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Labor
for Historical Statistics of the United States,
Millennial Edition
Susan B. Carter
University of California Project on the Historical Statistics of the United States
Center for Social and Economic Policy
Policy Studies Institute
University of California, Riverside
September, 2003
Carter is Professor of Economics, University of California, Riverside.
Table and figure references in angle brackets (< >) refer to data tables that will appear in a number of
different chapters in Historical Statistics of the United States, Millennial Edition. The format was devised,
in collaboration with Cambridge University Press, to meet specialized, technical needs and to facilitate the
transmission of over 100,000 files from the Historical Statistics editorial office in the Center of Social and
Economic Policy at UC Riverside to Cambridge University Press. The format was not optimized for the
general user.
I would like to thank Monty Hindman, Matthew Sobek, Richard Sutch, and Gavin Wright for helpful
comments on an early draft. The National Science Foundation and the Center for Social and Economic
Policy at UC Riverside provided financial assistance.
Suggested Citation: Susan B. Carter. "Labor.” In Susan B. Carter, Scott S. Gartner, Michael Haines, Alan
Olmstead, Richard Sutch, and Gavin Wright, eds., Historical Statistics of the United States, Millennial
Edition. New York: Cambridge University Press, forthcoming 2004.
JEL Classification Codes: J10, J20, J24, N31, N32.
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he annual labour of every nation is the fund which originally supplies it with all the necessaries and
conveniences of life,… (whose quantity) must in every nation be regulated by two different
circumstances; first, by the skill, dexterity, and judgment with which its labour is generally applied;
and, secondly, by the proportion between the number of those who are employed in useful labour, and that
of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular
nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon
those two circumstances. [Adam Smith. The Wealth of Nations 1776, p. 1.]
T
Writing in the American revolutionary war year, 1776, Adam Smith identified labor as the key for understanding
international differences in the standard of living and quality of life. For earlier thinkers the “wealth of nations” was
their stock of gold and other precious metals. With these they could purchase implements of military power and pay
the salary of a standing army. Such resources not only secured the nation’s own stock of wealth, but could be used
to plunder the wealth of others.
Smith’s insight was to recognize that the true “wealth of nations” is the productive capacity of the population.
While Smith based his analysis on a close reading of the historical development of European nations, perhaps the
best illustration of his principles was about to unfold with the development of the American economy.
In this broad sense, then, Labor is the subject of nearly every chapter of Historical Statistics of the United
States. It also commands an enormous literature of its own. For recent overviews, written from the point of view of
quantitatively-oriented economic historians, see Galenson (1996) for the Colonial era, Margo (2000a) for the
nineteenth century, and Goldin (2000) for the twentieth century.
The paragraphs that follow are meant to direct readers to material in other chapters of Historical Statistics
that are relevant to understanding the development of Labor in the American economy. I use the structure outlined
by Smith as an organizational device.
A. Proportion Employed in Useful Labor
For narrative purposes let us begin with Smith’s second “circumstance,” the proportion of the population
employed in “useful labour.” As Smith argues, this proportion is an important determinant of economic well-being.
Other things equal, high employment rates mean high levels of income per capita. Nations in which there are few
dependents have higher levels of income per capita than nations which support large numbers of young, old, or idle.
In addition, because labor productivity tends to be higher in the market than in the nonmarket sector, the transfer of
labor out of the household and into the market increases total output. This would be true even if official labor force
statistics were to include the output of the household sector, which typically they do not. If output in the household
sector is ignored, the effect of a shift of labor to the market sector is especially important (See Folbre and Wagman,
1993; Wagman and Folbre, 1996; and <labor.force.essay>).
One measure of the proportion of the population employed in useful labour is the labor force to population
ratio. This is not a perfect measure of Smith’s concept since it excludes non-market labor and includes work that
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some might not deem “useful.” Moreover, it makes no adjustment for changes in hours. For a discussion of change
in hours of work per worker over time see <Sundstrom.essay>.
1
The statistical record reveals a high and growing labor force to population ratio in America for most of the last two
centuries (see, for example, tables <SBC.A.2A>, <SBC.A.11>, and <SBC.W.1> to <SBC.W.6>).
These estimates put the
employment ratio at over 35 percent in 1800; by the year 2000 it had grown to approximately 51 percent. Both of
these levels are high by international standards, especially considering that -- except in the case of slaves -- relatively
few young children were or are engaged in labor in America. The labor force to population ratio fell only during the
period 1929 through 1966. The decline was the result of markedly reduced immigration resulting from restrictive
legislation, the onset of the Great Depression, and the post-World War II Baby Boom.
Part of the explanation for the high and growing labor force to population ratio that characterized much of
American history is demographic. While American fertility was extremely high during the eighteenth century, it began
to fall during the early years of the nineteenth. This more or less continuous fall, interrupted only by the post-World
War II Baby Boom, reduced the dependency ratio, that is, it reduced the fraction of the population that is either too
young or too old to work. Measured as the number of persons “young” (0 to 14 years) and “old” (65 years of age and
older) divided by the number of persons in the middle working ages (15 to 64 years) and multiplied by 100, the U.S.
dependency ratio was only 37.1 in 1850 when it is first reliably possible to make this calculation; by 1990 it had fallen
to 28.6 (<Vital Statistics>). By contrast, many developing countries at the turn of the twenty-first century experience
dependency ratios in excess of 75; with some as high as 100 (U.S. Census Bureau, 2003).
The effects of the early fertility decline were reinforced by a heavy influx of immigrants throughout much of
the last two centuries. Immigrants tend to arrive during their young working ages. This means that immigration
increases the population in the 15 to 64 year age group relative to those who are young and old (compare <bcs.d.2>
with <mrh.a.12a>). Moreover, because a major reason for immigrating in the first place is to obtain employment,
immigrants also tend to have high labor force participation rates relative to the native-born population of the same
age and gender (see <bcs.b.14>).
The long-term secular increase in women’s labor force participation reinforced the positive demographic
forces. Women’s participation rates are given in tables <SBC.W.4>, <SBC.A.7> and <SBC.A.8>. They show a more
than three-fold increase in the proportion of the prime age adult female population engaged in the labor force
since1800. Women’s labor force participation evolved from a relatively brief interlude between school-leaving and
marriage into a relatively permanent career attachment across the lifecycle, including, increasingly, mothers of young
children. This important development is discussed more fully in the labor force participation section below.
1
Abramovitz and David estimate that hours worked per capita rose over the period 1800 to 1890, fell from 1890
through 1966, and then rose over the period 1966 through 1989 (Abramovitz and David 2000, Table 1.3, p. 14).
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The increasing labor force participation of women more than offset three other developments that exerted
downward pressure on the economy-wide labor force participation rate. These were the reduction in the labor of
black workers following emancipation, as their participation rates adjusted to the standards of free rather than slave
labor; the reduction in labor force participation among young males as schooling levels advanced; and the marked
reduction in the labor force participation of older males as voluntary retirement became the American norm. These
participation rates are shown in tables <sbc.a.5> and <sbc.a.6> and discussed in greater detail in the labor force
participation section below.
