By Robert Kuttner
Nov 29 The American economy is irrevocably
shifting from manufacturing to services. Our workforce has gone
from 28 percent factory workers and 72 percent service workers
in 1978 to 14 percent factory workers and 86 percent service
But the service sector encompasses tens of millions of "bad"
jobs that are unstable and offer low pay with few benefits -
routine clerical work, for example, or retail sales, fast food
or low-end human services such as nurse's aides - alongside a
relatively small number of well-compensated professional
positions, including doctors, lawyers and scientists, as well as
astronomically rich investors and plutocrats in the financial
As we move into this service economy, there are political
choices to be made - or evaded. We can allow our increasingly
laissez-faire economy to take a low road of underpaid and
under-professionalized service jobs. Or we can use social
investment, taxation and public borrowing to create more
high-level careers in the human services, which will, in turn,
help stimulate an economic recovery and stem the tide of
Millions of jobs serving the very young, the very old and
the very sick are now low-wage positions. This is a social
decision, however, not the product of private supply-and-demand.
For the qualifications and earnings for these occupations are
determined by prevailing mores as much as by labor markets.
A person caring for 3-year-olds, for example, can be a
glorified baby sitter with minimum certification as a day-care
worker - or a well-trained professional in child development. So
the job can pay minimum wage, or it can be a middle-class
occupation and career.
This social choice governs not just the quality of the job
but also the quality of the early education - crucial for those
children who lack the advantages of more affluent families.
High-quality early childhood education and day care can also
help mothers and fathers be better parents.
A nursing home worker, similarly, can be a nurse's aide
making $8 an hour or a licensed practical nurse or trained
recreation aide earning almost twice that - closer to $30,000 a
year. Well-qualified and trained nursing home personnel produce
not just better career opportunities and economic stimulus but
also better quality of life for the elderly. Having competent
staff proves more efficient in the long run because there is
less turnover, less need for outlays on recruitment, better
morale and fewer incidents of neglect that require far more
expensive medical treatment.
I've done a rough calculation and found that for an annual
expenditure of about $100 billion to $150 billion - less than 1
percent of gross domestic product - we could set a national
policy goal of guaranteeing that all human service jobs are
professional jobs that pay at least $25,000 a year. This
requires professionalizing some occupations, as well as making
some woefully underfunded services, such as early education,
As long as the current deflationary economy persists, this
funding could come from additional government borrowing, since
interest rates are extraordinarily low. As the economy recovers,
the normal increase in revenue could pay for part of the cost,
supplemented by increased progressive taxation. The increase in
the supply of good service jobs would accelerate the recovery.
Historically, production jobs have paid better wages than
service jobs. But globalization has increasingly allowed factory
jobs to be done offshore by lower-paid workers. Most human
service jobs, by contrast, must be performed at home. If we have
a national policy of guaranteeing that they are well-paid jobs,
there is no risk that they will move overseas.
Two of the fastest-growing job categories, according to the
Bureau of Labor Statistics, are home care workers and nurse's
aides. These occupations suffer from shortages because the pay
is low and the working conditions often frustrating. Nurse's
aides typically make slightly above minimum wage, whereas
licensed practical nurses (usually a one-year certificate
program) earn about $20 an hour, or $42,000 a year. Registered
nurses, graduates of a two- or four-year college degree program
are more highly trained still, with median earnings in excess of
Extensive evidence shows that having home care or
nursing-home care performed by workers with the lowest minimally
acceptable skill levels is a false economy. The money saved on
lower wages is lost in medical incidents, like increased
bedsores on the part of nursing home residents or failure to
diagnose medical conditions early. Both can result in the need
for far more expensive hospital stays. At the same time these
service workers are condemned to jobs that do not pay well.
More than 60 percent of all human service work is
underwritten, directly or indirectly, by some level of
government. Most care in nursing homes as well as home care is
paid by Medicaid or by other state programs, while child care
for the poor and pre-kindergarten programs are provided or
subsidized by government. Thus, public policy determines whether
these jobs are professional occupations or casual labor and
whether they are adequate to the social need.
A national strategy of filling the holes in America's social
safety net could prove to be a countercyclical engine of
recovery. It could also offer a permanent strategy for replacing
our dwindling highly paid manufacturing jobs with domestic,
well-compensated non-exportable service jobs. We would get the
quadruple benefit of macroeconomic stimulus, better jobs, better
quality services and (in the case of the young) improved
lifetime opportunity and productivity.