FAQ: What impact do service exports have on the economy and jobs?

Talking Points:

For over three decades, the U.S. service sector has generated a trade surplus that has consistently reduced the trade deficit. For example, in 2004, U.S. services exports of $338.6 billion decreased the U.S. trade deficit by almost $50 billion, and the service export figure is probably severely underreported. Since 1980, U.S. service exports have grown almost twice as quickly as goods exports.

But more importantly, tremendous benefits are currently derived from—and huge potential is offered by—the service sector in terms of economic growth, personal income, employment and exports. This fact is not widely acknowledged. It is becoming increasingly likely that the telecommunications/digital infrastructure that is making the global sourcing of services possible today is the same infrastructure that will significantly support an even greater boost in service exports.

Major U.S. service exports include computer and data processing; wholesale, financial, transportation and communication services; architectural, engineering and surveying services; accounting, research and management services; and motion pictures. And it is anticipated that the export of business, professional and technical services (accounting, advertising, engineering, franchising, consulting, public relations, testing and training) will increase rapidly over the next several years.

When the delivery of services requires face-to-face contact, it is necessary to be present in the foreign market. To accomplish this, many U.S. companies sell their services through U.S.-owned foreign affiliates. U.S.-owned employment agencies operating in Europe, for example, interview hundreds of European candidates each day for local jobs. U.S.-owned insurance affiliates operating abroad, a fast-growing industry, account for a very large share of total U.S.-owned affiliate transactions.

FAQ: Do service jobs pay poorly?

Talking Points:

When some people envision the service sector, they think of employees flipping hamburgers. In reality, the U.S. service sector has become extremely advanced and internationally competitive. In turn, the sector’s wages have risen considerably. For example, in December 2002, January 2003 and February 2003, average hourly earnings for service production workers reached $15.49, $15.51 and $15.65, respectively, according to the Bureau of Labor Statistics. During these same months, average hourly earnings for U.S. manufacturing production workers were $15.48, $15.53 and $15.56. This indicates that hourly wages in the service sector have clearly caught up to the manufacturing sector.

With the recent introduction and availability of new and inexpensive technology—led by telecommunications, computers and the internet—millions of people and companies worldwide now have the ability to purchase more services from the United States. As a result, the U.S. service sector will continue to grow. Note: the number of workers employed in U.S. service producing industries has steadily climbed. In June 2005, it reached 111.4 million or 83.4 percent of total payroll employment.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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