B. “Skill, Dexterity, and Judgment”
Even more important than the labor force to population ratio, in Smith’s view, was the “skill, dexterity, and
judgment” possessed by those who work. To such factors Smith credited the “greatest improvements in the
productive powers of Labour.” Skill, dexterity and judgment are developed through three interrelated but distinct
processes: division of labor; investments in physical and human capital; and invention, innovation, and diffusion of
new technologies and organizational structures.
B.1 Division of Labor
The division of labor refers to specialization in production and the exchange of goods and services.
Specialization and exchange can take place at a variety of levels. Largely self-sufficient agriculturalists may produce
extra farm products for exchange for manufactured items or for services produced on neighboring farms, in a nearby
town, or in a distant land. An example is the Samuel Swayne household of Chester County, Pennsylvania in the
latter part of the eighteenth century described by Marc Egnal (1996, pp. 7-8). The Swaynes operated a 91-acre farm
they received at their marriage in 1756 and which they supplemented with an additional 35 acres purchased16 years
later. Most of the labor of the Swayne household was reserved for the production of the goods and services for its
own consumption but some was directed toward producing goods for exchange. Swayne made saddletrees (leather
frames that served as foundations for saddles) and his wife churned butter and made cheese for sale in the local
market. They produced wheat, flax, Indian corn, flaxseed, beef, rye, and pork for sale outside the community. The
Swaynes used the proceeds from these sales to purchase goods such as books, fabric, sugar, tea, and wine.
Another form of specialization and division of labor involves localities or regions. One well-known example
is the “triangular trade” that developed in the eighteenth century in which New England produced rum for export to
Africa, Africa produced slave for export to the Caribbean, and the Caribbean exported sugar to New England, where
much of it was made into rum. (For statistics regarding the number and tonnage of vessels clearing Boston by origin
and destination see <jjm.21a>.) Another example is the rapid expansion of regional specialization and interregional
trade after 1815 with the “West” (what we would today call the Midwest) specializing in grains, the South cotton and
tobacco, and the Northeast manufactured products (Atack and Passell, 1994, pp. 160-164).
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Yet a third form of the division of labor involves the specialization among and within occupations, industries,
and firms. One example that will be familiar to many is the evolution of the one-room rural school house in which a
single teacher taught all grades and subjects into graded classrooms with specialized teachers for individual grades
and subjects. A related development was the creation of separate institutions for the elementary, middle, secondary,
and post-secondary educational levels.
The division of labor stimulates labor productivity and wages in a number of ways. By specializing in each
its area of comparative advantage labor concentrates in the activity in which its relative productivity is highest.
Repetition develops workers’ skills so they become more proficient. Focus on a single activity eliminates lost time in
moving from one to another. Close familiarity with a specific task generates new ideas for enhancing productivity;
specialization provides an incentive to invest in skills, tools, machinery and structures to make the work more
accurate, faster, and less physically demanding.
Given its abundant advantages, why don’t all societies adopt the division of labor? The answer is contained
in Smith’s oft-quoted remark, “The division of labor is limited by the extent of the market.” In other words, in order for
specialization to be profitable, one needs trading partners. Had Robinson Caruso specialized, he would not have
survived his stay on his deserted island. Caruso was isolated from the large populations with their high level of
wealth that would have made specialization both possible and attractive. If, instead, Caruso had washed ashore in
the newly-formed United States of America in 1776 he would have found an extensive market and one which was
uniquely well-positioned to grow larger still.
Because of its high fertility, low mortality, and extensive immigration, the U.S. had a large and growing
population. By 1820 U.S. population was almost half the size of that of the United Kingdom (U.K.); by 1870 U.S.
population had overtaken that of the U.K.; and by the year 2000 the U.S. was the third most populace country in the
world after only China and India (Maddison, 1995, p. 106 and U.S. Census Bureau, 2003).
This large and growing population was also becoming wealthier. Robert Gallman estimates that the U.S.
economy in 1774 was already approximately a third the size of Great Britain’s, despite the fact that the U.S.
population was proportionately smaller and that the economy had not yet embarked upon the industrial revolution.
Between 1774 and 1909 the U.S. economy grew about 175-fold, or at an average annual rate of 3.9 percent <gdp
chapter>. This compares with an estimated average annual growth rate for the British economy over the same
period of about 2.2 percent. Thus by 1909, the U.S. economy was almost two-and-a-half times the size of Great
Britain’s (Gallman, 2000, pp. 2-5).
Low barriers to trade facilitate interactions among labor market participants, thereby further promoting the
division of labor. In this light, the Constitutional prohibition on tariffs and other impediments that might restrict
interstate commerce was an important stimulus to the division of labor. This stimulus was reinforced by early
governmental efforts at the federal, state, and local levels to actively promote internal trade by surveying the land,
dredging rivers and streams, building turnpikes and canals, and offering inducements to private companies to
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undertake transportation improvements. For all these reasons, the United States was in the forefront of a worldwide
“Transportation Revolution” which occurred in the early nineteenth century and which measurably increased the
speed and reduced the cost of moving goods and people from place to place. (For details see
<transportation.essay> and <gw.a.7>).
Overall, then, by virtue of its rapidly growing population and wealth and its falling barriers to internal trade,
the United States domestic market grew to become the world’s largest and wealthiest by the end of the nineteenth
century and it maintained that position through the twentieth century. Other countries have taken advantage of the
division of labor by responding to international markets, and indeed the United States has pursued this strategy as
well. But because of the common language and culture, nations with large internal markets have a particular
advantage in capturing this “Smithian” source of economic growth.
The developing division of labor is perhaps most easily visible in the occupation and industry statistics
presented in section <sbc.o> and discussed in <sobek.essay>. Since these statistics refer to the nation as a whole,
however, they necessarily omit labor specialization at the regional and local level.
Like most other economies of the time, eighteenth-century America was largely agricultural and, unlike
England, it had not yet commenced its industrial revolution. Nonetheless, as early as 1800 more than a quarter of
the labor force was employed outside this primary sector, with the two largest categories of non-agricultural
employment at the time being ocean transportation and domestic service. See <sbc.s.1>. Over the nineteenth and
twentieth centuries the agricultural share of the labor force declined further as labor moved into more productive
occupations. By 1890 the agricultural share of the labor force was less than 50 percent of the total; by 1990 it was
just a little more than 1.5 percent (see <sbc.o.1>). Only during the Great Depression of the 1930s when agriculture
provided employment for those who could not find work in other sectors, did agricultural employment experience a
respite from the relenting downward trend in its share of employment.
