Explain how productivity growth has led to labor market realignment in the United States.

What will be an ideal response?

Productivity has cut jobs drastically in some parts of the economy, sending the labor force to other economic sectors for employment. At the time of the American Revolution, nearly 90 percent of the U.S. labor force had agricultural jobs. Yet today, with less than 2 percent of the nation’s labor working on farms, the United States produces such a surplus of products that it sometimes seems unmanageable. At first, after the huge drop in farm jobs was under way, the farm workers shifted to manufacturing, as growing U.S. incomes raised demand for industrial products sharply. Then productivity in manufacturing took off, and workers again had to move elsewhere into the service sector of the economy. Indeed, it has transformed the United States into a “service economy,” with more than three-quarters of the labor force employed in services.