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The Next Service Economy

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The American economy has changed in the years following the Great Recession of 2008. Manufacturing has seen a renaissance, yet over three-quarters of American jobs remain concentrated in service employment categories. We have moved from being a world leader in global economic production to the world's largest service economy.

Employed Americans are increasingly restaurant workers, retail clerks, car rental and hotel booking agents, and lower-to-mid-level office professionals. The problem is that service jobs are less secure than traditional production jobs, pay far less, and offer fewer opportunities for upward mobility.

In the 1970s, America and other industrialized nations consolidated their deindustrialization by outsourcing most of what used to get produced domestically as a cost saving measure for business and industry. American law supported this movement away from production to services through supply side tax and investment incentives, deregulated banking practices, and union busting. The result is an economy that has radically diminished our middle class and led to growing numbers of talented and still relatively young workers with no place to go for meaningful employment that is commensurate with either their skills or their dreams.

An example is Dillon Kiel, a white middle class kid from Santa Barbara, California, who is a graduate of both the University of California and George Washington University. Despite a great education, an industrious outlook, and the motivation of a new wife and child at home, Kiel, age 29, had to take a hotel doorman job in Washington, DC at a minimum wage salary after completing his GWU Master's degree. There was no alternative available to him.

After nearly a year of struggling to get a job more in keeping with his training in public administration, Kiel finally landed a government job in Virginia at an annual salary of $58,000. But his wife Lucia became ill and could not work during or following her pregnancy. So after another year of barely getting by Kiel begrudgingly decided to move back to Santa Barbara where he and his family presently reside with his in-laws in order to make ends meet. He runs an event planning business that only sporadically meets his family's basic needs.

If you consider that Kiel had all the advantages of a strong supportive family, a middle class upbringing, and a great education, it is hard to imagine how someone in his position could be dealt such a hand. Yet, that is what is going on all across America. And it is far worse for young people of color and women who face continuing discrimination in the workplace and typically lack the family stability and access to resources required to stay afloat nowadays.

The problem is compounded by the very nature of the so-called "service" jobs our economy has produced in place of the traditional manufacturing jobs that fueled American greatness and shared prosperity in the 19th and 20th centuries. Most of these poorly paid and highly insecure jobs provide services that are far from the core of human need and social progress. More often than not, the service jobs our economy now supports are built to meet the creature comforts and vanities of a populace that is increasingly over-stressed, unhappy, and searching for meaning through conspicuous consumption. Relatively few of our emerging new economy service jobs produce outcomes that actually uplift people and society in meaningful and lasting ways -- ways that would actually constitute a true service in the larger sense.

Society would be better served through the advancement of whole new categories of service employment that actually addressed broader societal and environmental needs. If our tax system and public policies more generally encouraged and meaningfully rewarded social enterprises that employ people at living wages to do good for society, more people would be gainfully and happily employed.

We could achieve so much more as a society from both a personal and collective satisfaction standpoint by supporting businesses that engage our most talented individuals in the provision of services, like cleaning up our environmentally damaged inner cities, producing and distributing healthier foods to our school children and dependent seniors, and supporting public art, beautification, and safety enhancements in needy neighborhoods.

By building our social economy in ways that productively engage our presently underutilized talent and treasure, we can do more and better as a nation, both from a material and a moral standpoint. So what are we waiting for?

Henry A. J. Ramos is President & CEO of the Insight Center for Community Economic Development and an appointed member of the California Community Colleges Board of Governors.

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