The occupations that outpaced agriculture were enormously diverse and constantly changing. During the
nineteenth century manufacturing employment grew most spectacularly in both absolute and relative terms. In 1810,
manufacturing accounted for only 3.2 percent of the labor force; by 1870 it claimed between 19 to 24 percent of the
labor force and, at its peak in 1950 it claimed 34 percent of the total (<sbc.s.1> and <sbc.o.1>).
Clerical, sales, and service occupations outside of domestic work grew rapidly in the late-nineteenth and
early twentieth centuries. In 1870, the first year in which the census of occupations included the entire labor force,
clerical and sales and service occupations (excluding domestic work) accounted for only 3.4 and 1.4 percent of the
labor force, respectively. By 1920 their respective shares were 13.1 and 4.4 percent; and by 1990 these had
advanced to 25.6 and 12.8 (<sbc.o.1>). These important shifts in the occupational distribution of the labor force were
the source of both improvements in income per capita and also the cause and consequence of the entry of women
into the labor force. See <sobek.essay> for more detail on the occupational and industrial distribution and its change
over time. See <sundstrom.essay> for the changing character of the size of firms in which workers were employed.
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The <wright_productivity.essay> describes the pace and pattern of labor productivity change over time while the
<margo.essay> describes the pattern of wages.
B.2 Physical Capital
Output per worker may advance as a result of the development of the division of labor alone. Indeed,
Sokoloff (1986) ascribes productivity advances in early-nineteenth-century American textile manufacturing almost
entirely to this source. At the same time, expansion of the physical capital stock – machinery, factories, livestock,
and land – can enhance labor productivity regardless of the division of labor. A farmer with a horse-drawn plow can
cultivate more acres in a day than one who pushes the plow by hand.
Given the obvious advantages of employing physical capital in the production process, why don’t all
societies make use of it? The explanation has to do with relative prices and the legal status of labor. If labor is
plentiful, inexpensive, and “free”, then it pays to organize production using hand techniques even if machinery is
readily available; only if labor is scarce, expensive, and “free” does it pay to invest in machinery. “Free” labor in this
context means that the worker retains legal control over the disposition of his or her own labor and that they cannot
be compelled to complete a labor agreement by threat of punishment. Since the beginning of the nineteenth century,
and with the important exception of the American South that is discussed in detail below, American labor is and has
been scarce, expensive, and “free”; it is for these reasons that capital-intensive techniques have been and continue
to be a prominent feature of the American economy.
2
The origins of labor scarcity date to the earliest European settlements in North America. The arrival of
Europeans decimated the indigenous population through disease and through calculated political and military
strategies, leaving the continent sparsely populated (<See Snipp.essay>). European settlers and their offspring then
enjoyed a relative abundance of land, game, fish, timber, and minerals. Since the objective of the colonists in British
North America was settlement, they adopted a legal environment that encouraged small land holdings; democratic
institutions that encouraged broad-based input into local, state, and national decision-making; and a political system
of checks and balances designed to limit the exercise of power by any single group.
As a result of these institutions, independent family-based enterprise became the norm. The easy
availability of self- or family-employment meant that hired laborers could be had only at high wages. Thus those who
sought to expand output beyond what could be produced by the family looked for strategies that might mitigate the
impact of high wages on their profitability. To this end, they actively recruited foreign workers; encouraged
immigration; and pioneered ways to substitute capital, raw materials, and land for labor. Gallman (2000) and
Abramovitz and David (2000) have made estimates of average annual growth rates of capital relative to the
population and to the labor force for specified sub-periods during the nineteenth and twentieth centuries. Growth in
capital per worker was a particularly important source of economic growth in the nineteenth century. Abramovitz and
2
For a fuller discussion of “free” labor see the section on labor market institutions below.
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David (2000, Table 1.6, p. 23) estimate that this so-called capital deepening accounted for almost half (49 percent) of
the total growth in output per worker growth during the period 1800-1855 and 65 percent of a much more rapid rate of
output per worker growth during the period 1855-1890.
The high and growing capital-labor ratios were effected through a variety of technological and organizational
responses, three of which are particularly worthy of mention. These appeared first in America and were progenitors
of developments that would later be emulated world-wide.
First was the “American System of Manufactures,” perhaps best exemplified by rifle production in the Enfield
Armory in Connecticut. Prior to the adoption of the American System, rifles were hand-crafted to the specifications of
individual customers by an artisan who worked with general-purpose tools such as files, hammers and tongs. With to
the American System, a large volume of standardized rifles were manufactured by a large number of highly
specialized workers operating highly specialized single-purpose machines and making heavy use of capital and raw
materials. Early characterizations of the American System emphasize the importance of interchangeable parts,
although more recent research suggests that interchangeable parts were more the exception than the rule before
1870. Before then, quality was not high enough to make such interchangeability a practical reality in most industries
(Hounshell, 1984). The American System as developed in small arms production was soon adopted in the
production of other manufactured goods. Thus the modern factory production techniques that today are employed
world-wide had their origin in the high-wage environment of nineteenth-century America. See
<manufactures.essay>.
Second organizational response was the early development of the machine-tool industry, that is, an industry
specialized in the manufacture of machines for use in other industrial processes. The viability of such an industry
depended crucially upon an extensive domestic market of final manufactured goods and on the capital-intensive
nature of a wide range of industrial enterprises throughout the economy. The search for mineral inputs for this
industry, such as iron and coal, prompted mineral exploration efforts that had far-reaching consequences for the
economy. Thus the mineral-rich products that fueled America’s international ascendancy and, by extension, the
mineral discoveries that revolutionized economies around the world, also had their origin in the high wage
environment of nineteenth-century America (Rosenberg, 1963 and <Wright.natural resources essay>.
The third factor of significance was the early growth of large-scale corporations. These made their
appearance in the American railroad and telegraph industries during the mid-nineteenth centuries. The railroad and
telegraph companies expanded rapidly over the nineteenth century in response to an unprecedented increase in the
demand for transportation and communication services. This demand for transportation services, in turn, was
stimulated by the vast geographic extent of the nation, its large domestic market, and the strong regional variation of
its resource base. Technological breakthroughs in the 1820s and 1830s gave an edge to railroads over water and
road transportation systems in much of the country and the railroad industry expanded rapidly. Annual statistics on
the miles of railroad track laid between 1830 and 1925 are shown in <lpc.30>. What these statistics don’t show is the
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growing size of the corporations that owned these rail systems. The railroad industry was characterized by returns to
scale, that is, large companies were more profitable than small ones; as a consequence, the industry became highly
concentrated in the hands of a small number of rail service providers. The large size of these rail companies
presented unprecedented challenges to labor management. As business historian Alfred D. Chandler, Jr.,
emphasized:
They were the first to require a large number of full-time managers to coordinate, control, and evaluate the
activities of a number of widely scattered operating units. For this reason, they provided the most relevant
administrative models for enterprises in the production and distribution of goods and services when such
enterprises began to build, on the basis of the new transportation and communication network, their own
geographically extended, multiunit business empires (Chandler, 1977, p. 79).
