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February 23, 2004: Fixing the job situation in an otherwise booming economy...

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This is curious.

See In the New Economics: Fast-Food Factories?
David Cay Johnston, The New York Times, February 20, 2004

Here's the concept:


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.  

... "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. "

... 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. 


Indeed, it would produce such statistics. 

I myself have managed the system shop at a General Motors factory where they pumped out locomotives and light armored vehicles - using complex mainframe MRP (manufacturing resource planning) systems.  We had four to six programmer-analysts keeping that creaky old MRP system running.  Sean led a team to design a warehouse pick-list system to get parts to the assembly line on time.  Steph and Tim were working on accounting systems, while Rhona was a key DBA (database administrator) keeping things in order on the mid-range Unix boxes tracking all sorts of things.  Then there was linking to the big mainframe in Plano to track ten of thousands of parts for NAFTA certification so the finished products could cross borders with minimal tariffs. 

Just like MacDonald's and Burger King?  Maybe.  Maybe not. 

But if you want to improve unemployment statistics in regard to manufacturing, this could work.  Perhaps I should trot my résumé down to the local In-and-Out Burger place on Sunset.  My experience could be of use to them?

It strikes me that one reason the economy is booming, with profits soaring and the market rising, and productivity jumping better than it is has in forty or fifty years, is precisely because there may be almost ten million folks out of work.  This depresses wages, keeping them quite low - what with everyone worried about being laid off or having their job outsourced to Lahore or Bombay.  Pressing for better wages or better benefits would be insane, and collective labor actions foolish.  You don't want to roll those dice. 

Profits thus rise when labor costs are decreasing dramatically.  The current situation keeps workers "in line" and benefits owners and investors.  No kidding. 

The problem for the current administration is that not just investors and owners vote.  Workers vote too.  The trick will be convincing these workers that they are in great shape manufacturing useful things for their fellow countrymen. 

Well, burgers are useful.