Trade For America - Jobs. Growth. Engagement. Prosperity.
The Importance of Service in the U.S. Economy
Services are crucial to the US economy, employment, and international trade. Services represent nearly 78% of US economic output, and a similar proportion of private employment. Services are essential inputs into the production of virtually all products. The price and quality of services influence costs and productivity in all other sectors in an economy, including manufacturing and agriculture. Thus, when liberalized and made more efficient, services have a strong effect in the competitiveness of an entire economy.
- The US is the world’s largest service exporter. US services exports exceeded $414 billion in 2006, with a US services surplus of approximately $73 billion in 2006. The US has enjoyed surpluses in its services trade for many years.
- Services are the largest part of our economy. Services accounted for 77.8% of US private sector GDP in 2005, or $8.5 trillion.
- The service sector is creating jobs. Between 1996 and 2006, services added 15 million new US jobs, and virtually all new employment in the US over the next half-decade will be in services. Close to 400 Congressional Districts have 70% or more of their workforce employed in services. Services jobs accounted for over 80.6% of US private sector employment or 91.6 million jobs out of total private sector employment of 113.6 million in 2006.
- Services jobs pay well. Services jobs paid an average of $51,045 annually in 2005, and in many service industries, ranging from professional services, management services, wholesale trade, transportation and warehousing, finance and insurance, information services, and others, the average compensation levels are much higher.
- US services companies are globally competitive. Financial services, express delivery, telecommunications, entertainment and audiovisual services, IT services, and many others derive significant portions of their revenues from overseas operations. Their presence in foreign markets is crucial to their global competitiveness, and US income from sales by U.S. foreign affiliates was over $489 billion in 2004.
- The US stands to gain significantly from services liberalization in the Doha Round. Many studies have shown that tremendous gains will accrue to the US, and to the world economy, with freer trade in services. According to a study prepared by the University of Michigan, with global free trade in services, the United States would enjoy a welfare gain of an astonishing $466 billion.
- US Cross-Border Services Trade and Surplus