Thus the unprecedented economic and geographic expansion of the American product market laid the basis for the
innovation of labor management systems and internal labor markets. This innovation revolutionized labor systems in
the United States and throughout the world during the twentieth century (Jacoby, 1985). For statistics on
manufacturing employees by size of employing unit see (<sbc.d.30>).
B.3 Human Capital
“Human capital” refers to those productive human skills that are developed through investments in
education, apprenticeship, and other formal and informal on-the-job training. Human capital can advance productivity
directly, as it does when it leads to faster or more accurate completion of some given task. Human capital can also
advance productivity indirectly as it does when it enables workers to identify and seize new opportunities such as
adopting a new type of seed or a different method of cultivation, or to switch to a more advantageous venue for
example, abandoning the thin and rocky soils of New England for the fertile lands of the Midwest, or quitting
agriculture altogether to take up more profitable employment in industry. Human capital also stimulates invention. In
the nineteenth century it was human capital in the form of the work experience of thousands of individual farmers,
mechanics, and craftsmen that generated the stream of inventions that transformed American agriculture and
industry. In the early twentieth century the locus of American invention and innovation shifted to industrial research
laboratories and research universities. In this case the connection between human capital in the form of formal
schooling and invention is especially clear (<science&technology.essay>).
In the American context formal schooling is the form of human capital that has received the greatest
attention. One reason is that from as early as the mid-nineteenth century until recently, America led the world in
formal educational attainment. Claudia Goldin describes this American ascendancy in terms of three transformations
<goldin.essay>. The first of these was achieved about 1850 when the majority of free American youth completed the
eighth grade. The second was achieved about 1940 when the majority of youth completed high school. The third is
still ongoing at the beginning of the twenty-first century as a growing fraction of youth complete four years of college.
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Historical statistics on the educational attainment of the population by sex and race since 1940 are shown in
<cg.c.1>. Labor force participation rates by educational attainment are shown in <sbc.a.17>.
Not only did America lead the world in terms of educational attainment for much of the nineteenth and
twentieth centuries, but the rest of the world gradually adopted the American educational model – what Goldin terms
the “American template.” This template reflected the American political philosophy which Goldin characterizes as
“egalitarianism” and which consisted of several elements: “public funding, openness, gender neutrality, local (and
also state) control, separation of church and state, and an academic curriculum”(Goldin, 2001, p. 265, emphasis
added). Americans insisted upon an academic rather than a vocational curriculum because the academic but not the
vocational curriculum provided general skills. General skills are those that are useful in a variety of circumstances.
General skills “…survive transport across firms, industries, occupations, and geography …” (Goldin, 2001, p. 275).
Americans insisted upon these general, portable skills because of the dynamism of the American economy; in
America, the locus of opportunity shifted rapidly across industries, occupations, technologies, and locales.
If human capital development in the form of formal schooling is so attractive, why didn’t all societies
embraced it? Part of the answer has to do with demand-side factors. In a stagnant economy experiencing little
change in its technology, industrial organization, composition of its output, and in the geographic location of its
production, there is no payoff to training that goes beyond the acquisition of the current stock of skills; only dynamic
economies reward those who can craft solutions to new problems and seize new opportunities. Thus the principle
demand side factor explaining the growth of formal schooling in America was and is the dynamic economic
environment. Some milestones in this dynamic development with special implications for labor include the
development of the American System of Manufactures which reduced the demand for skilled artisans, growth of the
machine tool industry which stimulated demand for engineering skills, development of large-scale industries such as
the railroad and the telegraph which stimulated demand for managerial and organizational skills to run these large-
scale organizations, and the advent of “knowledge-based progress” in the twentieth century.
Some evidence pointing to the power of these demand-side factors are the estimated rates of return to
formal schooling. These appear to have been higher than returns to other forms of human capital investment
perhaps as early as the 1820s. It also seems probable that rates of return to formal schooling in America were
higher than in other parts of the world at that early date. Robert Margo (2000b and <margo.essay>) reports that
while wages of artisans fell relative to those of unskilled labor during the early period of industrialization, those of
educated labor rose. Rates of return to formal education have fallen during only two periods of American history.
One was the period of the 1930s, 1940s, and 1950s -- the era that Goldin and Margo (1992) describe as the “Great
Compression” when the Great Depression, then World War II, and finally the rapid expansion of manufacturing in
response to a dramatic growth in world demand for American products in the immediate post-World War II period
favored less educated workers. The second period of decline in the relative wage advantage of highly-educated
workers was during the 1970s when a downturn in the economy coincided with the labor force entry of the large,
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highly-educated Baby Boom generation. (On the business cycle see <business_cycle.essay>. On the
characteristics of the Baby Boom cohort as compared with those of other cohorts see <cohorts.essay>. For evidence
on relative earnings by skill category over time see <sbc.b.6>, <sbc.b.9>, <sbc.b.19>, <sbc.fig.07>; for income at
different times according to years of education see <cg.f.1> and <cg.f.2>.
The other reason formal schooling developed as rapidly and extensively as it did in America has to do with
supply-side factors. Human capital development requires wealth. There is the cost of instruction itself – the wages
of teachers and administrators, the physical plant, and books and supplies. Even more expensive in general, is the
implicit cost of the student’s time in school. Those engaged in on-the-job training reduce their production. Those
engaged in formal schooling may have to suspend production and forgo the associated income altogether. In order
for human capital accumulation to take place, a society or individual must be wealthy enough to absorb these
expenses. We have already documented the high and growing wealth in the American economy.
A related issue is the relationship between adults and youth. Human capital is most beneficial to the
individual and to society when it is acquired at young ages. This is because young people have more years in which
to reap the benefits in terms of higher productivity and wages. But young people generally find it difficult or
impossible to finance their own human capital investments since their earnings capabilities are typically low and they
have not had time to accumulate assets. For these reasons, youth are generally dependent for their human capital
development upon the decisions and resources of their elders. Not all elders are willing to provide schooling for
youth even if they are able. Schooling expands youths’ opportunities; youth may take up these opportunities to
distance themselves from their parents. In the past throughout the world and in many parts of the world even today,
parents rely on their grown children to provide economic security for their old age. Where they do so, they are
reluctant to educate their children, especially their daughters.
Americans largely abandoned their reliance on grown children for old-age security early in the nineteenth
century. After this transition, planned, self-financed retirement became the norm. Once accumulated savings
secured old age, children became precious. They were sent to school and little work was expected of them.
Daughters as well as sons enjoyed these benefits (Fishlow, 1966; Lindert, 1978; Kaestle and Vinovskis, 1980; Tyack
and Hansot, 1990; and Carter, Ransom, and Sutch, 2003). School enrollment rates were high and boys and girls
attended in relatively equal proportions. See <cg.a.15> and <cg.a.11>. An unintended consequence of educating
daughters as well as sons was the creation of a large pool of inexpensive female teachers. The schools’ willingness
to hire female teachers and female teachers’ willingness to teach for low wages were important ingredients in
facilitating the on-going expansion of the American educational system (Carter, 1986; Perlman and Margo, 2001).
