From employment to trade, almost all of the government's economic data is based on dividing the economy into two sectors: businesses that produce goods and businesses that provide services. But with the dawn of the Information Economy, this traditional split no longer makes sense. The service sector has become a confusing mishmash of everything from software giants such as Microsoft Corp. to the neighborhood day-care center.
It makes a lot more sense to create a new statistical system designed for the Information Age. It would consist of three economic sectors: goods-producing, services, and information. Services would include only businesses where personal contact with the ultimate consumer is essential--the day-care center is in the service sector, while Microsoft is not. Instead, the software giant would go in the information sector, along with other businesses that provide, move, or manipulate information--including most financial services, communications, and publishing companies such as McGraw-Hill, publisher of this magazine, which are currently counted as manufacturers.
The new classification shows that the big job creators in the economy are in the service industries, not the information sector (table). Yet strong productivity gains are largely in the information sector, not in services. After all, it's hard to imagine huge productivity gains in a barber shop.
Measuring the Information Economy won't be easy. But it would be worthwhile considering the growing role information plays in the U.S. economy.
A New Way To Split The Economy SHARE OF GROWTH IN EMPLOYMENT, EMPLOYMENT, 1993 1989-93 GOODS 14.7% -6.5% Includes mining, utilities, and most manufacturing SERVICES 70.0% 5.2% Includes people-oriented services such as auto repair, banking, and hotels; most health care; state and local government; elementary and secondary education INFORMATION 15.3% 3.2% Includes information-oriented services such as advertising and entertainment; communications; publishing; software; computers; higher education; medical diagnosis; securities industry DATA: BUSINESS WEEK