[ Photo of FDR Memorial in Washington, DC by Kate Ure, creative commons license. ]
"Don't fill potholes. That won't fix the economy. Instead, we should be investing in the entrepreneurs who will create jobs -- if fewer -- and wealth -- greater, thanks to platforms and efficiencies. Invest in education of our youth and our unemployed. Invest in efficiency -- energy efficiency, for example."
---- Consistently captivating curmudgeon Jeff Jarvis's judgment on jobs.
By Jason Calacanis
Depending on whose numbers you believe, we are at around 9% unemployment (11.8% here in California). If you include the underemployed folks and the folks who have simply given up, it’s 50% more (around 15%) I understand.
Let’s say, for simplicity, the number of folks unemployed or underemployed in America is 20M.
Further, let’s say our goal is to employee 2.5M more folks, thus reducing our un- and underemployed by 15% to 25% through high-tech retraining.
Would that be possible? Sure, because we’re only talking about trying to employ a portion of the unemployed.
The harsh reality is that some folks are, well, not driven, smart or focused enough to take on retraining. Some may feel too old to go back to the classroom -- if you're 50 years old I’m sure it's harder to retrain then when you're 30 of 40.
It’s hard to reboot a career if you’re a smart and driven person. For individuals who didn’t work hard in school, who feel entitled or perhaps even bitter, it might be impossible. We’re probably not going to save them.
And the good news is, we don’t need to. We only really need to cut unemployment by a couple of points to make a huge difference.
So, let’s all assume that some percentage of the unemployed could be retrained -- not all -- just some.
What would that cost?
Cost to Retrain One-Third of the Unemployed
Let’s imagine what a full-time training program would cost for someone to go from a basic associates or college-level education to being "startup/tech company ready." Not that everyone will go to a startup or tech company, but it’s a good benchmark for all of us since we know what an entry-level startup or tech company employee looks like.
Now, half the population might need to take some remedial classes for three months. Let’s pay these poor teachers an awesome $100K a year all-in. They would teach only four sessions a year with only 20 students in each.
The cost would be $2,500 a student ($100K/80 students). Add another $500 a student in facilities (~$150 a month for a rented desk and class room space each).
To catch up the slower half of the 5M, we would need $3K x 2.5M students, or $7.5B.
Now you’ve got 5M folks ready to take on a technical education of some kind. This would include learning HTML, web design, digital video and engineering as well as fixing windmills, installing solar panels and building high-speed trains.
If we were to hire absolutely kick-ass technical teachers -- the folks who currently work at major companies -- it would cost about $200K a teacher all-in. That’s a lot for higher education, where professors have an average compensation of $80K, but it’s average for the high-tech world.
If that $200K all-in person could train 20 folks for four months, three times a year, she would produce 60 retrained students a year. That $200K divided by 60 students is $3,333.33. Add $700 in space for those folks and you’re at $4K a student.
For 5M folks to be retrained would cost $20B. Add the $7.5M in catch-up costs and you’re at $27.5B.
Let’s add 20% to that number for management and overhead of the program, and we’re at $33B.
Four months is too short you say? Okay, let’s say the government pays companies $1K a month to take each on of these 5M folks for a four month mentorship program. That is another "whopping" $20B in costs, putting the entire program at $53B.
For $53B you get the following:
1. 2.5M folks go to catch-up school for three months to prepare them for technical jobs.
2. 5M folks go to technical school with an absurdly great professional in a class size of only 20 students for four months.
3. After those four months these 5M students get on-the-job training for four months.
4. The companies who host those folks get $4K for the four-month internship to make up for the new students slowing them down.
Let’s assume half of the folks either drop out at some point in the process or simply don’t get a job. They are a complete washout. We get nothing from the $27B we spent on them.
If the other half of those folks get a basic technical job that pays on average $60K a year over the next five years, 2M folks will have earned $300K each -- or $600B.
If they pay 20% tax, the government will make $120B in tax revenue from an investment of $53B. If you think I screwed up my back-of-the-envelope math above, consider the following:
a) Let’s say only 25% get a job -- the government is still in the black.
b) Let's say my costs are off by 50% -- the government is still in the black.
c) Let’s say my costs are off by 50% and only one-third get a job -- the government breaks even.
Here is how we can contextualize $53B:
1. About 1.4% of the $3.7 trillion for the wars in Iraq, Afghanistan and Pakistan.
2. Our bailout of GM (give or take a few billion).
3. One-third of the bailout to A.I.G.
4. Less than three months of the Bush tax cuts for the past decade.
5. Apple has $76B in cash.
6. Zuckerberg will be worth more than $53B in three or four years I'm sure.
7. Less than 1% of the net worth of all the billionaires/centimillionaires in the United States.
When people say there are no easy solutions to our problems, I don’t think they are thinking hard or creatively enough. If our problem is that we don’t have enough technically trained Americans, why are we not focused like lasers on educating people?
Let's put this New New Deal, call it "the Jarvis Deal," on a popular ballot and see what the voting public says.
Oh yeah, we don't have the ability to vote on line items.
No, we have a much better system of representative government filled with brilliant people who will take care of this for us.
Those brilliant people are destroying the country right now.
We should, as a country, give $100M to 50 amazing entrepreneurs over the next two years and see how many folks they can train. Oh wait, the government is incompetent and we have venture capitalists who will float us.
Oh wait, venture capitalists think social media is a better investment than education.
Back to work everyone,
1. "The jobless future" (Jeff Jarvis, Aug. 5, 2011)
2. Paul Graham, founder of Y Combinator, responds to "The jobless future" on Hacker News
3. "Why Might Jobs Not Come Back This Time?" (Ben Casnocha, Aug. 5, 2011)
4. "The End of the Job - The End of the Corporation as we know it" (Robert Paterson's Weblog, Aug. 3, 2011)
5. "Multiple Employment and Training Programs: Providing Information on Colocating Services and Consolidating Administrative Structures Could Promote Efficiencies" (GAO, Jan. 13, 2011)