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Can Vocational Training Really Solve Unemployment?

Dec 16, 2011

The job market's bleak right now, but still prospects improve with education. In theory, then, the most career-focused education would give you the best chances of finding employment. Entrepreneur and tech blogger Jason Calacanis has come up with a seemingly golden plan to retrain a significant portion of America's underemployed and kick-start the economy. What is it, and can it work?

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By Eric Garneau

vocational training technical education jarvis calacanis

FDR 2.0

In an article on the tech website Launch.is entitled 'A New New Deal,' Jason Calacanis proposes a plan that promises to retrain one quarter of the unemployed or underemployed U.S. workforce - five million citizens in all - and make the government money in revenue gained through income tax at the same time. Calacanis dubs it 'The Jarvis Deal' (after watchdog journalist Jeff Jarvist), and it sounds almost too good to be true. On the other hand, it also sounds too simple not to work: jobs generate revenue, and education generates jobs. If the government funds the re-education of even a fraction of the roughly 20 million un- or under-employed individuals in our country, positive dividends will result.

How does it work? To Calacanis, the future of employment rests with cutting-edge tech start-ups, so a re-educated workforce will need specific technical training for such endeavors (it should be noted that a number of figures in the education field agree with Calacanis that job-centric education is the way to go). Calacanis estimates the 'Jarvis Deal' will require about $53 billion to put five million people back to work, and here's how:

  • An estimated half of those five million would need remedial classes to catch them up on current tech skills, which Calacanis calculates to cost $7.5 billion (to cover teachers and facilities).
  • Then all five million of our workers get trained by top-notch tech experts, which he estimates will cost $20 billion (again for teachers and facilities, and the teachers cost more here because their skills are more specialized).
  • Calacanis then adds 20% to his running total for overhead costs and management, an additional $5.5 billion.
  • Finally, to get those five million workers mentorship programs at top tech companies, he adds another $20 billion in costs, footed by the government to provide incentive for these companies to put new trainees to work. Add that all up, and you get $53 billion.

Calacanis then postulates that if even 2/5 of those five million retrained individuals get an average-paying ($60,000/year) tech job, that's $600 billion in income earned over the next five years. At a 20% income tax rate, the government stands to make $120 billion in revenue, repaying their initial investment in under three years' time and reaping the rewards after that.

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Is the New New Deal also a Good Deal?

If Calacanis' plan works - and he notes that there's sufficient room for his math to be wrong and the government to still profit over five years - it would be the ultimate expression of efforts like President Obama's American Graduation Initiative, announced in 2009, which calls for five million more graduates from vocational and technical programs at community colleges by 2020. The Jarvis Deal would give us those five million graduates, but in his estimation training would take less than a year - three months for remedial classes (for those who need it) plus four months of tech training and a 4-month on-the-job apprenticeship. President Obama's lofty goals for education could be met as soon as 2013 if the right steps were taken. Of course, they probably won't be - one can't imagine the federal government to be too willing to throw down $53 billion on any kind of education initiative at the moment.

On the other hand, Calacanis frames his seemingly sky-high request for funding in frightening terms: the $53 billion needed to make our unemployment more manageable, he says, represents only 1.4% of the money the U.S. spent on its last three wars, and less than three months of revenue lost from George W. Bush's tax cuts. It's also less than one percent of the net worth of all the super-rich citizens in the country. When put into those terms, $53 billion doesn't seem so bad - and the possibility of helping five million unemployed individuals find work looks even better.

Why is the vocational training offered by community colleges such a good idea in tough economic times?

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