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Analysis

Welcome to the labor force!  Now get up there to the register and earn your $7.25 an hour!

To you it may just be a job flipping burgers, but to economists that job is your ticket into the civilian labor force. It identifies you as an unskilled (or maybe a semi-skilled) worker in the fast expanding service sector of the American economy.

Economists begin with a relatively simple concept—the people holding jobs in America—and add clarity by sharpening the definition. The civilian labor force includes all persons over sixteen able to work and actively seeking work. This definition obviously excludes large portions of the population; full-time students and prisoners (no, they are not the same thing), homemakers, and members of the military are not counted in this measurement.

But this is only the first way in which economists categorize workers. For most of the nineteenth century, the work force was broken into manufacturing, agriculture, and commerce. But as the American economy grew more complex during the twentieth century, economists added another set of occupational categories: blue-collar and white-collar workers. The former included manufacturing and industrial workers, people engaged in craft production, and non-farm laborers. White collar workers included clerical and sales personnel, managers and executives, as well as professionals, such as doctors, lawyers, accountants, engineers, and teachers.

By the last part of the twentieth century, however, the explosion of the service sector of the economy had left this simple white-collar/blue-collar differentiation obsolete. The service sector, defined as just about everything outside of farming, construction, mining, and manufacturing, included workers engaged in transportation and communication, sales, banking, and entertainment. More broadly, the service sector included all those employed in the production or delivery of a service rather than a good.

Many economists now just add the service portion of the economy to agriculture, manufacturing, and commerce when defining the workforce—but others, acknowledging all of the overlap in these categories, prefer categories based on education and skill: unskilled workers (common laborers), semi-skilled workers (those in jobs requiring a moderate level of training), skilled workers (workers who have mastered a craft), and professionals (workers in jobs that requires undergraduate or graduate college degrees).

So why is all of this necessary? Economists do this not just because they love to stack things in nice little categories—identifying these categories helps them monitor changes in the economy. For example, during periods of economic stress, these categories enable policymakers to identify those parts of the economy most in need of assistance. More broadly, these categories help economists track changes in the workforce and the structure of the economy.

US Labor Force by Occupation

(source)

Why It Matters Today

As you're thinking about joining the labor force, you'll want to think long and hard about what sector of the labor force to join.  Don't go into an industry that's dying; it's probably not a great time to try to make it in the CD shop or video rental business.  And as you get older, you'll want to be in an field that values your experience rather than throwing you overboard for younger, fresher talent.  (Hollywood could be dangerous in that regard... although don't tell that to Betty White!)

Sometimes, a Song Says it Better: Feel Good Inc., by Gorillaz

“You kill the Inc. 

So don’t stop, get it, get it

Until you’re Jet ahead.”

We are all tilting at windmills, trying to get ahead in Gorillaz “Feel Good Inc.”

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