NATIONAL INTERNSHIP PROGRAM (NIP)

While many proposed infrastructure expenditures are long-overdue and greatly needed across our country, most of the projects will take years to plan, design, meet various regulatory requirements, and build. Associated new employment will be well-paying but cannot materialize quickly. Furthermore, they constitute a long-term policy for the country separate from the immediate need to address high unemployment across every sector of the U.S. economy.

With high official unemployment and unofficial under-employment and uncounted unemployed rates of 10.2% and 18% respectively, we have to create many new jobs – and fast. Tax cuts only help those individuals, households and businesses that have taxable income. Prior history indicates they will not have the desired multiplier effect on the economy when most will be funneled towards paying down massive private debts or into new savings due to overall low consumer confidence and an economy that is still mired in a protracted jobless weak recovery.

OTHER OPTIONS IN ADDITION TO A NIP

The one sector that can use money the fastest and most effectively is small business. Companies under $10 million in gross annual revenues and with fewer than 100 employees historically account for nearly half of our nation’s economic and job growth. They will continue to be the primary engines for our country’s future growth and global competitiveness. Large corporations and public bureaucracies have proven to be some of the slowest and lest effective entities in using public stimulus money. This nation must concentrate on creating new and expanding existing smaller enterprises to get us out of this deep recession.

SBA guaranteed loans are at a standstill because banks across the nation have tightened their lending standards so as to render the minimal SBA loan program to smaller companies essentially non-existent. This dire situation will not ameliorate until the Federal Government directly channels money for grants and loans to small businesses through local SBA development corporations and its many local assistance offices. It must also get retired executives in SCORE to play a greater role in assessing grant and loan applications, and mentoring the recipient small businesses. This possible nationwide program will be discussed in further detail in another of my future TMV postings.

Proposed tax credits to employers to hire more people is an idea just waiting to be abused and buried in massive and confusing paperwork. Counting jobs created or saved by the original March 2009 Stimulus bill has become a silly effort in fantasy accounting. The same would occur with tax credits which are expensive and circuitous means of accomplishing what targeted direct federal spending can do much faster and more efficiently. We need a simple, fast, transparent, and fiscally honest way of generating new jobs.

HOW WOULD NIP WORK

Many unemployed and underemployed people can only develop new skills in different industries by working on the job or by going back to school. Most of them also still need to support families and pay normal living expenses at the same time. The only way we can accomplish this nationwide workforce retraining for the future is through a National Internship Program (NIP) funded directly by the Federal Government. Here’s how it would work.

A public-private national Internet jobs bank would be created for individuals to connect with internships in public entities and private companies locally and across the country. A simple nationwide job form would be used plus all applicants would also be able to attach their resumes. All individuals who sign up for the NIP would have to appear in person to a state employment assistance office to verify their right to work in the U.S. No intern could be judged upon their credit history, age, sex, race, or other impermissible factors. However, current school status and dependent children would have to be factors with respect to their available hours. Criminal backgrounds would only be factors with respect to limiting those interns to certain fields.

On the same Internet NIP clearinghouse, governmental entities and private companies would list all their open internship positions with reasonable prerequisites. They could also scan all submitted applications and resumes of individuals to fill their Internship openings. Every intern would still have to compete for all open positions through personal interviews and their public applications. However the temporary internships would turn more upon their overall backgrounds, personal presentations, and future potential. Internships could be terminated at will by any employer but because all direct financial considerations would be eliminated, employers would tend to avoid terminations based upon economic factors.

PUBLIC-PRIVATE PARTNERSHIP

Since there are only 1.4 million people in the Federal civilian workforce, most of the new internship positions would be created at the State, city or local level, or in private industry. The hiring public and private entities would determine what the NIP would pay their interns, ranging from $9 to $14 per hour. The hourly rate would depend upon the required skills, education, and experience for the opening, the particular talents and attributes of the intern, and finally the cost of living and unemployment compensation rate in their states and communities. Employers could also request up to $2,500 from the NIP to assist any intern to relocate to a new city in order to best match individual potential with appropriate internship opportunities. Interns could also be supplied with public transit passes to get to and from employment.