A third supply-side factor was the system of local control. This allowed communities to adjust school
structure, curriculum, and financing in response to local conditions. Local control meant that schools reflected local
needs and therefore garnered public support. See <goldin.essay>.
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B.4 Improvements in Technology and Industrial Organization
Technological improvements permit more output from a given set of inputs. Almost always they boost labor
productivity. A familiar example is Eli Whitney’s cotton gin (1793) which replaced hand methods of removing cotton
seeds from the bolls. Contemporary observers testified that the gin would “separate more by one hand in a day than
formerly in the space of months” (Green, 1956, p. 49). Organizational changes can improve output in the same way.
A famous early organizational innovation is the hog-slaughtering “disassembly” lines established first in Cincinnati
and then in Chicago in the early 1870s. Live hogs were herded into the upper floor of slaughter houses and moved
by gravity and overhead conveyer devices through a sequence of consecutive steps involving slaughtering,
butchering, and dressing. The meat for wholesale and retail distribution emerged at the far end of the slaughter
house without once retracing its steps (Giedion, 1948). Such sequential ordering of production was not possible in
early factories that relied on water or steam power for their energy. Instead, the power-intensive elements of
production were located near the power source and other intervening operations performed elsewhere in the building.
Because consecutive steps in the production process were performed at different places around the plant, a large
number of workers had to be employed in simply moving partially finished goods from one part of the factory to
another. The introduction of electrical power into factories in the 1890s and its widespread adoption in the 1920s
allowed for the rationalization of the workflow. Because electricity could be distributed as easily to one as to another
point in the factory, production was reorganized to manage the flow of production in a logical fashion and reduce the
need to move semi-finished products back and forth around the plant. These changes afforded considerable savings
in labor, plant size, and in working capital (David, 1990). To the extent to which such technological and
organizational changes raise labor productivity, they also prompt a rise in wages.
Scholars have argued that as early as the first half of the nineteenth century American technological
innovation in America was faster than elsewhere. In an influential book, H. J. Habakkuk reports commentary by
contemporary observers to this effect and asks, “Why should mechanisation, standardization and mass-production
have appeared before 1850 and to an extent which surprised reasonably dispassionate English observers”
(Habakkuk 1962, p. 5). At the same time there is abundant evidence that America was a heavy borrower of industrial
technologies from other countries. To briefly summarize a large and complicated literature, it seems that in certain
industries such firearms, steamboats, farm machinery, sewing machines, and other machine tools, the United States
was the primary source of new and distinctive technological inventions and innovations. In other industries,
especially cotton textiles, most of the technology employed in America was borrowed from abroad (Habakkuk, 1962;
Rosenberg, 1976; and Hounshell, 1984). The longest-running quantitative measure of this technological activity is the
series on patents (<SLE.A.3.4>). The U.S. surpassed Great Britain in patents per capita by 1810 (Khan and Sokoloff,
2001, p. 239).
The characterization of American industrial and organizational inventions, innovations, and practice over the
last two hundred years is the subject of a large literature. See <science&technology essay>, Engerman and Sokoloff
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(2000), and Mowery and Rosenberg (2000) for recent surveys. See <productivity essay> for an assessment of the
role of improvements in technology and industrial organization as a source of American productivity growth.
Technological and organizational improvements rarely affect all inputs equally. Those that do are said to be
“neutral.” Generally speaking, however, changes in technology affect the demand for capital and for labor differently
and may have different effects on skilled verses unskilled labor as well. See <margo.essay> for a discussion of the
impact of technological and organizational changes on various types of labor over time.
C. Laws, Institutions and the Operation of the American Labor Market
The American labor market operates within a complex, idiosyncratic, and changing set of laws and
institutions. These laws and institutions influence a wide range of labor market outcomes. We have already referred
to the impact of educational institutions on labor skills; immigration policy on the size and character of the labor force;
and Indian policy on “land abundance” for European settlers. These are but a few examples.
The basic law of employment specifies the ownership and control over human labor itself. Three major
categories of such ownership and control have been practiced historically: slavery and serfdom, “contract labor”
such as indentured servitude, and free labor. A slave is the property of a master who exercises complete legal and
physical control. Slaves pass their enslaved status on to their offspring. Contract laborers are born free and their
children are born free, but when they voluntarily enter into a labor contract they are bound for the specified period of
time to perform their agreed upon duties or face punishment. Free laborers enter labor relations voluntarily and are
free to quit at any time. Unlike contract laborers, they are not bound to remain until the task or term of work is
completed. If they do depart before the work is complete they loose compensation for the uncompleted work, but
they do not face punishment.
Orthogonal to these three labor systems are laws controlling married women’s right to make contracts and
to control their own their property, earnings, and activities. Until the nineteenth century throughout most of the world
and in some parts of the world even today, wives were forbidden to “…make contracts, buy and sell property, sue or
be sued, or draft wills. Her husband owned any wages she earned, and he controlled any property she brought to
the marriage. A husband also could control his wife’s economic activities outside the home, such as limiting a
particular shopkeeper from selling to his wife” (Geddes and Lueck 2002, p. 1079). Other legal restrictions society-
wide often limited the labor of married women.
At their founding, the American colonies recognized slavery and indentured servitude, but over time
abolished both of these forms of coercive labor. The abolition of slavery began in the North in 1777 and was
complete in the “Free” States by 1803. Slavery continued in the South, however, until a Civil War and the Thirteenth
Amendment to the Constitution outlawed this practice. Indentured servitude vanished by the 1820s. In 1864
Congress legalized contract labor for immigrants, but in 1885 reversed itself and banned the practice. According to
Robert Steinfeld (1991), America was the first nation to embrace the institution of free labor on a wide scale.
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American labor institutions originated out of the English labor practice and law at the time of initial
colonization during the early-seventeenth century. As Steinfeld demonstrates, English law at that time sanctioned
both slave and consensual labor contracts. The distinction between the two is that slaves had no say in the
disposition of their labor while free persons did. Free persons could sign labor contracts in exchange for wages,
training, and/or transatlantic transportation. Steinfeld also demonstrates that the consensual labor contracts offered
at the time subjected workers to what we would describe today as “unfree labor” (Steinfeld, 1991, p. 3). While
workers entered into these labor agreements voluntarily, they faced stiff penalties if they failed to fulfill their promises.
Thus, if an individual agreed to work for some specified period of time, produce some product, or provide some
service, he or she would risk not only the loss of compensation for failing to deliver, but would also face fines,
imprisonment, whippings, disfigurement, or other punishments. Under such circumstances, hired labor in the
seventeenth and eighteenth centuries was closer in nature to indentured servitude than it was to the free labor we
know today. Today employees have the right to quit at anytime without fear of coercive retribution.
