Friday, February 20, 2004


We read in the New York Times: (excerpts, emphasis added)
In the New Economics: Fast-Food Factories?

The latest edition [of the Economic Report of the President], 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."

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."


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