In the 1970s, the US economy began to shift away from manufacturers. Deindustrialization continued into the 1990s. Explain why this occurred and who was affected by this shift. What were the benefits and other consequences of this shift?

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There wasn't one specific thing that caused the shift from manufacturing to service-oriented employment in the United States in the late twentieth century, which some people call "deindustrializaton." In my opinion, that's also not such a bad thing as it is typically made out to be. Let's look briefly at...

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the causes and the consequences.

The oil supply shocks of the early 1970s arrived at a time when Baby Boomers were getting old enough, as a group, to dominate the American labor market and when computers were small enough and cheap enough to fit on a desk in a typical business. So, the first generation to internalize civil rights, feminism, and "sex, drugs, and rock-n-roll" hit middle management at the same time as the desktop PC and the green revolution. The distaste for our fathers' "old-fashioned" manufacturing jobs, the technology to make work easier, and the necessity to do more with less energy defined the US economy in the 1970s. The balance of payments crisis and the crash in GDP growth that came with those cultural trends were like gasoline on the fire. It's no surprise America as a whole tipped away from manufacturing toward service. We had to.

This shift affected everyone. The people hit hardest were the blue-collar employees of the manufacturing industries: steel workers, coal miners, assembly line workers at car companies. They lost their jobs or saw their pay cut drastically. Their benefits were cut or "redefined." Pensions were phased out. The ripple effect of these changes touched all parts of American society. There were suddenly whole industries organized around re-training workers: community colleges became a lot more important in higher education, and job re-training centers multiplied and filled up, as did college entrance and standardized test prep centers.

It wasn't all bad. The shift toward services re-ignited the American economy in the 1980s, along with the Reagan administration's loose monetary policy, which set off decades of economic growth. There were recessions and savage income inequality, but by 1990, the United States had regained the economic momentum it lost when Nixon was president. This time, however, it was the service sector, not big industry, that drove economic growth.

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There are several explanations for why deindustrialization has occurred in countries like the United States. One is that technology has phased out many industrial jobs. Jobs in manufacturing that were once done by people can now be done by machines, which means that factories employ a smaller portion of the labor force. Another explanation, perhaps the most important explanation, is that manufacturers have relocated their facilities to countries where labor costs are lower. Both of these factors are interrelated and helped lead to deindustrialization. It has mostly affected working-class people, especially in cities where the manufacturing sector was most important. The city of Detroit, for example, has suffered tremendously from the departure of some auto manufacturing facilities, and many former factory towns in places like Pennsylvania and Ohio have all but died out. Workers have had to seek training for new jobs or have been forced to take lower-paying unskilled jobs, usually in the service sector. The jobs often have fewer benefits as well. As for the benefits of deindustrialization itself, the process has lowered the cost of many manufactured goods, which increases spending power. It has also lessened the environmental impact of manufacturing on many areas, though of course these effects have been shifted to other places in the world. We are still in the midst of understanding the effects of this profound shift in Western life.

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