The motivation for adopting these systems of “unfree” labor was the relative ease of attaining self-
employment in the American environment. The abundance of land, game, fish, timber, and minerals and their
consequent low price for the right to exploit these resources meant that even those who started with few assets of
their own could soon purchase access by accumulating savings over a few years of wage work. Those seeking to
expand employment in their enterprise beyond the family labor force found it necessary to resort to some form of
unfree labor. The insight is due to Evsey Domar (1970) who demonstrated that free land, free laborers, and rent-
earning landlords can not exist simultaneously. Free land means high wages for free laborers and these high wages
exhaust landowners’ rents. In a land-rich environment property owners can profit from labor only by placing
restrictions on laborers’ rights.
C.1. Indentured Servitude and Other Forms of Contractual Labor
Indentured servitude was the first form of unfree labor to enjoy wide-spread adoption in the American
colonies. According to this system Europeans voluntarily signed contracts, called “indentures”, in which they
pledged to work for a specific period of time in return for food, shelter, and clothing and often passage to America,
training, and “freedom dues” upon the completion of their service. The length of the required service varied with the
reimbursements; those who could afford to pay their own passage could negotiate for a shorter period of service.
The length of required service also varied with the characteristics of the servant. Young, healthy men in possession
of craft skills were offered shorter periods of service because of their higher productivity than those without such
characteristics. The length of service also varied with supply and demand. A decrease in the supply of servants or
an increase in demand for labor caused the period of service to fall, effectively raising the price of the servant for the
master.
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By about 1630, after the initial establishment of the colonies had been completed, indentured servants
constituted the majority of new arrivals from Europe. With the end to religious persecutions in Europe, the rise in
wages, and the fall in transportation costs, the number of persons willing to enter servitude fell and colonists were
forced to offer shorter terms of service in order to attract them. Increases in the value of colonial export products also
led to reductions in the length of service as planters searched for ways to entice more potential workers. These
forces eventually drove the price of indentured servants above the price of black slaves imported from Africa or the
Caribbean. Colonists who wished to use bound labor relied increasingly on slave labor. By the time of the American
Revolution slaves had largely replaced indentured servants in the South although they continued as an important
source of labor in Pennsylvania and the Chesapeake. After 1820 the institution of indentured servitude disappeared
entirely (Steinfeld 1991, Galensen 1996).
In addition to indentured servants, restrictive contracts formed the basis of the employment relation for
apprentices, domestic servants, as well as for laborers. Peter Way (1993) shows that early American canals were
built with a labor force comprised of slaves and white laborers who signed contracts committing them to remain with
the project until the work was complete. Coercive labor contracts were also ubiquitous in the market for Northern
agricultural labor through the first half of the nineteenth century. While most Northern farms made do with family
labor, those that employed hired hands bound them to honor either specific periods of service or the completion of
specific tasks (Rothenberg 1992; Steinfeld, 1991, Ch. 2).
C.2. Slave Labor
Slave labor was a powerful and quantitatively important institution in colonial America. Slavery was legal
throughout British North America and it was practiced in all of the colonies that would ultimately become the United
States. In 1770, blacks (almost all of whom are presumed to have been slaves) accounted for an estimated 21.7
percent of the total population. They were heavily concentrated in the South. In Virginia, North Carolina, South
Carolina, and Georgia they accounted for 42.0, 35.3, 60.5, and 45.5 percent of the population, respectively. At the
same time slaves were present in the Northern colonies as well, in particular in Rhode Island, New York and New
Jersey where they accounted for 6.5, 11.7, and 7.0 percent of the 1770 population (<jjm.1>).
In 1800 slaves accounted for over thirty percent of the workforce nationally and slightly over 50 percent of
the workforce in the South. Almost all slave labor was engaged in agriculture, especially in the cultivation of tobacco.
Enslaved women and children were just as likely as enslaved men to work in the fields. See <sbc.w.7> through
<sbc.w.12>.
Vermont was the first to abolish slavery in 1777; by 1804 all of the Northern states had outlawed this
practice. Slavery continued to be practiced throughout the South until 1865 at the conclusion of the Civil War and the
passage of the Thirteenth Amendment to the Constitution. The <slavery.essay> describes the origins of slavery in
the American colonies, its development, and subsequent abolition. <mccusker.essay> discusses the role of slavery
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in the colonial economy. The <confederate.states of America.essay> focuses on the Conferderate States of America
and the Civil War.
The institution of slave labor produced a distinctive economic dynamic in the South. Gavin Wright argues
that the distinctiveness of the Southern labor market even today had its origins in behaviors motivated by
slaveholding in the early nineteenth century.
As compared to the American North, the incentives of slave property tended to disperse population across
the land, reduce investments in transportation and in cities, and limit the exploration of southern natural
resources. Above all, slave owners had no incentives to open up labor market links with outside areas, and
the resulting inelasticity of the labor supply squeezed out labor-intensive manufacturing activity, such as the
pre-[Civil]war textile industry which grew during the 1840s but stagnated during the cotton boom of the
1850s (Wright, 1984, p. 11).
With the abolition of slavery, Southerners ceased to engage in these distinctive practices. Wright calls particular
attention to the “reallocation of land from corn to cotton, new enthusiasm for railroads and local development, and the
rise of new manufacturing and mining sectors (p. 11).” He also shows that after the abolition of slavery the Southern
labor market began to function much like the labor market in the rest of the country. Despite the evils of debt
peonage, sharecropping, and racism, Southern labor turnover was high and laborers migrated from lower- to higher-
wage areas. At the same time, the absence of formal linkages with the rest of the nation (in the slave era the South
had stronger trade connections with Europe than it did with the Northern states), the absence of appropriate industrial
technologies (the American System of Manufactures was not well suited to the low-wage labor-abundant South), and
a reluctance to invest heavily in education for fear of enabling the out-migration of youth, kept the Southern labor
market separate from that of the rest of the nation. Until World War I the Southern labor market operated in isolation
from that in the rest of the country. Southern migration took place only within the South, despite the availability of
higher wages, better working conditions, and more political freedom for blacks in other regions of the country. Since
the vast majority of blacks lived in the South, an important implication of this Southern labor market isolation is that it
perpetuated the poverty, low educational attainment, and agricultural employment of the black population. In
Wright’s phrase, blacks were the “poorest group in the country’s poorest region” (Wright, 1987). See also
Rosenbloom (2001) on the isolation of the Southern labor market. William Collins (1997) demonstrates that this
isolation of the Southern labor market was caused by mass European immigration coupled with racist hiring practices
of Northern employers who favored white immigrants over Southern blacks.
