The long term trend in goods and government vs. everything else I think also shows part of what has happened to the American middle class.

Goods and Government are what we might have thought about as backbone jobs. These are police officers, fire fighters, school teachers, factory workers, construction workers. When you think of a stereotypical 1950s American, they are doing one of these jobs.

And, in the 1950s half of Americans were employed in these sectors. Yet, since then the labor market has radically shifted.

FRED Graph

Notice these two are plotted on the same axis so from 1939  to 1965 – not including the war boom – goods and government was roughly half of the nonfarm labor force. Then a rapid falling off.

One thing I hadn’t considered but is probably true is that goods (via the magic of boxes) and government via transfers between jurisdictions, is not as dependent on urbanization as the rest of the economy.

This probably supported the stagnation in land rents that occurred over this period, which also supported real wages.

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