A Better Way to Help the Jobless

12/02/2011 10:50 am EST

Focus: MARKETS

Igor Greenwald

Chief Investment Strategist, MLP Profits

The mismatch between the available jobs and the skills of the unemployed calls for a free, online public university to train the programmers and miners the nation needs, writes MoneyShow.com senior editor Igor Greenwald.

It’s coming up on three years since the bear market ended and the economy started growing again. Yet here we are with nearly 14 million Americans still unemployed, nearly 8.5 million underemployed, and 6 million so discouraged they’ve stopped looking.

That’s close to 10% of the population and more than 15% of the labor force unable to find enough work. While that remains the case, the economy is running with a hand tied behind its back, in search of the next obstacle to trip over.

And yet the jobs the long-term unemployed once held are never coming back. Their industries are either in ruins (housing) or have moved on to a less labor-intensive model (pretty much everyone else.)

According to the latest research, hardly any of the workers laid off in the aftermath of the financial crash have hung on to their lifestyle and former income level.

Their misfortune limits the economy’s productive potential, seemingly permanently. It also undermines the political system, promoting extremism and fueling protests over record levels of economic inequality.

That’s why so many experts, and not just those wedded to the theories of John Maynard Keynes, have pushed for increased infrastructure spending by the government. Investment manager Daniel Alpert and economist Nouriel Roubini recently proposed a five-year, $1.2 trillion infrastructure investment plan, making up the gap between America’s estimated needs and projected outlays in that department.

Alpert and Roubini predict the program would create 5.5 million jobs over its span, more than the 3.3 million payrolls added by the 2009 federal stimulus, based on an estimate by the Congressional budget office.

That would certainly occupy many of the construction workers idled by the housing slump. It would also boost the economy’s productive capacity, which is why so many emerging economies have been investing in infrastructure so enthusiastically, with excellent results.

The low rates the US government currently pays to borrow money would make investment in new jobs a financial home run over all but the shortest time spans.

We’d need to be smart about the investments, of course, favoring road and bridge repairs, unglamorous and therefore long-neglected energy efficiency upgrades, and the like. The aim should be not just to create immediate jobs, but to leave lasting improvements that will still be boosting growth decades from now.

This would rule out sure-fire white elephants like economist Laurence Kotlikoff’s plan to build a brand new city for all the unemployed. Building a city’s worth of new housing and all the associated infrastructure seems like a waste at a time when millions of homes across the land stand empty, and while millions of the unemployed can’t move because they’re lashed to underwater mortgages.

I have a better idea. In addition to getting our roads, bridges, and air-traffic control systems up to snuff, let’s draft C-level executives from every industry (and there are many) that have recently complained about a shortage of qualified job applicants. Lock these engineers, chemists, programmers, miners, and managers up at some retreat and give them a couple of months to come up with a crash action plan for an online National Science and Technology University.

Tuition would be free for any US resident, and the university would provide apprenticeships with sponsoring companies to give graduates a foot in the office door.

The technical and scientific fields experiencing the greatest personnel shortage are particularly suited to self-paced learning from an online curriculum. Online tests would make it easy to identify the cream of the crop for recruitment to the private sector. Even an online university on this scale would require tens of thousands of support jobs, of course—providing an additional bang for the buck.

A free, national online university training professionals in high-paying fields experiencing shortages would kill a couple of birds with one virtual stone. First, it would answer critics of spending programs who argue that US unemployment is mostly structural rather than cyclical, exacerbated by a mismatch between the available jobs and the skills of the unemployed.

It would also answer the complaints of Occupy protesters complaining of huge student debts and lack of opportunity. Want an opportunity? Here’s an online syllabus developed by some of the best minds at Apple (AAPL) and Google (GOOG)—now go see if you can be among the top 10% of aspiring programmers. The best ones would go on to Silicon Valley apprenticeships upon graduation.

It’s fanciful, of course, to think that every unemployed secretary and assembly-line worker could be turned into a chemist or a geologist. But everyone deserves that opportunity, and a federal university figures to be an improvement over private diploma mills cranking out graduates who’ll be defaulting on their government-backed loans for lack of work in a few years’ time.

Giving the unemployed a meaningful chance to learn a new, higher-paying profession would take the sting out of the economic contrasts that are now too pronounced to be ignored.

The required investment would be a drop in the bucket next to all the hard-hat-and-shovel undertaking. The payoff could be huge.

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