of how each sector has been represented in the U.S. economy over time.
The above chart provides greater context for the employment changes of these same industries by comparing their share of all jobs in the U.S. In this picture, the decline in manufacturing employment is even steeper, dropping from 26% of all jobs to just 9%. Moreover, the rise in government employment from the previous chart is seen more clearly as a function of the overall growth of the nation’s economy. In other words, government’s share of employment has remained relatively constant over the last 40 years.
Like the first chart, the gradual yet steady decline of manufacturing since the 1970s is evident. Professional and business services and health services also show an upward trajectory, increasing their relative shares of the nation’s total gross domestic product (GDP).
The most striking difference in this data set from the previous employment charts is financial activities. If employment was the only indicator used to judge this sector’s importance, the viewer may determine that financial activities is not a major force in the overall economy. On the contrary, financial activities has dramatically increased its share of total GDP and now comprises the single largest share of economic activity in the U.S.