The NIP would provide cost-free workers to all public and private employers who decided they needed the extra help or those that determined they will need additional personnel in the future but currently cannot afford to train them. An intern would work for at least 30 days but not more than 2 years at any location. Interns would work from 20 to 40 hours a week, the work schedule being flexible with the intern’s school and family commitments. Any intern could be hired permanently on a full-time basis at any time by any employer with whom they were placed.

Some interns could work 2 part-time positions, and be assigned to several different public entities and private companies over a 2-year period. Interns would make important networking connections by working instead of receiving unemployment checks and food stamps. Their direct job experiences would greatly enhance their chances of obtaining future meaningful employment after the economy fully recovers. Some other interns might work part-time and start a small business simultaneously that would become their principle livelihood after the nation fully exits this deep recession. Paid interns would have all their student loan payments deferred without incurring interest charges until they were permanently hired.

TOTAL PUBLIC COST

If one million interns were paid between $9 and $14 per hour working full time, the total cost to the Federal Budget would run around $30 billion annually. If 10 million interns were employed under this proposed NIP, the total cost over 2 years would run around $600 billion. Compared to the 2009 Stimulus Bill, the Wall Street Banking Bailouts, the Wars in Iraq and Afghanistan, and the Proposed Healthcare Reforms, this would be a modest federal expenditure to directly help 10 million people and their families. Furthermore it would directly create new economic activity across the country much faster than any other job or economic stimulus proposals.

Private companies would not be able obtain interns in excess of 10% of their total workforce. Enterprises under $1 million in annual gross revenues could get up to 4 Interns at public expense, possibly with some minimum total payroll being required. All interns would not be able to work at any company or for any of its affiliates if they were employed there anytime during the prior 2 years, nor could they be assigned to most start-up ventures. The principle paperwork for managing this program would be that a supervisor or human resource director at each public and private entity would have to verify the hours worked by each Intern to authorize the weekly payments by NIP.

QUICK, MEASURABLE AND PERMANENT NATIONWIDE BENEFITS

This proposed National Internship Program would be the most effective, efficient, and sensible approach to comprehensively address the serious systemic workforce problems facing this nation. As designed, the private sector would play a major role in determining where many of the interns would be assigned.

The simplicity, efficiency, directness, transparency, and nationwide public-private benefits of a NIP might result in prompt Congressional approval, particularly with the 2010 Midterm elections less than a year away. It could become the largest publicly-funded program that would rapidly reduce unemployment by directly assisting the private sector. It would also precede and compliment many other needed long-term stimulus and infrastructure projects.

Marc Pascal

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  • champ1

    The idea sounds good. Like most things I think the devil will be in the details. Who is going to administer the program? The Government? Do you reallly think they are capable of effectively running a program like this? Would the unions get involved? Boy, wouldn't they love a piece of that pie! Like I said, it sounds good, the devil will be in the details and working them out with the appropriate parties.

  • dduck12

    I agree, a nice concept. Big devil in the details and I think at least some unions would fight it like hell.
    If it at least started with unfillable jobs, that might work. Sort of like CCC lite.

  • Don Quijote

    Cool, let's create a source of cheap labor to drive down the cost of labor some more, it' ll do wonders for the economy…
    And who is going to buy the services and products being created by this new cheap workforce? I know that it wont be them cause at $15 an hour after taxes, you barely have enough to feed and house yourself, and we know it won't be the people whose job they are taking either cause they'll be getting an unemployment check…

  • DLS

    Looks like Sixties revisited, complete with Nineties thoughts by the likes of Robert Reich or Lester Thurow. (Krugman doesn't have time to think of this; he's too busy being a simple Dim party hack.)

    There's no reason to use this for rehab as well as retraining, not just idealistic youth stuff (and to be contemporary or hip, to even already provide an acronym for the program in place of its actual name).

    Put prisoners to work as well as retraining the laid-off and displaced current work force members.

  • DLS

    “If it at least started with unfillable jobs, that might work. Sort of like CCC”

    Most people would probably accept the logic in requiring work for pay, rather than an unrestricted guaranteed minimum income or enhanced unemployment “insurance” scheme.