Fast food to be considered manufacturing? FUCKING BULLSHIT

[Hamel]

In the New Economics: Fast-Food Factories?
By DAVID CAY JOHNSTON

Published: February 20, 2004

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.

WTF are these god damn idiots trying to do: sex up our number of manufacturing jobs? Seems like it, since they've been taking hits over outsourced manufacturing...

[Hamel]

Register for your chance to win a new vagina

[Admiral Valdemar]

I certainly wouldn't call most fast food cooking...

[Joe]

WTF are these god damn idiots trying to do: sex up our number of manufacturing jobs?

Unlikely, since 1) they've been taking hits most recently over outsourced IT, not manufacturing and 2) adding fast food to the manufacturing sector will only decrease the amount of jobs in the service sector, making it an overall wash.

[General Zod]

for genuine resturaunts i'd say a definite no. but fast food. . . . .it's a tough call really. it's not exactly as though they put alot of effort into the food they make.

[Hamel]

for genuine resturaunts i'd say a definite no. but fast food. . . . .it's a tough call really. it's not exactly as though they put alot of effort into the food they make.

Perhaps I should consider myself a self-employed manufacturer since I microwave my food Tough call my hickory smoked ass

Unlikely, since 1) they've been taking hits most recently over outsourced IT, not manufacturing and 2) adding fast food to the manufacturing sector will only decrease the amount of jobs in the service sector, making it an overall wash.

Then they should leave it the hell alone.

[Master of Ossus]

for genuine resturaunts i'd say a definite no. but fast food. . . . .it's a tough call really. it's not exactly as though they put alot of effort into the food they make.

Right. They're manufacturing a standardized product from a standardized set of ingredients for standardized prices. That's pretty well the definition of manufacturing.

[Joe]

Perhaps I should consider myself a self-employed manufacturer since I microwave my food Tough call my hickory smoked ass

I'm sorry, but fast food meets the definition of manufacturing created by the Census Bureau perfectly. It's not such an easy call.

[Alex Moon]

Here's the entire box item in question

Box 2-2: What Is Manufacturing?
The value of the output of the U.S. manufacturing sector as defined in official U.S. statistics is larger than the economies of all but a handful of other countries. The definition of a manufactured product, however, is not straightforward. 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 official definition of manufacturing comes from the Census Bureau’s North American Industry Classification System, or NAICS. NAICS classifies all business establishments in the United States into categories based on how their output is produced. One such category is “manufacturing.” NAICS classifies an establishment as in the manufacturing sector if it is “engaged in the mechanical, physical, or chemical transformation of materials, substances, or components into new products.”

This definition is somewhat unspecific, as the Census Bureau has recognized: “The boundaries of manufacturing and other sectors… can be somewhat blurry.” Some (perhaps surprising) examples of manufacturers listed by the Bureau of Labor Statistics are: bakeries, candy stores, custom tailors, milk bottling and pasteurizing, fresh fish packaging (oyster shucking, fish filleting), and tire retreading. 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 distinction between non-manufacturing and manufacturing industries may seem somewhat arbitrary but it can play an important role in developing policy and assessing its effects. Suppose it was decided to offer tax relief to manufacturing firms. 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.

For policy makers, the blurriness of the definition of manufacturing means that policy aimed at manufacturing may inadvertently distort production and have unintended and harmful results. Whenever possible, policy making should not be based upon this type of arbitrary statistical delineation.

As you can see, the whole point was not that we were going to start counting fast food as manufacturing, but merely to point out that the nature of our economy is becoming such that the lines between manufacturing and service industries are becoming blurry, and thus we should be wary of making policy decisions based on those kinds of definations.

[kojikun]

Yes it is manufacturing, which is precisely why it TASTES LIKE CRAP.

[Darth Wong]

The problem with definitions like this is that they overlap by nature. Manufacturers could just as easily be reclassified as service industries. After all, the factory workers are providing a "service" to the consumer by assembling car parts into a finished car for them.

In practice, manufacturing traditionally means "heavy manufacturing", ie- something which requires more in the way of equipment than your hands and a spatula.

And that's why I think this stinks of sophistry; they're just trying to address the critics who say that the nation is losing its manufacturing industry and turning into a country of burger-flippers by literally re-classifying burger-flipping as manufacturing.

[Howedar]

They're spinning so fast, no wonder they're puking up shitty numbers.

[Alex Moon]

Here's a link to the actual report. The relevant section begins on pg 76 of the PDF.

