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Industries are groups of one or more businesses that are involved in the same production process or a similar production processes. Industries may be also be called areas of business, business sectors, trades or professions.
The U.S. economy is comprised of industries with diverse characteristics. Each industry has specific characteristics: the nature of the industry, working conditions, employment, occupational composition, training and advancement requirements, earnings, and the job outlook.
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Industries are defined by the processes they use to produce goods and services. Workers in the United States produce and provide a wide variety of products and services and as a result, the types of industries in the U.S. economy range widely-from agriculture, forestry, and fishing to aerospace manufacturing. Although many of these industries are related, each industry has a unique combination of occupations, production techniques, inputs and outputs, and business characteristics. Understanding the nature of the industry is important, because it is this unique combination that determines working conditions, educational requirements and the job outlook for the industries.
Industries consist of many different places of work, called establishments, which range from large factories and office complexes employing thousands of workers to small businesses employing only a few workers. Not to be confused with companies, which are legal entities, establishments are physical locations in which people work, such as the branch office of a bank. Thus, a company may have more than one establishment. Establishments that use the same or similar processes to produce goods or services are organized together into industries. Industries are, in turn, organized together into industry groups. These are further organized into industry subsectors and then ultimately into industry sectors. For the purposes of labor market analysis, the U.S. Bureau of Labor Statistics organized industry sectors into industry supersectors and then divided the supersectors into two broad groups: Goods-producing industries (natural resources and mining; construction; and manufacturing) and service-providing industries (trade, transportation, and utilities; information; financial activities; professional and business services; education and health services; leisure and hospitality; other services; and public administration).
Each industry subsector is made up of a number of industry groups, which are, as mentioned, determined by differences in production processes. An easily recognized example of these distinctions is in the food manufacturing subsector, which is made up of industry groups that produce meat products, preserved fruits and vegetables, bakery items, and dairy products, among others. Each of these industry groups requires workers with varying skills and employs unique production techniques. Another example of these distinctions is found in utilities, which employs workers in establishments that provide electricity, natural gas, and water.
There were almost 7.8 million private business establishments in the United States in 2002. The average size of these establishments varies widely across industries.
Most establishments in the construction, wholesale trade, retail trade, finance and insurance, real estate and rental and leasing, and professional, scientific, and technical services industries are small, averaging fewer than 15 employees per establishment. However, wide differences within industries can exist. Hospitals, for example, employ an average of 712.4 workers, while physicians’ offices employ an average of 9.3. Similarly, although there is an average of 13.3 employees per establishment for all of retail trade, department stores employ an average of 166.5 people.
Business establishments in the United States are predominantly small; 59.6 percent of all establishments employed fewer than 5 workers in 2002. However, the medium-sized to large establishments employ a greater proportion of all workers. For example, establishments that employed 50 or more workers accounted for only 4.7 percent of all establishments, yet employed 57.4 percent of all workers. The large establishments-those with more than 500 workers-accounted for only 0.2 percent of all establishments, but employed 18.2 percent of all workers.
Establishment size can play a role in the characteristics of each job. Large establishments generally offer workers greater occupational mobility and advancement potential, whereas small establishments may provide their employees with broader experience by requiring them to assume a wider range of responsibilities. Also, small establishments are distributed throughout the Nation; every locality has a few small businesses. Large establishments, in contrast, employ more workers and are less common, but they play a much more prominent role in the economies of the areas in which they are located.
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The occupations found in each industry depend on the types of services provided or goods produced. For example, because construction companies require skilled trades workers to build and renovate buildings, these companies employ large numbers of carpenters, electricians, plumbers, painters, and sheet metal workers. Other occupations common to construction include construction equipment operators and mechanics, installers, and repairers. Retail trade, on the other hand, displays and sells manufactured goods to consumers. As a result, retail trade employs numerous sales clerks and other workers, including more than three-fourths of all cashiers.
The Nation’s occupational distribution clearly is influenced by its industrial structure, yet there are many occupations, such as general manager or secretary, that are found in all industries. In fact, some of the largest occupations in the U.S. economy are dispersed across many industries. For example, the office and administrative support occupational group is among the largest in the Nation since nearly every industry relies on administrative support workers. Other large occupational groups include professional and related occupations, service occupations, management, business, and financial occupations, and sales and related occupations.
The occupations found in each industry depend on the types of services provided or goods produced. For example, because construction companies require skilled trades workers to build and renovate buildings, these companies employ large numbers of carpenters, electricians, plumbers, painters, and sheet metal workers. Other occupations common to construction include construction equipment operators and mechanics, installers, and repairers. Retail trade, on the other hand, displays and sells manufactured goods to consumers. As a result, retail trade employs numerous sales clerks and other workers, including more than three-fourths of all cashiers.
