Heckyl, our summer intern, has, like Elvis, left the building. Although the original scope of the program called for working ten weeks over the summer, the bureaucrats administering the program ran out of money early. They cut the program off after seven weeks.
Heckyl made such a difference to our operations that it was three days before I noticed that he was gone. Put your hand into a pail of water, than pull your hand out. Does the water miss you?
His lack of impact was not his fault. Completely untrained and inexperienced workers cannot contribute a lot in any organization, and if they’re not going to be around for a long time, there is no point in giving them much training. I would have liked to provide Heckyl with more technical training while he was with us, but I didn’t push the issue with my staff. It would be fair to say that I had higher hopes, but not higher expectations.
What makes this interesting is that last week our HR manager went to a meeting where the speaker was with the Tennessee Career Center, the agency that administered the make work summer jobs program. Part of his talk was about the Summer Works program. (The title of the program was “Summer Works.” Who knew?)
Regarding the Summer Works program, the salient points of the briefing were:
1. Tennessee as a whole got $65 million.
2. Our slice of Tennessee (area #11), got $4.2 million.
3. Approximately 1000 youth in our area participated in the program.
4. Total impact in goods and services was over $6.5 million, according to a study by the University of Memphis.
A thousand people got jobs! The economic impact was a dollar and a half for every dollar spent! This must have been money well spent, right?
Hogwash.
If you look at these numbers with a more jaundiced eye, a different picture emerges. Let’s start with the 1000 people who got jobs. If you’re trying to make your numbers look good, you include everyone who you sent out to a job site. At our company, we tried out five people through the Summer Works program. One never showed up for the first day of work. One was late on the first day, then lied about the time he was told to show up, so we fired him before he began. Two started work and lasted less than two weeks. The last was Heckyl.
One data point does not make a trend, but if other companies’ experience is anywhere close to ours, the number of people who actually worked for the whole summer was only a fraction of what is reported.
But let’s assume that the 1000 jobs actually represents the number of full time equivalents for the length of the program, i.e. even with all the churning, 32,000 hours a week were actually clocked in for the duration of the program (program participants were limited to 32 hours a week). At $6.75/hour, and with a ten week duration, wages paid out would be $2.16 million. $4.2 million was allocated, but less than half of that actually went to the participants. Half the money was chewed up by overhead.
Finally, let’s look at the alleged $6.5 million dollar impact. I would love to see the methodology used to arrive at that number. I suspect they simply took the amount spent, and used a multiplier to arrive at the total amount of economic activity generated. The idea behind economic multipliers is that when you pay someone, they go out and spend their money, in this case the $4.2 million. It doesn’t stop there, however. The people you spend your money with then go out and spend their paychecks with other vendors who then pay their employees, and so on. Based a $6.5 million impact produced by $4.2 million in spending, the multiplier effect is about 1.5 for this program.
In terms of being effective or productive in a job, producing 1.5 times your wages is incredibly low. In manufacturing, the value of goods and services produced is normally a minimum of six times wages. The multiplier effect for this program is about the same as for consumption spending in general.
In other words, the estimated impact of the Summer Works program was no higher than it would be if they simply handed out the money to the applicants, without actually requiring them to show up at a job.
Frankly, based on my experience with the program, I tend to agree with the estimate.
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