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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.

David Cay Johnston, The New York Times

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I noticed in the recently released Economic Report of the President that there was some consternation in the defining of manufacturing. It could be inferred from your report that the administration is willing to recognize drink mixing, hamburger garnishing, French/freedom fry cooking, and milk shake mixing to be vital components of our manufacturing sector.

I am sure the 163,000 factory workers who have lost their jobs in Michigan will find it
heartening to know that a world of opportunity awaits them in high growth manufacturing careers
like spatula operator, napkin restocking, and lunch tray removal. I do have some questions of this new policy and I hope you will help me provide answers for my constituents:

*Will federal student loans and Trade Adjustment Assistance grants be applied to tuition
costs at Burger College1

*Will the administration commit to allowing the Manufacturing Extension Partnership
(MEP) to fund cutting edge burger research such as new nugget ingredients or keeping the
hot and cold sides of burgers separate until consumption?

* Will special sauce now be counted as a durable good?

* Do you want fries with that?

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Originally posted by Jason Abbadon:
...and his detractors say Bush hasnt done anything but wage war for the past four years.

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