Infrastructure Megaprojects: Jobs

Over the last fifteen years the American middle class has been gutted. Unemployment, while dropping slowly, is still high. Underemployment is worse; maybe more people have full-time jobs, but at reduced wages. This is the fundamental economic problem we face. It directly affects the lives of millions of Americans, and is the cause of much of our budget deficit. (Government tax receipts dropped like a stone when all those people lost their jobs, not to mention all the welfare they suddenly needed.)

I think the government could do more to help people find work. We've talked about building huge things, like power grids and aqueducts, which provide direct employment. But what about helping people find existing jobs? Or incentivizing the creation of better ones?

As an added bonus for the deficit hawks out there, or perhaps those who think government should be run like a business, consider this: if the government spends $1k helping me get a better job, how long before the government gets that $1k back in the taxes I pay and the welfare I no longer need? From a strictly financial perspective, spending money helping people get jobs is one of the best investments our government can make.

So suppose you're looking for a job, and can't find one. What can stop you?

Information 
You can't get a job you don't know exists. The government could create a central jobs bank, a single location where employers across the country could post job openings. And when I say employers across the country, I mean all of them. Pay employers to post job openings, and you'll have a database of every job everywhere quite rapidly. Figure there are ten million job openings in the country at any time. At $100 per opening posted, that's $1b. Chump change on the scale of the projects we're talking about.

Naturally, no matter what system you set up, someone will try to game it. We'd need to pay employers, not just for submitting an opening, but only if the job is filled by someone, and you can confirm who that someone is. That should take care of most cases of fraud. You'd also need to put limits on how often you could hire for the same position, or the same person, and promotions from within couldn't count. There will still be flaws, but for the most part it's workable. You don't shut down a functional project because of 1% waste.

The other downside is that this could completely destroy every other online jobs site. Who could survive against a negative-profit competitor? But consider, the government has a terrible track record lately with building complex websites. So perhaps a better idea is to contract the service out to existing job sites. Have a central database, but give easy hooks for Monster and Dice and whoever else to mine the data and list the results. Leverage the market, instead of trying to replace it.

Education
So now we have a giant list of every job in the country. For many, that means you can now be absolutely certain that you'll never make more than you're making now unless you retrain. So we link the jobs listings with data on training programs; each listing says "here are the qualifications, and here's how you get the qualifications if you don't have them." Link directly to a list of relevant educational programs, and all available financial assistance for each. As a bonus, this gives the government more data to target educational assistance.

Experience
Now you've found a job, and you have the paper qualifications. But you can't get any of them; they all say 3-5 years experience required! (Particularly funny when they want ten years experience programming in a language that hasn't existed that long...) How do you get experience when all the job openings require you to have experience? Chicken, egg.

Decades ago, companies had apprenticeship programs. They would actively train replacements for older employees, taking someone with no experience and turning them into whatever they needed. These programs are mostly gone. Companies don't plan decades in advance now; they're focused entirely on maximizing immediate profit. This is leading many industries into a disaster: as older employees retire, there's literally nobody with their skillset to replace them!

The government could incentivize apprenticeship programs. For a rough estimate, say the program is two years long, and that the government paid the entire compensation of the apprentice. For $10b, we could easily fund a hundred thousand apprenticeships, and probably more. We end up with a more skilled, more employable workforce, and those more skilled employees will almost certainly pay for themselves: the more money they make, the more taxes the government receives. Again, if you're the sort to say that government should be run like a business, I'd call that a good investment.

Competition
American companies often complain that they can't find skilled workers in the United States, and push for H-1B visas. We need to import workers, they say, to fill this skills gap. But there is no skills gap! There are plenty of American workers able to do the jobs in question. The inability to hire a $25/hr worker at $10/hr is not a skills gap. I'm all for immigration, but we don't need to be purposefully importing low-cost workers to compete with Americans for jobs.

Also, failure to plan on your part does not constitute an emergency on my part. If these companies hadn't dismantled their apprenticeship programs, they'd be in a better position. I'm not inclined to screw American worker to make up for a corporate lack of foresight.

Location
Okay, say you've found a job you're qualified for, but it's too far away. You need to move, but you need a moving truck, and gas, and a place to live, and a deposit, at a minimum, not to mention lost wages in between jobs. You may also need temporary housing while you look for a permanent place. Moving's expensive, especially over a long distance. For people barely making ends meet, it may just not be an option.

Let's take the naive approach first and throw money at the problem, just to get a sense of the scale of things. Assume we have a million people moving across the country every year for work. If you just handed each one $5000 in moving assistance, that's $5b a year. Easily affordable, especially when you consider that putting someone to work in a better job gets the government tax income it didn't have before. That $5000 should come back easily within two years in most cases.

One specific expense the government could subsidize is real-estate agents. Many people moving a long distance for work wouldn't spend the extra money for a professional to help them find a place to live. But that kind of local professional is exactly what you need in that situation: you need someone who knows the local market and can find you what you're looking for quickly and efficiently.