Labor shortages during World War I and the restrictive immigration legislation of the 1920s sparked the
“Great Migration” which ended the isolation of the Southern labor market. The “Great Migration” refers to the
wholesale migration of black Southerners into Northeastern and Midwestern cities. It began in the last decade of the
nineteenth century, accelerated substantially during World War I and then again during the 1920s, subsided
somewhat during the Great Depression of the 1930s, but then accelerated once again during the World War II years.
While Southerners of all races migrated to the North, black Southerners participated to a disproportionate degree
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(<ferrie.essay> and Collins 1997). The Great Migration is credited with substantial gains for blacks on a wide range
of fronts including improvements in educational attainment (<cg.a.15>), increased occupational integration
(<sbc.o.29>), and greater equality in black-white earnings (<sbc.b.35> and <sbc.b.36>).
While the exodus of blacks sparked some improvements for the black workers who remained in the South,
Wright (1987) demonstrates that it was not until the enactment of New Deal labor policies during the 1930s that the
Southern labor market really began to resemble the labor market in the rest of the nation. The National Recovery Act
(NRA) raised the wage in many Southern industries, Works Progress Administration (WPA) employment
opportunities were offered at wages that were much higher than those prevailing in the South. Other influential New
Deal policies were those that encouraged unionization and established a relatively high minimum wage.
C.3. Free Labor
“Free labor” in this context refers to a labor system in which employees have the right to quit. As Steinfeld
(1991) demonstrates, free labor was not an institution that America inherited from the English, it was a unique
American development. While free labor first appeared in America in the early eighteenth century, it wasn’t until the
early years of the nineteenth century that it emerged as the dominate mode. Steinfeld explains the appearance and
spread of free labor to two consequences of the American Revolution, a heightened resolve to abolish black slavery
and a broad-based demand to extend the suffrage. He argues that following the Revolution, “…Americans began to
think about indentured servitude quite differently, as a form of involuntary rather than voluntary servitude and as
essentially indistinguishable from slavery” (p. 7). Their post-Revolutionary agitation for broadened suffrage pushed in
the same direction. “one of the principal new tests for the suffrage that states began to adopt was the test of legal
self-government. Did an individual have the legal right to control and dispose of his or her own person, or did that
right lie in another? If individuals enjoyed the legal right to control and dispose of themselves, they would be qualified
to exercise the suffrage…” (p. 185). Thus, under this interpretation, suffrage required the abolition of unfree labor.
Way (1993) suggests an economic motive may have played a role as well. Free laborers are cheaper than unfree
when the supply of labor is great and where demand fluctuates the way it did in the building of canals in the late
eighteenth and early nineteenth centuries. During good times inexpensive free labor could be recruited in Scotland
and Ireland, during bad times free labor could be dismissed, sparing the company the cost of their room and board,
forcing laborers to finance their own unemployment. By the early nineteenth century the two labor systems were
chattel slavery and free labor, where free labor not only entered into the employment relation voluntarily but had
secured the right to depart at will.
Free labor became an increasingly important institution in America over the nineteenth century and for most
of the twentieth century as well. While the free share of the Southern labor force remained roughly constant over the
nineteenth century up until the abolition of slavery, it rose as a share of the national labor force. This was because of
the substantial immigration of free laborers to the North but not to the South, especially after 1840. Thus, while free
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workers accounted for 69.5 percent of the labor force in 1800, on the eve of the Civil War in 1860 the free share was
78.3 percent (calculated from <sbc.w.1> and <sbc.w.4>).
There is an additional sense in which free labor was growing in importance over time. It is when we
distinguish self-employed and unpaid family workers from hired workers. As late as 1900, Lebergott estimates that
hired labor accounted for only a little more than half (55.4 percent) of the labor force (calculated from <sbc.s.9.1>,
<sbc.s.9.9> and <sbc.a.2.1>). The continuing importance of owner-operated farms and small retail and service
establishments limited the extent of hired labor economy-wide. By 1960 wage and salary workers comprised 84
percent of the labor force according to Lebergott and 86 percent according to the BLS (<sbc.a.21.12>). In 2000
wage and salary workers are estimated to account for 93 percent of the labor force. The decline in self-employment
and rise in (free) wage and salary workers has been a largely uninterrupted development except for a mild reversal of
the trend toward wage and salary work in the late 1970s and early 1980s (<sbc.a.21.12>). One confounding
development has been the growing use of S-Corporations as a legal form for small individual and family enterprises.
To reduce risk and taxation, an increasing number of small enterprises have adopted this legal form. When they do
so, the formerly self-employed individual is reclassified as an employee of the new corporation. See <nlr.a.4>. The
number of S-corporations has risen rapidly over time, especially since the mid-1980s. This trend may be masking a
substantial amount of what we would otherwise classify as self-employment.
C. 4. The Rights of Married Women
America law adopted the English practice of “coverture”, which refers to the constricted status of married
women under common law. In the oft-quoted words of the prominent English jurist, Sir William Blackstone marriage
creates under coverture a “unity of person between the husband and wife; it being held that they are one person in
law, so that the very being and existence of the woman is suspended during the coverture, or entirely merged and
incorporated in that of the husband” (Blackstone 1897). In other words, under coveture husbands exercised legal
control over their wives’ activities and owned their wives’ output; the absence of coverture is self-ownership.
Coverture has been shown to limit married women’s commercial and patenting activities in nineteenth-
century America (Khan 1996). It is also probable that coverture reduced investments in women’s education and job-
related skills (Schultz 1968).
American laws regarding coverture were written at the state level and it is therefore possible to observe
regional differences in the decline of this institution over time. Geddes and Lueck (2002) develop a chronology of
women’s property rights by state over time (see <sbc.c.6>) and use the data to explore the causes of this important
legal change. In their view, the principle causes of the decline in coverture, at least in the American environment,
were increases in wealth, the market wage, the rate of return to education, and the complexity of market work.
According to available estimates, women’s self-ownership became law throughout the country by the late 1890s
(<sbc.c.6>)..
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Nonetheless twentieth century depression and wartime exigencies produced a series of labor laws that
severely limited married women’s employment opportunities between the 1920s and the 1950s. These were the so-
called “Marriage Bars” that prohibited employers from hiring married women and required them to fire experienced,
formerly single female employees upon their marriage. Goldin (1991) documents the rise of such practices beginning
in the 1920s, just as women were beginning to extend the number of years they devoted to the labor force. The
institution of such regulations posed few costs to employers, in Goldin’s view, since they were imposed at a time
when most married women considered their jobs to be temporary. Nonetheless, they must surely have inhibited
investments in human capital by women who would have preferred longer employment careers. Marriage Bars were
suddenly abandoned in the 1950s under pressure from the markedly growing labor supply of married women.
C. 5. Labor Market Structure
In addition to the basic law of employment there are countless other laws, institutions, and practices that
affect labor market operation. Nickell and Layard (1999) classify these under five headings: labor taxation, especially
payroll taxes, income taxes, and consumption sales taxes; employment protection legislation regulating of hours of
work, employee compensation, and job security; trade union activity and minimum wages; support for the
unemployed and active labor market policy aimed at reducing unemployment; and education and skill formation.
