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TL;DR
A November 9 analysis from ThorstenMeyerAI.com says services accounted for 86% of U.S. nonfarm payroll jobs in 2025, while the International Labour Organization estimates services made up 79.6% of all U.S. workers. It connects the long-running shift 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; the broader effect on service jobs and costs remains uncertain.
A November 9 analysis by ThorstenMeyerAI.com examines whether artificial intelligence could raise productivity in service work that has historically been difficult to speed up. It reports that service-providing industries accounted for 86% of U.S. nonfarm payroll jobs in 2025, while an International Labour Organization estimate puts services at 79.6% of all U.S. workers.
The analysis says services were already a majority of U.S. nonfarm payroll jobs in 1939, at about 62%. Their share rose to 67% in 1967, 72% in 1979 and 86% in 2025, based on the author’s calculations from Bureau of Labor Statistics Current Employment Statistics annual averages. The payroll survey excludes farm workers and self-employed people. The separate ILO estimate, which covers all workers, puts the 2025 services share at 79.6%.
The article uses economist William Baumol’s cost disease to explain why some services become more expensive relative to goods. In a 1967 paper, Baumol described work where labor is an input that technology can reduce, and work where the labor itself is central to the product. A factory may produce more per worker as machinery improves; a quartet still needs four musicians to perform the same piece live.
As examples of diverging prices, the analysis reports that the official, quality-adjusted U.S. price of televisions fell 98% between 2000 and 2025, while hospital services rose 274%, college tuition 188% and car repair 143%. These figures are presented as price changes over that period, not as evidence that every service has the same cause of rising costs. The article also cites a study of 5,172 customer-support agents in which an AI assistant increased issues resolved per hour by 15% on average.
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 Labor-Intensive Services
The stakes reach beyond technology companies. Services include health care, education, transport, retail, repairs and entertainment, and they account for most U.S. employment under both measures cited in the analysis. If AI helps workers complete more tasks in the same time, it could change the cost and delivery of some services, as well as the amount of labor employers need for them.
The cited support-agent result is a specific productivity finding, not proof that AI will reduce service employment or lower prices across the economy. The analysis frames the unresolved issue as whether productivity gains will reduce the number of workers needed or redirect workers toward tasks that remain difficult to automate. For consumers, the distinction matters: an efficiency gain does not automatically become a lower bill, better service or higher wages.
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From Quartets to Cost Disease
Economists William Baumol and William Bowen examined the finances of performing arts in their 1966 book, Performing Arts: The Economic Dilemma. Their example contrasted a live performance, which requires musicians’ time even as technology advances elsewhere, with manufacturing, where innovations can reduce labor per item. Baumol developed the broader argument in his 1967 paper, “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.”
The theory does not claim that all services are technologically stagnant. The source stresses that the distinction is a matter of degree: supermarkets and self-service changed retail, while transport technology made some kinds of work more productive. Its central mechanism is that wages can rise across the economy even where output per worker grows slowly, putting pressure on the relative cost of labor-intensive services.
The employment history also challenges a simple explanation that services grew only after factories began to decline. The source places manufacturing employment’s peak at nearly 20 million in June 1979, but says services were already 72% of nonfarm payroll jobs that year and had accounted for 62% as far back as 1939. The figures describe different sectors and measures; they do not by themselves establish why each worker moved between them.
““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 and William Bowen, quoted from their 1966 book as cited by economist Alex Tabarrok
Limits of the AI Evidence
The source does not provide the customer-support study’s publication date, research setting, comparison group or details about how the 15% average was measured. The figure should therefore be read as a reported result from one study, not as a forecast for all service workers or a measure of economy-wide productivity.
It is also not clear how widely AI systems can improve performance in services requiring physical care, in-person judgment or sustained human interaction. The source raises possible effects on employment and costs but does not establish that AI will reduce service-sector headcounts, lower prices or improve service quality. The employment shares and price figures show trends and comparisons; they do not, on their own, identify all causes behind them.
Tracking Productivity and Jobs
The next evidence to watch is whether AI productivity gains recur across different service occupations and persist outside individual studies. Useful follow-up measures would include task completion and quality, customer outcomes, staffing levels, wages and prices—not just the number of issues resolved per hour.
The source presents the question of whether AI will shrink service employment or shift people into work that remains difficult to automate as an open issue for the season. No specific policy change, company rollout or new research milestone is identified in the supplied material. Until more comparable evidence emerges, the 15% support finding is a limited indicator of what AI may do, rather than a settled account of how the service economy will change.
Key Questions
What does the 80% figure describe?
The headline refers to services’ share of U.S. workers. The International Labour Organization estimate cited by the source puts that share at 79.6% in 2025. A separate BLS payroll measure puts service-providing industries at 86% of nonfarm payroll jobs that year; it excludes farm workers and self-employed people.
What is Baumol’s cost disease?
It is an economic explanation for why labor-intensive services can become more expensive relative to goods when productivity grows more slowly in those services, while wages still rise across the economy. A live musical performance is a common example because the same number of musicians’ hours is needed to play the piece.
Does the support-agent study show AI will eliminate service jobs?
No. The analysis reports that an AI assistant raised issues resolved per hour by 15% on average among 5,172 customer-support agents. That result does not establish that employers will cut jobs, that the finding applies to other occupations or that the effect will persist.
Why did service prices rise while television prices fell?
The source compares quality-adjusted U.S. television prices, which fell 98% from 2000 to 2025, with reported increases in hospital services, college tuition and car repair. It uses Baumol’s theory to discuss differences in productivity, but the figures alone do not explain every cause of each price change.
Source: ThorstenMeyerAI.com