Transportation
You've found a job, you're qualified for it, and it's in your city. But you can't afford a car, and you can't afford to move close enough to the job for walking or biking to be viable. What do you do?

Obviously, someone's going to have to drive you. If there are bus routes or trains already, great! But if you live or work outside a high-density area, that's not going to help you. You're going to need something more point-to-point. The government paying to facilitate that transportation could make all the difference between employment and unemployment.

Assume a 20-mile commute, which is pretty common these days. We could pay for a taxi, but that could cost $450/wk. We could rent a car for under $200/wk, plus $35 in gas, which sounds better. Assuming the standard 56 cents per mile, we're not going to do any better than $115/wk for a single-passenger vehicle; if that vehicle comes with a driver, they'll probably make enough per week for their time that we're back up to rental car levels. For single-passenger, a rental car may be the best we can reasonably do. So that comes to over $10k/year, which most people aren't going to pay in taxes with a better job. If you're getting someone off other forms of welfare, though, it may pay for itself.

Now, if neither home nor work is completely isolated from other travelers, we can reduce cost further with multiple passengers. So we're back to what I've proposed before: incentiveized carpooling. Pay people to carpool, set up a system to make it easy (or leverage an existing system like Uber or Lyft with modifications for multiple riders). The cost of helping this one carless person get to work could easily be cut in half, or better. Plus there will be fewer cars on the road, which is good for everyone.

Unpredictability
So you've found a job, you can get there, but they keep changing your hours. You work two hours this week, fourteen next week, you have no regular schedule, and you'd better be available 24-7 in case they call you in. And if you show up for a scheduled shift, you might be sent straight home. Don't like it? Too bad, you're replaceable.

This is what's wrong with a completely unregulated labor market: there are vastly more suppliers (workers) than there are consumers (employers). Without regulation, market forces dictate exactly what we see: wages go to nothing, and quality of life for the workers drops to nothing. Remember, the market is a tool for telling us what will happen. Like all science, it says nothing about what should happen, any more than observing nature tells us we should be eaten by predators because we can't fight back.

This means some form of government regulations are the only solution; by nature, market forces don't result in the outcomes we as a society prefer. We want people to have decent lives, and to be able to make a living working. So we're working counter to market forces, and that's okay, so long as we do it well.

If you're scheduled to work a shift 48 hours before shift start, you should be paid for that shift, even if the manager screwed up and scheduled too many people. If you're on-call, you should be paid like you're on-call. If you have a work schedule that works for you, you should be able to keep that schedule without arbitrary changes. In other words, you should be able to have a job.

Letter to the Editor: Amp Alternative

Traffic on West End is abysmal, and something needs to be done. The Amp is, indeed, something. But what alternatives are there? I’m not presently taking sides in the debate over the Amp. But I’d like to propose one alternative which I think will be simpler and cheaper.

Amp is projected to cost $4 million a year to operate, plus the $174 million startup costs. Add some for inevitable overruns, divide that over 20 years, and you get about $14 million annually. A comparable BRT system in Cleveland has ridership of around 14,000 daily. So we’re spending (very roughly) a thousand dollars per year to get each individual car off the road.

How about instead, we just pay people to carpool? If someone paid me a thousand dollars a year for my trouble, you can bet I’d be carpooling! Set up a good smartphone-based system to make ride matches, and I guarantee you you’ll get more cars off the road for less money. The result helps all of Nashville, not just one dense strip. And there’s zero construction disruption. If you want to get it off the ground fast, don’t put a fixed dollar value on it. Say “There’s a million dollars in the pot. Whoever carpools splits it.” It will take off instantly.

Obviously there’s a lot of variation possible. Who gets paid? The driver? The rider? Both? How do you keep track and minimize gaming the system? I don’t have all the answers. But it’s worth consideration.

What's better than public transportation?

I'm a big fan of public transportation. The ability to survive without owning a car would lead to a tremendous reduction in cost-of-living. Reduction in traffic is in everyone's best interest. And not having to drive every day would let me get a lot more reading done. (Or more realistically, sleep.)

But here in Nashville, the bus system is more or less a joke for much of the city. I live in the city limits, and I could get to work by bus, but I'd have to spend ninety minutes instead of twenty, I'd get there late, and I'd spend more money. The many thousands in the exurbs are pretty much hosed except for the Music City Star, and even then your options once you reach Nashville are limited.

The more I think about it, the more I think the emphasis on trains and buses may be misplaced. Mass transit as a concept has one inherent limitation: each rider wants to stop at only two places, and no others. The more riders there are wanting different stops, the less convenient it gets for everyone involved. But the fewer stops the bus (or train or whatever) makes, the fewer people the bus is convenient for. You want a very high person-to-stop ratio. This only works for high-density end-to-end traffic paths, like an express from a park-and-ride, a commuter train, or a small local circuit in a high-density area.

But what about those of us (and I'd guess we're the majority) who neither live nor work in high-density areas? By definition, we collectively have more stops to make. To keep a high person-to-stop ratio, you have to reduce the number of people per vehicle. Perhaps to, say, five.

