Labor Market Trends
Before industrialization, agriculture dominated employment, there were no labor markets, and only subsistence theories appeared to be necessary to explain variations in labor income. With the coming of the Industrial Revolution, however, more complex labor markets emerged, with diverse and dynamic job patterns and employment requirements.
Before examining the methods by which labor markets are analyzed in general (Chapter 5) or the forces that determine both the supply of (Chapter 6) and the demand for labor (Chapter 7), it is necessary to outline prevailing U.S. labor market trends as we enter the last decade of the 20th century.
Since the end of the 1950 s, the labor force of the United States has sustained a period of rapid employment growth. From 1959 through 1986, the U.S. economy has generated over 43 million new jobs. This phenomenon of long-term employment growth, however, has not been uniformly spread across the various sectors of the economy (see Table 4-1). Indeed, some sectors, like agriculture, have experienced absolute declines over this entire period. Other industries, such as mining and manufacturing, have had their ups and downs. Some, like government, have had substantial growth for part of the period but relatively little in more recent years. (In fact, almost all of the aggregate growth in the public sector has come at the state and local level, with federal government employment remaining constant over virtually this entire period.) Still other service sectors -- such as wholesale and retail trade, personal services, and finance, insurance, and real estate -- sustained steady growth over these years.
The single most important observation from Table 4-1, however, is that since the end of World War II there has been a major compositional change in the U.S. industrial employment patterns. In the 19th century, agriculture was the country's major employer, and over the first half of the 20th century it was manufacturing -- both of which were goods-producing industries (i.e., they produced tangible outputs). But over the latter half of the 20th century there has been a perceptible shift in