When we asked Mendoza alumni for their ideas on how to improve the nation’s unemployment rate, we weren’t expecting suggestions like Margaret Harrison’s:
Stay grounded. Be mentally fit. Be fearless. Develop new skills.
She was offering advice to the nearly 14 million Americans the federal Labor Department counted as unemployed in calculating the national unemployment rate of 9 percent for October 2011. Millions more people were working fewer hours than they wanted or had given up looking altogether. Adding them to the totals would have yielded a rate of more than 16 percent.
Harrison had been one of them.
“I was out of work for almost 2½ years,” says the 2006 Executive MBA alum, now director of database management and analysis services for the American Osteopathic Association, based in Chicago. “It took a while to find a position, but I did land well. I did some contract work in between opportunities.”
As Harrison’s experience illustrates, the unemployment issue is personal. And varied. So with a nation mired in political maneuvering, we thought it time to give individuals a voice in solving the problem.
We weren’t looking for political speeches or blame-gaming, just actionable ideas, short-term or long-term, that could move the needle. Hundreds of people responded with suggestions from across the political spectrum and divergent schools of economic thought.
There were earnest pleas to cut government spending to reduce the deficit. Or to expend more tax dollars on infrastructure projects or to nurture new businesses or technologies. Lower barriers to trade. Or pass new tariffs. Support President Obama’s job-creation proposals. Or, “Fire Obama.”
Multiple alumni members advocated the power of prayer.
“Pray for wisdom for our business and elected leaders. Pray for those out of work to find a job. Pray for companies to thrive and need more employees,” wrote Robert Ficker (’89), a principal in Systems Evolution, a business and technology consulting firm, in Cincinnati.
Other suggestions included a plan to allow advertising on postage stamps as a way to raise money to fund job training. Another called for allowing people to apply for a license “to produce and sell up to 1,000 gallons of moonshine per year.” The thinking here was that anyone who applied for such a license would be making themselves known to the government as someone who was not unemployed and therefore no longer entitled to “benefits and welfare.”
Many ideas promoted cutting taxes or reducing regulatory “burdens,” including environmental protections “standing in the way” of oil exploration. There was widespread support for (somehow) helping the real-estate industry recover. Encouraging entrepreneurship was thought by many to be the best way to create jobs.
But many alums, frustrated with the sluggish economy, expressed doubt that any artificial stimulus will make the recession go away. As Trey Dawson (’94), an independent mergers-and-acquisitions adviser at EHD Consulting in Cincinnati, put it, tax credits and tax breaks alone will never make companies hire people they don’t need.
“There needs to be a business reason to hire someone. And if business is slow to declining, there is NO need to hire.”
Loan out, don’t lay off
While at Arthur Andersen for 25 years, we hired large numbers of employees. In recessionary periods, we felt it like everyone else in the economy. Keeping our professional staff and not allowing generational holes was critical to our growth model. So in tough times, we made deals with our clients. We literally gave them staff—offered them at cost or some other discounted fee, either supervised or unsupervised by us. We would do this for periods of time, fully expecting that the client would see the value that our personnel brought and would seek to keep them at normal rates after the discounted or free period was over. Guess what? It worked beautifully! Why not do this with today’s unemployed? The government could offer this program to employers, reimbursing them for the discounted/free period. At the end of the program, the employer decides whether the employee brings value. If yes, the employee is kept. If not, it’s back to the unemployment pool.
Rich Linting (’67), founder and president, Linting Brown Ltd., Laguna Beach, Calif.
Natural gas up
Compressed Natural Gas (CNG) would be a great place to start. Natural gas is domestically produced and abundant. It is a real money-saving, job-creating, environmentally considerate way to move us. The government could start by
converting some military and government vehicles to CNG. Truckers and fleets would be right behind them as infrastructure was developed. Individuals would have another car choice that offers near-zero emissions and economy. Soon small shops would be manufacturing products for both the new Original Equipment Manufacturer (OEM) and the conversion business. People would have a greener choice to fill up with, and America would have jobs and more energy independence.
Warren Bayer (’77), owner and president, Bayou Oilfield Sales & Service, Covington, La.
Go where you’re needed
My husband and I frequently discuss the difficulty he is having filling several open positions in his technology company because he cannot find people with the necessary specialized skill sets. Thus, one solution for reducing unemployment is to encourage people to train in fields where we need them the most. I was able to attend Notre Dame by accepting a scholarship from the Air Force on the condition that I would study one of only six specified majors. The Air Force anticipated its personnel needs in the coming years and therefore offered scholarships to people who would fill those slots. Not only did I receive money for my education, I was guaranteed a job in my career field. This model can be expanded to the civilian sector through grants and scholarships offered for specific degrees/certificates in areas where labor shortages exist (such as nursing).
Becky Saydak, (MNA ’04, ’95), homemaker, Raleigh, N.C.
