What amazes me is the situation the United States is in with regards to unemployment and a lack of economic growth at the start of the 21st century. The beginning of this century has positioned us to be number one in economic growth, educated individuals, and overall well-being, but how do we get there? Lets look at a few different models and examine situations in which others around the world have demonstrated initiatives for growth that have been successful.
Germany offers one model to follow. Many companies in Germany offer an apprenticeship program, where after completion of high school, students can partner with companies who offer many different types of training and learning programs to promote economic growth. Students get apprenticeship training for jobs that they are guaranteed to have once complete, and also educational degrees can be sought for free. One company to examine is Siemens, the global technical manufacturing giant. On average, Siemens pays $120,000 USD for each apprentice they train, including their education which results in either a certificate or degree upon completion. How does this transfer to the United States? Well, Siemens operates an industrial factory in North Carolina, where it has partnered with a local community college to offer the same incentives to young individuals. Often though, the hardest part is convincing recent high school graduates that a four-year college degree is not the only path to success.
Germany shows an example of how to get young people to employment, but what about youth that are already employed? In the Netherlands, it’s all about keeping young people employed no matter what the hardships of an economic downturn. Flexicurity is at the core of their initiatives, and it is a fiercely debated topic. The Flex means an employer can hire or fire with relative ease, while the Security part promotes job security efforts. It may sound confusing at first but its a balancing effort. To illustrate, companies have banded together to create a Mobility Center, a system where employers join together to help employees maintain job security and sufficient training. Companies that are growing can hire from this pool of well-educated individuals with the know-how to perform required job functions, while companies that are downsizing can lay of workers but help them maintain job security by assisting them with getting hired at another partner company involved in the Mobility Center. The incentives for companies to do this involve maintaining an educated workforce to choose from and reducing costs. For instance, Philips, another manufacturing giant, uses the Mobility Center as a way to not only help an employee find another job, but they invest funds that would have gone to unemployment which now goes into other investments. In fact, some companies even pay the difference in salary that some employees lost when those employees are hired at another company. The Mobility Center helps keep employees educated, trained, and employed, ultimately offering a greater pool of human capital that employers may utilize. There is a reason why the Netherlands has one of the lowest unemployment rates in the world, corporate social responsibility, employee self-interest, and an understanding of how to best be competitive in the world market. The key lesson that the United States can take from the Netherlands’ policy is that investment in an educated workforce and partnerships for mutual benefit are two methods that help achieve economic growth and prosperity.
We’ve seen how Germany gets people into the workforce, and how the Netherlands keeps employees, but what about government efforts to curb unemployment. South Korea’s dictator in the 1960s and 1970s began to offer government subsidies to heavy manufacturing companies, and now Samsung, LG, and Hyundai are household names all over the world. So what changed? Government subsidies helped these companies invest in infrastructure and resources that they otherwise could not afford, or could employ somewhere else at a lower cost, which resulted in almost unheard of economic growth.
Sometimes government investment in companies works, but other times it does not. For instance, in the United States, Solyndra was a failed effort. However, this does not mean that government investment in business is unnecessary or wasteful. In New York state, in the 1990s with an initial investment of $1 million USD, a nanotechnology research hub at the University of Albany was created. As of now, over 300 nanotechnology companies have moved to this area to share the research laboratory and employee students, graduates and others. Currently, the average wage for one of these workers is $92,000 USD, and over 15,000 individuals work in this location. This demonstrates that often times partnerships and shared investments work for mutual benefit, and government investment to spur growth is capable of being successful in the long-term if managed appropriately.
Another option for job growth that the United States can capitalize on is tourism, which actually could use less regulation to promote healthy growth. Dubai, UAE is probably the best example of this. The opportunity for traveling tourism today is at its peak, and Dubai seeks to add almost 1 million new employees this decade from tourism in a city that only has a population of 2 million. It is estimated that if the United States got back to the tourism levels before 9/11, we could add about 1.3 million jobs (about 20% of the entire economic downturn). So how might the United States accomplish such a task. Well for one, making visas more accessible to tourists would greatly increase growth in this industry. Also, heavy promotion of tourism is another main facet of convincing others that there are many sites to see in the United States.
So what are we currently doing in the United States to promote a healthy economic environment that fosters growth. One politician offers a revolutionary new model that would put people back to work. Promoted by Chicago Mayor Rahm Emanuel, a sharp-witted and talented former chief of staff for President Obama, is the Chicago Infrastructure Trust. This concept has been backed by many supporters, including former President Clinton, under which the United States saw its greatest economic growth spurt ever. The Chicago Infrastructure Trust, a not-for-profit, was designed to allow private investors to invest in infrastructure, who would receive returns for their investments. This model has already been employed almost everywhere in the world, and has been proven to work. The best part is, this concept puts many back to work for years. So far the Chicago Infrastructure Trust is only a plan, and no money has been put in place to support this concept. This is a shame because we know that investment in infrastructure is the fastest way to employ individuals. Also, investment in infrastructure lays the foundation for future economic growth that may be maintained in the long-term. So what is Chicago doing in the meantime? It is performing a retrofit of city buildings, which should save about 25% of energy costs in the next 3 years. Also, pipelines are being renewed, since bursting pipelines have cost the city millions in the last few years alone. The cost savings from these efforts will then be reinvested into other infrastructure needs.
To conclude, we’ve seen a few different methods of how to turn around the economy and put people back to work. Continued educational training, investment in the workforce, boosting tourism, and rebuilding infrastructure will all result in a better economic situation in the long-term. The problem is, how do we convince companies and the government to act accordingly and in our best effort? Another question might be, should government be involved at all helping to create new jobs? I’ll leave you with a few interesting statistics to think about, which may spur your creativity and ingenuity of how to turn around the economy.
- In the 1970’s the United States led the world in college graduates, now we’re ranked 14th.
- The World Economic Forum ranks the United States 25th in infrastructure, down from 5th a decade ago,largely due to a lack of investment
- Federal funding for research and development is now half of the GDP investment that is was in the 1960s and 1970s
- The World Economic Forum ranks the United States 7th in the world for economic competitiveness
- Continued under investment in infrastructure will cost each United States family $10,600 USD in this decade
*It should be noted, this information above is a quick summary of a CNN televised event featuring Fareed Zakaria entitled “Global Lessons: Putting America to Work”.
- Fareed Zakaria Looks for Solutions for Growing Jobs in Political Special (cnnpressroom.blogs.cnn.com)
- Baby Boom Generation is Driving an Entrepreneurial Boom Toward Economic Growth, Kauffman Foundation Study Indicates (kauffman.org)
- International Think Tank Message: High-Growth Small and Medium-Sized Firms and Innovation Fuel Entrepreneurial Engine (kauffman.org)
- Chamber & EDC tout long-term economic growth, as well as jobs (gazette.com)
- What Every Country Needs for Economic Growth (realthinktank.com)
- Economists Agree, Cutting Spending Now is Bad for Recovery; Why is Fox Still Lying? (alternet.org)
- Why manufacturing matters for America (globalpublicsquare.blogs.cnn.com)
- Youth unemployment: the crisis to meet head-on in Mauritius (insightnewspaper.wordpress.com)
- Hidden cost of youth unemployment is depression and poor physical health (standard.co.uk)
- Business grants to tackle youth unemployment – Today’s small business news roundup (simplybusiness.co.uk)