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TL;DR
A November 9, 2026, article from ThorstenMeyerAI.com argues that U.S. employment shifted toward services well before manufacturing jobs peaked in 1979. It links the change to Baumol’s cost disease and cites a study in which an AI assistant increased customer-support agents’ issues resolved per hour by 15% on average. How that productivity gain will affect service employment remains unsettled.
Services accounted for 86% of U.S. nonfarm payroll jobs in 2025, according to a calculation using Bureau of Labor Statistics data cited in a November 9 analysis by ThorstenMeyerAI.com. The article argues that the shift toward service work began decades before manufacturing employment peaked in 1979, and considers whether AI could raise productivity in sectors where human time remains difficult to reduce.
The employment figures use different definitions. The article’s calculation from the BLS Current Employment Statistics survey puts services at 62% of nonfarm payroll jobs in 1939, 67% in 1967, 72% in 1979 and 86% in 2025. The survey excludes farm workers and self-employed people. Separately, the International Labour Organization estimates that services made up 79.6% of all U.S. workers in 2025. These measures should not be treated as interchangeable: one concerns payroll jobs outside farming, while the other covers a broader workforce estimate.
The analysis uses economist William Baumol’s cost disease to explain why some services can become more expensive even as other industries grow more productive. In work such as manufacturing, machinery and process changes can increase output per worker. In other activities, including live music, teaching and some forms of personal care, the time and attention involved are part of what is being provided. Wages can rise across the economy, while productivity in these activities is harder to increase at the same rate.
As an illustration of different price paths, the article reports that official, quality-adjusted U.S. television prices fell 98% from 2000, while hospital services rose 274%, college tuition 188% and car repair 143%. These are historical comparisons as reported by the source, not evidence that every price in a sector followed the same path. The source also cites a study of 5,172 customer-support agents in which an AI assistant increased issues resolved per hour by 15% on average. It does not provide the study’s date or full research details in the supplied material.
Infographic 02 · Baumol's cost disease
Why the workers moved to services
Baumol's mechanism in four steps, and what it looks like in US jobs.
- 1966Baumol and Bowen: the quartetA 45-minute Schubert quartet still takes about three hours of human work
- 1967Two kinds of workWhere labour is a tool, machines cut it again and again; where labour is the product, they can’t
- WagesPay rises everywhereTeachers, nurses and musicians must earn more too, or they leave
- ResultCosts rise, people moveIf we keep buying the same mix, more and more workers end up in the slow sector
Service industries, share of US nonfarm payroll jobs
US jobs, annual average 2025 (millions)
Payroll shares exclude farm workers and the self-employed (BLS establishment survey). Health spending: national health expenditure as a share of gross domestic product.
Sources: W. J. Baumol, “Macroeconomics of Unbalanced Growth”, American Economic Review 57(3), 1967, BLS Current Employment Statistics (own calculation of shares), CMS, National Health Expenditure, Table 1.
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AI Meets Slow-Growing Service Work
The analysis matters because services make up most U.S. employment under either measure it cites, while productivity gains in manufacturing have not automatically translated into similarly rapid output gains in every service. If wages rise across occupations but the time needed for a service remains relatively fixed, employers may face higher costs, which can feed into prices. Baumol’s explanation is one framework for that pattern, not a claim that every price increase has the same cause.
AI could alter that balance if it lets workers resolve more requests, prepare information faster or handle routine tasks with less time. The customer-support result offers a specific example of measured productivity improvement, but it does not establish what happens to total employment. Employers could use productivity gains to serve more customers, reduce staffing, change job duties or combine those responses. The article frames that outcome as an open question rather than a settled forecast.
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The Long Shift Toward Services
The article places service-sector growth on a longer timeline than the decline in factory employment. It says U.S. manufacturing employment reached almost 20 million jobs in June 1979, but the service share of nonfarm payroll employment was already 72% that year and had been increasing in earlier decades. On the figures presented, the economy did not become service-heavy only because factories later employed fewer people.
Baumol and economist William Bowen examined the economics of performing arts in their 1966 book, Performing Arts: The Economic Dilemma. Their example was a 45-minute Schubert string quartet: four musicians perform for 45 minutes, requiring three hours of combined human work. The performance cannot be made shorter without changing the piece or how it is played. Baumol developed a wider account of such productivity differences in his 1967 paper, “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.”
The distinction is not absolute. The article notes that retail has adopted supermarkets and self-service, while faster travel can allow a lecturer to address audiences in more places. The point is that some work is more readily reorganized or mechanized than work whose value depends on human attention or presence. That distinction helps explain why technological progress can lower the cost of some products without doing so uniformly across the economy.
““Human ingenuity has devised ways to reduce the labor necessary to produce an automobile, but no one has yet succeeded in decreasing the human effort expended at a live performance of a 45-minute Schubert quartet much below a total of three man-hours.””
— William Baumol, quoted from his 1967 paper
What AI Productivity May Change
The material does not establish whether AI-driven productivity gains will reduce service-sector employment, increase demand enough to sustain or add jobs, or mainly change the tasks workers perform. The reported 15% average increase in issues resolved per hour is tied to one study of 5,172 customer-support agents; the source excerpt does not supply the study date, setting, duration or details about how the result was measured.
It is also unclear how much of the price growth cited for hospitals, tuition and repairs reflects limited productivity gains rather than other influences. The article itself cautions against explaining every increase as waste or greed, and notes that the U.S. spends 18.0% of its economy on health compared with 12.4% in Germany. Those figures are presented as a cross-country contrast, but the supplied material does not detail the years or accounting methods behind them. The employment shares, price comparisons and AI study each have distinct scopes and should be read accordingly.
The Next Test for Service Jobs
The immediate question is whether productivity improvements from AI extend beyond the customer-support setting cited in the article and how employers use them. More evidence would be needed to assess effects on service quality, worker duties, wages, prices and staffing across different industries. A faster response to customer requests, for example, does not by itself show whether a company will employ fewer people or serve more customers.
The article presents AI’s effect on service work as the question for the season, rather than reporting a resolved employment trend. Subsequent evidence and reporting will need to distinguish task-level gains from changes in total jobs and to identify the time period and comparison baseline for any productivity claims.
Key Questions
What does the claim that services account for about four in five U.S. workers mean?
The source cites an International Labour Organization estimate of 79.6% of U.S. workers in services in 2025. It separately calculates that services made up 86% of nonfarm payroll jobs in the BLS survey that year. The figures use different workforce definitions.
What is Baumol’s cost disease?
It is an economic explanation for why costs can rise in activities where it is difficult to increase output per worker as quickly as in more technologically progressive industries. Workers in those services may still need wage increases to keep pace with pay elsewhere.
Did services grow only after U.S. factory jobs declined?
No. The figures cited in the analysis show services at 62% of nonfarm payroll jobs in 1939 and 72% in 1979, the year U.S. manufacturing employment reached its cited peak. The service share continued to grow afterward.
Does the cited AI study show that AI will eliminate customer-support jobs?
No. The source reports that an AI assistant raised issues resolved per hour by 15% on average in a study of 5,172 agents. That finding alone does not establish whether employers will cut jobs, change duties or handle more customer requests.
Why did some service prices rise while television prices fell?
The article points to differences in productivity: television production can benefit from changes that raise output per worker, while some services require substantial human time or attention. The price comparisons are historical figures reported by the source and do not show that productivity is the only factor behind each sector’s prices.
Source: ThorstenMeyerAI.com
