Wednesday, September 14, 2011

Why the Obama Jobs Plan Won't Work...and What Would

Today, creating jobs is Job One, and I worry that the Obama Jobs Plan will fail. Here are reasons why:
  • Both sides of the aisle advocate extending 99-week employment checks to more people, on the belief that redistributing money to people likely to spend rather than save it, will thereby create jobs. Alas, that has a serious side effect. Nearly all of my unemployed clients, in the confidentiality of my office, admit that each time there's an extension in unemployment, they feel less pressure to look for a job. They're just sitting around.
  • We've already tried a trillion-dollar stimulus and it created few jobs. It's oft been lamented, "The job stimulus didn't stimulate and those shovel-ready jobs weren't." That doesn't inspire sufficient confidence that it's worth spending hundreds of billions more of our money on another round of "stimulus."
  • Funding jobs with taxpayer dollars means taking money from the taxpayers (those most likely to use money to create jobs) and redistributing it to those least likely to.
  • Once any government-stimulus-spending-created jobs are completed, continuing taxpayer-funded money will be required to keep the recipients employed.
  • Many of the infrastructure jobs are make-work. For example, when politicians say spending will be on roads, they don't say they'll be building roads, which would relieve congestion. Radical environmentalists are making that nearly impossible. Instead, the road money heavily goes to repaving existing roads. I don't know what's going on nationwide, but where I'm driving, I'm seeing the repaving work that is funded by the previous round of taxpayer-funded stimulus, and those roads really don't need paving, certainly not enough to justify the cost to us the taxpayer. The main result is that I'm forced to sit in more traffic because of the repaving work going on, and which seems to take far longer than it should.
A Better Jobs Plan
(Regular readers of this blog will recognize two of the following three ideas. I apologize to you, but in light of the currency of the Obama Jobs Plan/Act, I wanted to present these ideas within that context.)

I believe that just the following three ideas would create millions of enduring, pro-social, offshore-resistant jobs.

Entrepreneurship Nation
Both sides of the aisle agree that government stimulus spending, at best, is a jump-start., that permanent job creation must come from the private sector. Most people also agree that entrepreneurs, while providing better, faster, cheaper goods and services, also create jobs.

So why not replace just a fraction of our arcana-larded K-16 curriculum with entrepreneurship education? For example, most high school students spend many hours deriving geometric theorems, balancing chemical equations, memorizing historical facts, and untangling the intricacies of Shakespeare. Could it be reasonably be argued that those are more important for all students than learning how to start an ethical yet successful business?

While some entrepreneurs are born not made, much is learnable, especially if taught not by ivory-tower academics but by successful, ethical businesspeople. I imagine that many, especially the retired, would be willing to do that even as a volunteer.

America Assists
It's widely agreed that buying non-essential "stuff" is unlikely to lead to happiness. Don't we all know people who live in an impressive home, who replace their good used car with a new one, go on costly vacations, and buy lots of la-di-dah clothes and jewelry, yet after a brief "shopper's high," aren't that much happier, let alone more kind? Yet we seem to be addicted to trying to shop our way into bliss.

But what if the government launched a public service campaign like its successful anti-smoking campaign to encourage the public to replace some of its buying of "stuff" with buying of services that hold greater promise of improving their quality of life. For example, hire a part-time:
assistant to:
  • help care for your newborn
  • a homework helper for your older child
  • a personal assistant to do errands, laundry, wait for the repairperson, etc.
  • a personal geek to teach you the technology you're afraid of
  • a health care system advocate to help you get the care you need, affordably, in our labyrinthine, scary system
  • a companion for your aging relative
Each of those jobs promise to significantly improve the life of the hirer and family. And the employee, piecing together a few such part-time jobs can make a reasonable living doing work that's unquestionably beneficial and ethical. Importantly, most of those jobs require only a modest skill set. Even many high school dropouts could likely find one such job they could do well enough.

How would hirers and employees match up? Just as they do for other jobs: hirers would place ads, for example, on Craigslist. If hirers want a professional to do the screening and payroll, they could turn to employment agencies. That would create yet more jobs.

Crowd-funded businesses. Today, it's very difficult for new businesss to obtain funding because banks are reluctant to invest in unproven entrepreneurs and because of massive government regulations. I'd waive those regulations for new businesses seeking up to $50,000, thereby allowing them to solicit financing on what I call crowd-financing websites. Potential investors could visit the site, read thorough various start-ups' prospectuses, and invest as little or as much as they wanted, from $1 to the maximum the new business wants up to the aforementioned $50,000.

Dear readers, as always, your comments are welcome.


Greg said...

Great ideas as usual. I especially like the part about entrepreneurship. Maybe existing business school entrepreneurship classes could be adapted for a high school curriculum?

The "hire-a-helper" idea already has been happening on craigslist, and many other websites for quite some time. Would a government ad campaign really make much of a difference in this case? The anti-tobacco campaign did work well. Smoking kills. It's an easy sell. Plus the government benefits through increased tax revenue on the tobacco tax. Hiring help = minor life improvement for most people, and what does the government get on its end? Such a campaign might even be perceived by the public to be a ploy by the government to diminish unemployment or even imply that the government is getting desperate. I'm not a marketing/ad/PR person though, so what do I know...

Crowd financing seems like it has upsides for start-ups that are good at marketing, but what about those that are not? Crowds are fickle, people have short attention spans, and once there is momentum behind one idea, everyone else tends to fall in line, whether or not the idea is valid...It seems like everyone can become their own venture capitalist, but finding and investing in great companies requires a lot of hard work, objectivity and patience.

I totally agree that the Obama jobs plan will fail. It will probably make things worse for everyone in the long term...In my opinion, people will get fed up eventually and things will change...when they're angry enough...

Marty Nemko said...

Greg, the perfect is the enemy of the good. No intervention will solve all problems, but the plan I propose here will create far more good, permanent jobs than the Obama Plan, and without crippling job creation by taking billions from the job-creators to distribute to those who aren't, and who, thanks to ever longer unemployment "insurance," will be less motivated to look for a job.

Jeffrie said...

Here's another part that won't work, or should I say, may have unintended consequences: discrimination rules for the unemployed.

Check out section 371, titled "Prohibition Of Discrimination In Employment On The Basis Of An Individual's Status As Unemployed."

Just another thing for employers to worry about: a lawsuit from an applicant alleging discrimination because they were unemployed when they applied.

Marty Nemko said...


What makes that clause particularly bad is this: Imagine you owned a business and you were required to consider unemployed people. Who is unemployed is not random. The pool of the employed is more likely to contain good workers than the pool of unemployed people. Your business would probably be worse as a result and, if you're attempting to compete globally, your company would fail compared with companies in which employers were free to hire the best candidates, without worrying whether they were unemployed. As a result of this clause, more U.S. businesses will go out of business resulting in FEWER, not more jobs, which is the intent, of course, of the Obama Jobs Act.

Dulantha said...

Obama cannot create jobs for your people, he knows only how to waste the money of taxpayers by satisfying the people who have no policies for their lives. He is working for stupid liberals who are too selfish and irresponsible. They do not like to work hard but they want to utilize all the public property.

Anonymous said...

Your ideas are even more relevant given this latest post from "The Economist." The world's largest employers: U.S. Department of Defense is number one. Wait until you see the rest. Depressing!


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