[Corporations] FW: Fast-Food Factories?

[Mike Spears]

 In a nation where they classify Catsup/ketchup as a vegetable, fast-food
service is -of course - a manufacturing industry.
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http://www.nytimes.com/2004/02/20/business/20jobs.html?pagewanted=print&posi
tion=

The New York Times  February 20, 2004
 By DAVID CAY JOHNSTON

In the New Economics: Fast-Food Factories?

Is cooking a hamburger patty and inserting the meat, lettuce and ketchup
inside a bun a manufacturing job, like assembling automobiles?

That question is posed in the new Economic Report of the President, a
thick annual compendium of observations and statistics on the health of
the United States economy.

The latest edition, sent to Congress last week, questions whether
fast-food restaurants should continue to be counted as part of the service
sector or should be reclassified as manufacturers. No answers were
offered.

In a speech to Washington economists Tuesday, N. Gregory Mankiw, chairman
of the president's Council of Economic Advisers, said that properly
classifying such workers was "an important consideration" in setting
economic policy.

Counting jobs at McDonald's, Burger King and other fast-food enterprises
alongside those at industrial companies like General Motors and Eastman
Kodak might seem like a stretch, akin to classifying ketchup in school
lunches as a vegetable, as was briefly the case in a 1981 federal
regulatory proposal.

But the presidential report points out that the current system for
classifying jobs "is not straightforward." The White House drew a box
around the section so it would stand out among the 417 pages of
statistics.

"When a fast-food restaurant sells a hamburger, for example, is it
providing a 'service' or is it combining inputs to 'manufacture' a
product?" the report asks.

"Sometimes, seemingly subtle differences can determine whether an industry
is classified as manufacturing. For example, mixing water and concentrate
to produce soft drinks is classified as manufacturing. However, if that
activity is performed at a snack bar, it is considered a service."

The report notes that the Census Bureau's North American Industry
Classification System defines manufacturing as covering enterprises
"engaged in the mechanical, physical or chemical transformation of
materials, substances or components into new products."

Classifications matter, the report says, because among other things, they
can affect which businesses receive tax relief. "Suppose it was decided to
offer tax relief to manufacturing firms," the report said. "Because the
manufacturing category is not well defined, firms would have an incentive
to characterize themselves as in manufacturing. Administering the tax
relief could be difficult, and the tax relief may not extend to the firms
for which it was enacted."

David Huether, chief economist for the National Association of
Manufacturers, said he had heard that some economists wanted to count
hamburger flipping as manufacturing, which he noted would produce
statistics showing more jobs in what has been a declining sector of the
economy.

"The question is: If you heat the hamburger up are you chemically
transforming it?" Mr. Huether said.

His answer? No.