I argue that mass carpooling could have more effect getting cars off the road than any imaginable public transportation system. Say we're comparing three options: 60-person buses, 5-person carpools, and the default single-occupant car. If there are six thousand people commuting from Clarksville (to pick a random number and exurb), that's six thousand cars, twelve hundred carpools, or one hundred buses. Obviously both carpools and buses are vast improvements to traffic. And if everyone would ride the busses, they win over carpools. But not everyone will bus, because of the lack of flexibility.

So the next question is, how many people are willing to bus? How many are willing to carpool? And at what point does realistic carpooling get more vehicles off the road than busing? I won't bore you with my algebraic prowess (maybe later), but in our case the answer works out to be pretty interesting: regardless of the number of people involved, if just 25% more people are willing to carpool than are willing to bus, mass carpooling gets more vehicles off the road. This even though a bus holds twelve times more people! Since a carpool is far more convenient than a bus, I'd expect far more than 25% greater ridership.

Now let's consider cost. If you've got 100 busses, that's at least $30,000,000 in capital expenditure. Probably more. Each bus costs around $100/hr to run. Even if you assume they only run four hours a day (two round trips), that's $40,000/day, or $10,000,000 a year in operating costs. Assuming each bus lasts ten years, that's $13,000,000/year to get 5,900 vehicles off the road. This seems like a lot, but consider that adding a lane of interstate between Nashville and Clarksville would cost something like $150,000,000 and take several years.

How about gasoline? A hundred mile round trip at 25 mpg costs $15 a day. That's $22 million a year in gasoline saved by getting those 5900 cars off the road! That's a number so big I almost want to cry.

Further, consider that traffic can add half an hour to your commute each way. One hour a day saved, times six thousand drivers, is 1.5 million man-hours per year. Figure an average wage of $12/hr, and $13,000,000/year starts to sound cheap.  If we come up with a solution that makes a significant reduction in traffic that only costs, say, a million dollars a year, we collectively are coming out way ahead.

So here's the idea: we should pay people to carpool. But not at a flat rate. Put a million dollars in a pot, and declare that that pot will be distributed evenly among everyone who carpools that year, weighted by how many days they do it. Imagine how people would respond to an incentive like that! If only five people carpool all year, boom, easy $200k each. Pay it out more often than once a year, too. Say every two weeks. Within a few months you should reach an equilibrium point where exactly the right number of people are carpooling for the money being offered. After that you can see just how good the system is and how much it's worth.

As an added bonus, you could let people without cars sign up for the system, and basically turn every driver in the city into a government-provided taxi for the carless. The driver gets paid by the number of passengers, so its a win for them. And the car-free individual gets better service than busses.

The problem is making the matches. If you could get our hypothetical six thousand people to put their schedules in a system, a relatively simple computer program could make matches between them and make a huge dent in traffic. There are already such systems, but there's relatively little data in them. Paying people to participate will fix that. And with smart phones becoming ubiquitous, hitching a ride without advance planning becomes easy.

Now, how does this apply to the Amp? To be clear, I’m not presently taking sides in the debate over the Amp. Traffic on West End is abysmal, and something needs to be done. The Amp is, indeed, something. But what alternatives are there? I think this alternative is better from almost every perspective. Let's run the numbers.

Amp is projected to cost $4 million a year to operate, plus the $174 million startup costs. Add some for inevitable overruns, divide that over 20 years, and you get about $14 million annually. A comparable BRT system in Cleveland has ridership of around 14,000 daily. Each rider represents at most one car off the road, but maybe not even that. Depends on whether they count the same person going both directions as one rider or two. So being generous, we’re spending at least a thousand dollars per year to get each individual car off the road.

How about instead, we just pay people to carpool? If someone paid me a thousand dollars a year for my trouble, you can bet I’d be carpooling! Set up a good smartphone-based system to make ride matches, and I guarantee you you’ll get more cars off the road for less money. The result helps all of Nashville, not just one dense strip. And there’s zero construction disruption.

Obviously there’s a lot of variation possible. Who gets paid? The driver? The rider? Both? How do you keep track and minimize gaming the system? I don’t have all the answers. I can tell you that the system has to be set up well from the start; I've seen far too many systems like this half-complete with clearly zero ease-of-use consideration. The problem isn't trivial. But it is solvable, and I think this is what we should be looking at as an alternative to ripping up West End for a few years.

Footnote:

Suppose you have two forms of transit available to people. Cars, which hold 5 people, and busses, which hold 60. Suppose your goal is to get as many vehicles off the road as possible. For cars to get more people off the road than busses, more people have to be willing to use cars than are willing to use busses. How many more?

Define DB to be the number of people held by a bus, and DC to be the number of people held by a car. The ratio of people willing to carpool vs. number willing to bus must be at least (1-1/DB)/(1-1/DC)

If this criterion is met, more vehicles will be off the road by carpooling, even though each vehicle holds fewer people.