University of Maryland
Sociology 441: Stratification 

De-industrialization as a cause of growing inequality


The shift of the labor force from manufacturing to the service sector should increase inequality in two ways:
Loss of middle income jobs:
Many manufacturing jobs, especially in durable goods manufacturing like steel mills and automobile assembly plants, pay even high school graduates quite well (see operators in the list of occupations). Many service sector jobs, on the other hand, have low wages (see service workers and retail sales). A shift of workers out of these middle income factory jobs to low income service sectors jobs not only lowers average earnings, but it hollows out the middle of the income distribution, creating more inequality. Or, as Danziger and Gottschalk put it, "There were fewer jobs for auto workers and more jobs for hamburger flippers."

Growth of (the more unequal) service sector.
The service sector has a greater income gap between high-paying and low-paying jobs than does manufacturing. While the service sector includes "hamburger flippers", retail sales clerks, and parking lot attendants, it also includes stock brokers, physicians, and professional athletes. So there is a big gap within the service sector between good jobs and bad jobs. Manufacturing tends to have a more equal distribution of incomes. Factory managers don't make what stock brokers make and factory workers make more than hamburger flippers. So the range of incomes is smaller in manufacturing. As the economy moves from manufacturing to service, the sector with the most inequality grows, thus creating more inequality in the whole society.
This theory was first popularized in two books by Barry Bluestone and Bennett Harrison, The Deindustrialization of America and The Great U-Turn: Corporate Restructuring and the Polarization of America.


Danziger and Gottschalk cite two types of evidence to evaluate this idea:
return to: Sociology 441 home page Sociology 441 schedule list of causes of inequality

Last updated March 3, 2000
comments to: Reeve Vanneman.