Our country is rapidly changing, and not for the better — but there are some jobs that are booming, even as the economy continues to dive.
Some jobs are on the way up — and others are on the way out. Picture: SuppliedSource:istock
Australia has turned into a services economy.
Our country is rapidly changing, and one of the biggest ways is that almost everyone who has got a new job recently has ended up in the services sector.
We’re a nation of hairdressers and consultants now. As the next graph shows, we’ve added over a million jobs in household services and business services while losing jobs in manufacturing and mining.
Employment growth by industry. Picture: SuppliedSource:Supplied
Are services sector jobs any good? We better hope so, because they’re what we are all going to be doing soon.
The shocking answer to the question is yes, they are good, mostly.
We tend to get stuck believing facts about the economy that applied 20 years ago, and we can be slow to catch up with the truth. We cling to the idea hard jobs making material things are the best jobs. But the truth is a lot of those good steady factory jobs are not that good any more. And not that steady either.
As the next graph shows, manufacturing jobs used to pay as well as jobs in a bank or a telecommunications company. Not any more. There’s a lot more money in those services sector jobs now. (These industries are some of the ones that are counted as “business services” in the chart above.)
Many service jobs are booming while others are stagnating. Picture: SuppliedSource:Supplied
We have this old-fashioned idea that service jobs are burger flipping, and yes, there’s entry level jobs like that, but lots of service sector jobs are doctors and nurses, lawyers and consultants.
Those are good jobs in many ways. Safe, well-paid jobs that you can do until late in life. But they are also good because it is much harder for international trade to undermine them. Chinese manufacturing may have caused the demise of a lot of Australian factories, but Chinese hospitals don’t do much to affect Australian hospitals. (That said, some people do travel to Thailand for cheap cosmetic surgery. There is some trade in medical services!)
THE GRAIN OF TRUTH IN THE STEREOTYPE
Of course, the services economy does include some crappy jobs. Some of those household services jobs are not exactly lucrative. As the next chart shows, a career in hospitality has proved a particularly disappointing choice in the last couple of decades.
Pay growth since 1994. Picture: SuppliedSource:Supplied
Education and training has also not shot ahead like some of the other services sector jobs. Healthcare and social assistance, which is one of the biggest employing industries in Australia and includes many well-paid jobs, sits just below the middle of the pack for pay growth.
WHY ARE WE A SERVICES ECONOMY NOW?
The basic reason is simple: People are spending less on goods than on services. Goods industries fell from 34 per cent of the economy in 1985-86 to around 21 per cent in 2015-16. Services have taken up the slack.
Spending more on services is a good thing. It’s a sign we’re well-off as a nation. The RBA puts it like this: “As incomes rise, households typically spend more of their income on household services, such as health, education and restaurant meals, than on goods.”
That makes total sense to me. If I only had a few dollars I’d spend them on food and clothes. If I had many millions, I’d spend them on travel, advisers to tell me where to put my millions and gardeners to tend my estates.
Basically, after a while of earning more, we tend to admit we have enough stuff. In fact, if you’re aware of Japanese cleaning sensation Marie Kondo, you’ll know we actually have too much stuff. At least one delightfully polite Japanese lady has got rich by inspiring us to get rid of it. (Marie Kondo’s job, by the way, is definitely in the services sector.)
Hopefully, I’ve convinced you that not all services sector jobs are “burger flippers”. But while we are on the topic, how much money do burger flippers make?
McDonald’s pay is changing at the moment as a result of a big fight with the union, but in the first half of 2019, an 18-year old permanent employee at McDonalds would have been earning $14.56 an hour. An 18-year-old casual would have made $18.20/hour, while a 15-year-old casual would have made $10.40/hour.
These, clearly, are not high-paying jobs. But they can lead to higher-paid opportunities in the same organisation as this story shows. All the store managers, marketing gurus and financial people who work at McDonald’s HQ count as service sector employees. That’s the thing about the service sector. The bottom-end jobs are the most visible, but we shouldn’t forget the rest.