Quantitative evidence on the historical development of these labor market institutions are displayed in various
chapters of Historical Statistics of the United States. The <wallis.essay> discusses the development of the federal
income tax, its level, its incidence, and change over time. The <sundstrom.essay> discusses the development of
hours of work, worker safety, and job security legislation. The <rosenbloom.essay> discusses trade unions and their
growth and evolution over time. Table <sbc.b.29> displays time series data regarding the federal minimum wage.
The <ziliack-hannon.essay> and <fishback-thomasson.essay> describe private and social income support for the
unemployed and for those who are out of the labor force. The <businesscycle.essay> discusses the evolution of
active labor market policy. Educational institutions are described in <goldin.essay> and in the paragraphs above.
The constellation of institutions that affect labor market operation are sometimes referred to collectively by
the term “labor market structure.” For some purposes labor market structure can be usefully viewed as lying along a
single dimension. At one end of the spectrum lie “unfettered” labor markets that mimic textbook examples of perfect
competition. At the other end are highly “structured” labor markets with substantial legal, political, and social
institutions that modify the forces of market competition. A popular way of viewing the development of the American
labor market is to see it as moving along this continuum from less to more structure over time. Tomlins (2000)
provides an overview and analysis of the major legal developments. Fishback (1998) offers a comprehensive
description of the operation of the relatively “unfettered” labor markets at the turn of the twentieth century. He also
provides an assessment of their operation and the political economy of the emergence of additional labor market
structure over the course of the twentieth century. In Fishback’s view, the relatively unfettered labor markets at about
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1900 “functioned well enough that workers typically had multiple opportunities and were able to move to take
advantage of them to improve their situation” (p. 759). At the same time, laborers clearly expressed their
dissatisfaction with many of the labor practices of the day and there were a considerable number of issues that were
viewed as problems by workers and employers both. Fishback concludes that many of the progressive-era labor
regulations, especially worker compensation laws, unemployment insurance, and minimum wages were beneficial
not only to workers but to a “significant subset of employers” (p. 761). For this reason they are likely to remain a part
of the American landscape, at least until the underlying conditions change.
Labor markets can also be compared according to these structures. An active area of labor market
research in the closing years of the twentieth century is the identification of connections between different labor
market structures and their associated labor market outcomes (See Blau and Kahn 1999 and Nickell and Layard,
1999 for overviews).
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Manufacturing employment is expected to drop between 1996 and 2006, losing about 350,000 jobs, and will represent just 12% of employment in 2006. Mining employment will also decline by 131,000 jobs. (James Franklin, economist, Office of Employment Projections, (202) 606-5709; U.S. Department of Labor, Occupational Outlook Quarterly, "Special Issue - Charting the Projections: 1996 - 2000, Vol 41, 12-22-1997.)
In 1997, manufacturing represented 15% of employment. In 1970, manufacturing represented 27% of work, and in 1950, 34% of jobs in the US. (Bureau of Labor Statistics Establishment Data: Historical Employment, Table B-1, Employees on Non-farm Payrolls by Major Industry, 1947 to date.)
The 20 fastest growing industries are all in the service-producing sector, which in total will add 17.6 million workers to the workforce by 2006. (Bureau of Labor Statistics, Occupational Outlook Quarterly, "Special Issue - Charting the Projections: 1996 - 2000, Vol 41, 12-22-1997.)
Computer and data processing services is the fastest employment growth industry expected to double between 1996 and 2006, adding 1.3 million jobs. (Bureau of Labor Statistics New 1996-2006 Employment Projections, Table 4a.)
High-tech employment in the US, including manufacturing, communications services, software and computer-related services, employs about 4.3 million Americans. The high-tech manufacturing sector, of electronics, semiconductors, communications equipment, electromedical equipment, and computers and office equipment, is the top exports industry in the country and the largest US manufacturing base. (American Electronics Association, 1996, based on Bureau of Labor Statistics data)
Over the past two decades, earnings inequality has widened in the US. Hourly wages of American workers in the top one-tenth of the workforce increased from $24.80 in 1982 to $25.74 in 1996, while hourly wages for workers in the bottom one-tenth of the workforce fell from $6.28 in 1982 to $5.46 in 1996. (US Department of Housing and Urban Development, State of the Cities, June 1998.)
Cities contain 30% of metropolitan America's population and are home to half of all low-income families in metropolitan areas. From 1970 to 1997, 6 million middle-income and affluent families moved away from cities. (US Department of Housing and Urban Development, State of the Cities Report, p.9.)
Suburban population is growing twice as fast as central city population, with suburbs growing 9.6% from 1990 to 1997, and cities, growing 4.2%. (US Department of Housing and Urban Development, State of the Cities Report, June 1998, p.8)
Central city employment is on the rise. Between 1993 and 1998, the number of employed workers living in central cities increased by 10.4%, or by almost 3.7 million people. Unemployment rates are falling in central cities, too, with an average 5.3% rate today, compared to 8.2% in 1993. (US Department of Housing and Urban Development, State of the Cities Report, June 1998, p.8)
In 74 US urban counties, over the next 5 years, there may be up to two job seekers for each low-skilled job nationwide. The number of current welfare recipients who will need jobs over the next 5 years is likely to exceed growth in low-skilled jobs by 353,000. (US Department of Housing and Urban Development, State of the Cities Report, June 1998, based on a report from the US Conference of Mayors.)
Urban redevelopment in the 1990s tries to capitalize on leisure dollars. To draw new jobs and tourist dollars, cities are investing in convention centers, stadiums, entertainment and sports complexes, pedestrian malls, waterfront developments, casino and riverboat gambling projects. (Walker, Sam, "Building Boom Reshapes City Skylines," The Christian Science Monitor, Aug. 18, 1997, p. A1; Smith, Sam, "Saving our Cities from the Experts," Utne Reader, Sep/Oct. 1994, p. 57.)
Many cities are building megaplex movie houses to bank on the $6.2 billion annual movie box office sales nationwide. In 1997, the US added 149 megaplexes, and the five largest theater chains will add 127 cinemas with 1,890 screens by the end of 1998. In total, there are about 28,000 theaters in the US, 21% more than ten years ago. (Holt, Nancy, "Attack of the Giant Theaters," The Wall Street Journal, March 4, 1998; Templin, Neal, "Movie Theaters Drive City and Suburb Development," The Wall Street Journal, Mar. 4, 1998.)
Americans spend about 240 hours total driving each year or six, 40 hour work weeks a year behind the wheel. (US Department of Transportation, National Personal Transportation Survey, 1995)
Commuters in one-third of the nation's largest cities spend more than 40 hours a year in traffic jams. (Texas Transportation Institute, "Commuters Face Growing Time Loss Due to Traffic Jams," Dec. 9, 1996)
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