In terms of shares of overall nonfarm employment, adjusted manufacturing
shows a decline of 2.8 percentage points over the 1990s, compared with a drop
of 3.1 percentage points in the reported data. If outsourcing were also
included, the decline in the actual share of employment in the manufacturing
sector would probably be even smaller. In other words, at least one-tenth (and
perhaps as much as one-fourth) of the decline in manufacturing’s share of
employment over the 1990s does not reflect a loss of manufactured goodsproducing
jobs. Rather, it reflects how measurement conventions used to
calculate employment statistics account for manufacturers’ increased use of
outsourced workers for tasks previously performed internally. Another example
of how measurement conventions can affect, and confuse, the evaluation of the
manufacturing sector is in the definition of manufacturing (Box 2-2).

The decline in manufacturing employment in the official statistics may
somewhat overstate the number of actual manufacturing production jobs
that have been lost. Changing business practices in the manufacturing
sector have led to both the outsourcing of nonproduction work that used to
be done “in house” and the increased use of temporary workers.
Manufacturing firms that once employed lawyers or accountants in their
legal or finance departments might now hire outside consultants to perform
these services. Counting this outsourcing as a decline in manufacturing jobs
is somewhat misleading, because these workers provide services whether
they are working for a manufacturing firm or an outside firm.
Similarly, manufacturing firms are increasingly using temporary workers,
especially during periods of uncertain demand. Such workers, previously
counted as manufacturing employees, are now counted as service-sector
employees in the payroll employment data, although many of them still
produce manufactured goods. The way in which employment statistics
capture the increased use of outsourcing and temporary workers thus overstates
the shift from manufacturing to service-providing jobs.
Much of the outsourced work is taken on by industries that make up the
employment category “Professional and Business Services,” which includes
the temporary-help services industry. The professional and business services
category covers a rapidly growing sector of the labor market, so it is likely
that the understatement of manufacturing employment has increased over
time. Professional and business services grew from just under 3 million
employees in 1950 to over 16 million employees in 2000 (Chart 2-17).
Employment in subgroups of this category increased substantially in the
1990s (Chart 2-18 ).

This is what section 2-2 was talking about. Basing policy off of loose definitions like 'manufacturing jobs' ultimately leads to problems precisely because the definitions lead to inaccurate pictures of the economic situation. No one is proposing that McDonald's jobs be counted as manufacturing jobs. They are merely saying that we need to look beyond the basic definitions to what is actually happening, especially as the line between the two become more and more blurred.

[Alex Moon]

The problem with definitions like this is that they overlap by nature. Manufacturers could just as easily be reclassified as service industries. After all, the factory workers are providing a "service" to the consumer by assembling car parts into a finished car for them.

And when temp workers are hired by manufacturers, they are considered 'service' jobs. That's exactly the problem that the ERP was trying to address. "How has changing industry structure caused the the government to overestimate the number of jobs lossed?"

[Darth Wong]

The problem with definitions like this is that they overlap by nature. Manufacturers could just as easily be reclassified as service industries. After all, the factory workers are providing a "service" to the consumer by assembling car parts into a finished car for them.

And when temp workers are hired by manufacturers, they are considered 'service' jobs. That's exactly the problem that the ERP was trying to address. "How has changing industry structure caused the the government to overestimate the number of jobs lossed?"

In most cases, they are service jobs. The kind of work that can be farmed out to unseasoned temp workers is not what anyone in his right mind would call "quality manufacturing jobs". I've worked for a few manufacturing firms; it takes a long time to bring up a new employee to a useful level of proficiency, and you rarely hire temp workers to do it unless it's some kind of totally brainless activity. Even if you would attempt to classify it as a "manufacturing job", it is hardly an indication that the manufacturing job sector is alive and well. Politically speaking, the whole purpose of tracking manufacturing job growth is as a barometer of middle-class employment, and it does not serve that purpose if you are actually an increasing number of low-paid no-benefit temp workers.

[0.1]

it's a ploy in the election year process (the republicans have to use it or they get browbeaten by the democrats by losses in manufacturing sector) because too many people are wedded (stupidly if you ask me) to the concept of having manufacturing jobs as an indicator of a healthy economy. (Think labor unions)

The truth of the matter is, manufacturing jobs are going to continue to move off shore at a large rate due simply to the fact that free market dictates that consumers seek out the lowest prices for their purchasing needs. And for a company, they can lower prices far better if they employ
labor force in Mexico or SE Asia as opposed to workers in the U.S.