The Nation’s occupational distribution clearly is influenced by its industrial structure, yet there are many occupations, such as general manager or secretary, that are found in all industries. In fact, some of the largest occupations in the U.S. economy are dispersed across many industries. For example, the office and administrative support occupational group is among the largest in the Nation since nearly every industry relies on administrative support workers. Other large occupational groups include professional and related occupations, service occupations, management, business, and financial occupations, and sales and related occupations.
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Workers prepare for employment in many ways, but the most fundamental form of job training in the United States is a high school education. Fully 88 percent of the Nation’s workforce possessed a high school diploma or its equivalent in 2002. However, many occupations require more training, so growing numbers of workers pursue additional training or education after high school. In 2002, 28.7 percent of the Nation’s workforce reported having completed some college or an associate's degree as their highest level of education, while an additional 28.7 percent continued in their studies and attained a bachelor's or higher degree. In addition to these types of formal education, other sources of qualifying training include formal company-provided training, apprenticeships, informal on-the-job training, correspondence courses, the Armed Forces vocational training, and non-work-related training.
The unique combination of training required to succeed in each industry is determined largely by the industry’s production process and the mix of occupations it requires. For example, manufacturing employs many machine operators who generally need little formal education after high school, but sometimes complete considerable on-the-job training. In contrast, educational services employs many types of teachers, most of whom require a bachelor’s or higher degree.
Persons with no more than a high school diploma accounted for about 65.4 percent of all workers in agriculture, forestry, fishing, and hunting; 64.7 percent in construction; 63.3 percent in accommodation and food services; 56.9 percent in mining; 52.9 percent in manufacturing; and 52.7 in retail trade. On the other hand, those who had acquired a bachelor’s or higher degree accounted for 61.6 percent of all workers in educational services, private; 60.4 percent in professional, scientific, and technical services; 41.9 percent in finance and insurance; 39.3 percent in information; and 37.8 percent in government.
Education and training also are important factors in the variety of advancement paths found in different industries. Each industry has some unique advancement paths, but workers who complete additional on-the-job training or education generally help their chances of being promoted. In much of the manufacturing sector, for example, production workers who receive training in management and computer skills increase their likelihood of being promoted to supervisory positions. Other factors that impact advancement and that may figure prominently in the industries include the size of the establishments, institutionalized career tracks, and the mix of occupations. As a result, persons who seek jobs in particular industries should be aware of how these advancement paths and other factors may later shape their careers.
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Like other characteristics, earnings differ by industry, the result of a highly complicated process that reflects a number of factors. For example, earnings may vary due to the nature of occupations in the industry, average hours worked, geographical location, workers’ average age, educational requirements, industry profits, and union penetration of the workforce. In general, wages are highest in metropolitan areas to compensate for the higher cost of living. Also, as would be expected, industries that employ a large proportion of unskilled minimum-wage or part time workers tend to have lower earnings.
The difference in earnings of all wage and salary workers in computer systems design and related services, which averaged $1,112 a week in 2002, and those in food service and drinking places, where the weekly average was $359, provide a good illustration of how various factors can affect earnings. The difference is so large primarily because computer systems design and related services establishments employ more highly skilled, full-time workers, while food service and drinking places employ many lower skilled, part-time workers. In addition, many workers in food service and drinking places are able to supplement their low wages with money they receive as tips, which is not included in the industry wages data.
Employee benefits, once a minor addition to wages and salaries, continue to grow in diversity and cost. In addition to traditional benefits-including paid vacations, life and health insurance, and pensions-many employers now offer various benefits to accommodate the needs of a changing labor force. Such benefits include childcare, employee assistance programs that provide counseling for personal problems, and wellness programs that encourage exercise, stress management, and self-improvement. Benefits vary among occupational groups, full- and part-time workers, public and private sector workers, regions, unionized and nonunionized workers, and small and large establishments. Data indicate that full-time workers and those in medium-sized and large establishments-those with 100 or more workers-receive better benefits than do part-time workers and those in smaller establishments.
Union penetration of the workforce varies widely by industry, and it also may play a role in earnings and benefits. In 2002, about 14.5 percent of workers throughout the Nation were union members or covered by union contracts. As table 9 demonstrates, union affiliation of workers varies widely by industry. Almost 45 percent of the workers in air transportation were union members, the highest rate of all the industries, followed by 38.5 percent in educational services, and 36.9 percent in steel manufacturing. Industries with the lowest unionization rate include software publishers, 0 percent; food services and drinking places, 1.8 percent; and computer systems design and related services, 1.9 percent.