Blame the higher standards of living in the U.S., the increased productivity, whatever. Bottom line is, unless U.S. workers in the manufacturing sector are willing to match the pricing offered by their foreign counterparts. They are fucked as far as manufacturing jobs are concerned.

The same can be said for R&D work these days, consider Intel's outsourcing of one of their R&D center to India or the growing number of Indian computer programers and their willingness to move back to India. Nowhere is the effect more pronounced in silicon valley. The growing number of well educated people in the so called third world is going to shift things over in the high tech market as well. In India for example, the nation itself is focusing on educating its population with an effort to bring high tech companies over. Hard to compete against that when the U.S. government is unable to do the same. But, that's the beauty of free market economics in the "global environment," it is simply a pricing advantage for corporations.

So, the incumbent administration is always caught in the same bind. They can "kowtow" to the labor unions, and get that vote, but then they're against free trade. Or, they can enact acts like NAFTA, and they'll be accused of shipping jobs overseas to the benefits of corporations. In the end, that's the way life is, it's the perfect lose lose situation.

Until pricing parity can be achieved in the U.S. with respect to the rest of the world, American manufacturing sector will likely continue to degrade "with the exception of essential national security functions."

P.S. in terms of economic situations, I'd dare say that the U.S. is probably much better off than the rest of the world. Growth is slow, but that's hardly surprising, since it really is a matter of scope. If anyone thinks that the U.S. could grow its economy at the same rate as say Thailand, then I have a bridge I'd like to sell you.

[Oddysseus]

Administration: "Hey look at me!!! I'm going to adjust the weight of the statistics to make it look like we haven't f@$%@& up the economy. WHOO!!!"


Yeah...Good job guys. You all know the saying about the types of lies: lies, damn lies, and statistics.


When they try to foist this large a dump over the heads of this many people, should it now be classified as a MFG job?

[Mayabird]

When they try to foist this large a dump over the heads of this many people, should it now be classified as a MFG job?

You sure they wouldn't call it a public service?

[Asst. Asst. Lt. Cmdr. Smi]

for genuine resturaunts i'd say a definite no. but fast food. . . . .it's a tough call really. it's not exactly as though they put alot of effort into the food they make.

Right. They're manufacturing a standardized product from a standardized set of ingredients for standardized prices. That's pretty well the definition of manufacturing.

Under that defenition, could we consider the process of a record comapny making a boy band "manufacturing"? After all, they are manufacturing a standardized product with a standardized set of ingredients when you think about it.

[Alex Moon]

The problem with definitions like this is that they overlap by nature. Manufacturers could just as easily be reclassified as service industries. After all, the factory workers are providing a "service" to the consumer by assembling car parts into a finished car for them.

And when temp workers are hired by manufacturers, they are considered 'service' jobs. That's exactly the problem that the ERP was trying to address. "How has changing industry structure caused the the government to overestimate the number of jobs lossed?"

In most cases, they are service jobs. The kind of work that can be farmed out to unseasoned temp workers is not what anyone in his right mind would call "quality manufacturing jobs". I've worked for a few manufacturing firms; it takes a long time to bring up a new employee to a useful level of proficiency, and you rarely hire temp workers to do it unless it's some kind of totally brainless activity. Even if you would attempt to classify it as a "manufacturing job", it is hardly an indication that the manufacturing job sector is alive and well. Politically speaking, the whole purpose of tracking manufacturing job growth is as a barometer of middle-class employment, and it does not serve that purpose if you are actually an increasing number of low-paid no-benefit temp workers.

But if temp jobs are only good for low skilled, brainless activities, then those jobs are not likely to be paid very much to begin with. The workers they're replacing are likely on the low end of middle class, if in it at all. If your purpose is to track middle class employment, then the way you are going about it is flawed because you are recording these shifted lower-class jobs as a loss to middle-class employment, when they are not.

[Darth Wong]

But if temp jobs are only good for low skilled, brainless activities, then those jobs are not likely to be paid very much to begin with. The workers they're replacing are likely on the low end of middle class, if in it at all.

All the more reason not to count these worthless temp jobs as real manufacturing jobs.

If your purpose is to track middle class employment, then the way you are going about it is flawed because you are recording these shifted lower-class jobs as a loss to middle-class employment, when they are not.

Wrong again. The loss to manufacturing jobs is being tracked directly, not indirectly by subtracting these temp jobs from something.