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Total employment in the United States is projected to increase by about 15 percent over the 2002-2012 period. Employment growth, however, is only one source of job openings. The total number of openings in any industry also depends on the industry’s current employment level and its need to replace workers who leave their jobs. Throughout the economy, in fact, replacement needs will create more job openings than will employment growth. Employment size is a major determinant of job openings-larger industries generally have larger numbers of workers who must be replaced and provide more openings. The occupational composition of an industry is another factor. Industries with high concentrations of professional, technical, and other jobs that require more formal education-occupations in which workers tend to leave their jobs less frequently-generally have fewer openings resulting from replacement needs. On the other hand, more replacement openings generally occur in industries with high concentrations of service, laborer, and other jobs that require little formal education and have lower wages because workers in these jobs are more likely to leave their occupations.
Employment growth is determined largely by changes in the demand for the goods and services provided by an industry, worker productivity, and foreign competition. Each industry is affected by a different set of variables that determines the number and composition of jobs that will be available. Even within an industry, employment may grow at different rates in different occupations. For example, changes in technology, production methods, and business practices in an industry might eliminate some jobs, while creating others. Some industries may be growing rapidly overall, yet opportunities for workers in occupations that are adversely affected by technological change could be stagnant or even declining. Similarly, employment of some occupations may be declining in the economy as a whole, yet may be increasing in a rapidly growing industry.
Employment growth rates over the next decade will vary widely among industries. Employment in goods-producing industries is expected to increase as growth in construction is partially offset by declining employment in agriculture, forestry, fishing, and hunting; mining; and manufacturing. Growth in construction employment will stem from new factory construction as existing facilities are modernized; from new school construction, reflecting growth in the school-age population; and from infrastructure improvements, such as road and bridge construction. Employment in mining is expected to decline due to laborsaving technology and continued reliance on foreign sources of energy.
Manufacturing employment will decrease slightly-employment declines in apparel manufacturing, computer and electronic product manufacturing, and textile mills and products manufacturing will be partially offset by employment gains in food manufacturing and pharmaceutical and medicine manufacturing. Apparel manufacturing is projected to lose about 245,000 jobs over the 2002-2012 period-more than any other manufacturing industry-due primarily to increasing imports replacing domestic products. Employment growth in food manufacturing is expected, as a growing and ever more diverse population increase the demand for manufactured food products. Employment growth in pharmaceutical and medicine manufacturing is expected, as sales of pharmaceuticals increase with growth in the population, particularly among the elderly, and with the introduction of new medicines to the market. Both food and pharmaceutical and medicine manufacturing also have growing export markets.
Growth in overall employment will result primarily from growth in service-providing industries over the 2002-2012 period, almost all of which are expected to have increasing employment. Rising employment in service-providing industries is expected to occur predominately in health services and educational services - the two largest industries - as well as in employment services, food services and drinking places, state and local government, and wholesale trade. When combined, these sectors will account for almost half of all new wage and salary jobs across the Nation.
Health services will account for the most new wage and salary jobs, about 3.5 million over the 2002-2012 period. Population growth, advances in medical technologies that increase the number of treatable diseases, and a growing share of the population in older age groups will drive employment growth. Offices of physicians, the largest health services industry group, is expected to account for about 770,000 of these new jobs as patients seek more healthcare outside of the traditional inpatient hospital setting.
Educational services is expected to grow by nearly 20 percent over the 2002-2012 period, adding about 2.5 million new jobs. A growing emphasis on improving education and making it available to more children and young adults will be the primary factors contributing to employment growth. Employment growth at all levels of education is expected, particularly at the postsecondary level, as children of the baby boomers continue to reach college age, and as more adults pursue continuing education to enhance or update their skills.
Employment in one of the Nation’s fastest growing industries-employment services-is expected to increase by more than 50 percent, adding another 1.8 million jobs over the 2002-12 period. Employment will increase, particularly in temporary help services and professional employer organizations, as businesses seek new ways to make their workforces more specialized and responsive to changes in demand.
The food services and drinking places industry is expected to add more that 1.3 million new jobs over the 2002-2012 projection period. Increases in population, dual-income families, and dining sophistication will contribute to job growth. In addition, the increasing diversity of the population will contribute to job growth in food service and drinking places that offer a wider variety of ethnic foods and drinks.
Almost 760,000 new jobs are expected to arise in State and local government, adding almost 10 percent over the 2002-2012 period. Job growth will result primarily from growth in the population and its demand for public services. Additional job growth will result as State and local governments continue to receive greater responsibility for administering federally funded programs from the Federal Government.
Wholesale trade is expected to add almost 640,000 new jobs over the coming decade, reflecting growth both in trade and in the overall economy. Most new jobs will be in durable goods merchant wholesalers, such as professional and commercial equipment and supplies; electrical and electronic goods; and furniture and home furnishing. However, industry consolidation and the growth of electronic commerce using the Internet are expected to limit job growth to 11 percent over the 2002-2012 period, less than the 15 percent projected for all industries.
Continual changes in the economy have far-reaching and complex effects on employment. Job seekers should be aware of these changes, keeping alert for developments that can affect job opportunities in industries and the variety of occupations that are found in each industry.
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