Get credit for risk taking
Many entrepreneurs cannot get funding for their startups or adequate capital to bring their products to market. If successfully funded, these high-risk companies could ultimately drive new jobs and create wealth. To attract new capital to high-risk ventures, the federal government should provide tax credits equal to 50 percent of an investment, and the credits should be allowed to be traded so investors can “monetize” them. My company has recently filed for a patent for a fiber-reduction technology for paper mills. Now that we have proven our technology, the next challenge is to raise enough capital to bring it to market. If investors had their risk back-stopped with U.S. tax credits, I think we could broaden the number of potential investors and thus bring our novel technology
Tom Moore (’79), president, Cerealus Holdings, Harpswell, Maine
Check the job board
There are more than 3 million unfilled jobs in the U.S. right now, the highest level in three years. When it comes to reducing unemployment, open jobs are the low-hanging fruit. Here’s one idea that’s simple and scalable: Encourage employees to spend a half-hour each month browsing their company’s job openings and referring qualified candidates from their professional network.
Matt Grunewald (’01), senior research associate, LinkedIn, San Francisco
Line up in the ‘hall’ for jobs
Companies are slow to hire on a full-time basis. So let’s approach work at a more atomic level and take the traditional concept of a hiring hall into the virtual world. Use home repair as an example. Workers sign up for categories such as painting or carpentry. As with a hiring hall, workers take turns on top of the list of available workers and prices are set to market rates. Similarly to Elance.com or Angie’s List, clients can pick from several workers and see previous jobs and ratings. Money passes through escrow and is distributed via debit card. A portion is set aside in a “benefits account,” and at a certain threshold, the worker becomes eligible for group medical insurance from the local “eHall.”
Jim Riley (’88), director of operations, TBO.com, Tampa, Fla.
Revive New Deal agency
Bring back the Civilian Conservation Corps (CCC) to help rebuild our national parks, clean up our cities, educate our children, and help the elderly. This would be an investment in our country and put people to work in a positive manner rather than putting stimulus funds in the hands of a few and betting on our future. As the economy recovers and new jobs are created, the CCC could be phased out.
William Carnegie (MNA ’01), president and CEO, Community Food Bank of Southern Arizona, Tucson, Ariz.
Only give tax breaks to employers
Instead of giving a broad-based tax break, focus the rebate on job creators by basing it on the amount of Social Security taxes an individual pays on behalf of employees. For instance, if you employ between 10 and 200 people, you would get a credit for up to 250 percent of the Social Security taxes you pay on their behalf, based on a sliding scale of income and employees. It would be a focused tax credit, not diluted by extremely high earners or those without employees or capital investments (i.e., wealthy actors, athletes, traders, etc.) A tax-credit package focused on this sweet spot of job creators in small- to medium-sized businesses would provide the most stimulus/hiring bang for our buck.
Jeff Szklarek (’02), CFO, Producers Chemical Co., Geneva, Ill.
Streamline the visa process and create a national advertising effort to promote tourism to the United States. The average Chinese tourist spends $4,000 per visit to the U.S. Current wait time for a travel visa to the U.S. in Brasilia, Brazil, is 110 days. The visa application is also in English. You cannot outsource hotels, and many of the (tourism) workers do not even need a high school diploma.
Matthew O’Dell (MBA ’09), project manager-sales operations, ResMed, San Diego
If the federal government could promise a two- to five-year hiatus on tinkering with the tax code and regulatory aspects of our business environment, employers would be able to create and execute more aggressive five-year plans. Not knowing what regulations are coming or going, and not having a clear picture of the future tax landscape, is causing companies to horde cash and prepare for the worst-case scenario, when we could instead be expanding and hiring new workers. The government’s actions are muddying the waters for many of us, and muddy water is no place to lay a foundation on which you can confidently grow your business.
Brendan Shaw (MBA ’08), director of acquisitions and asset management,
Brookline Development Co., Apex, N.C.
Housing production in this country totaled approximately 1.5 million units annually for the last 40 years. In the last two years, it has been around 500,000. It takes around three people a full year to build a house, so that’s 3 million unemployed contractors, not to mention the ancillary businesses like furniture makers, curtain makers, etc. To cure the economy, we need to fix housing. To fix housing, it’s important to help good borrowers who are current or near current on their mortgages despite being underwater. If we reset their underwater mortgages to a current-pay “A” note (at the current rate of interest, 4 percent) equal to the value of their home and a deferred-pay “B” note equal to the balance, we will stem the additions to the foreclosure pipeline, reduce the moral hazard, and stop the decline in home values. The deferred B note would be paid off in later years through capital appreciation or principal amortization.
Marty Connor (’86), CFO and treasurer, Toll Brothers, Horsham, Pa.
Offer million-dollar loans
Provide $100 billion in government loans to 100,000 entrepreneurs to start or fund a new business venture. Each entrepreneur would receive $1 million. The stipulation would be that they would have to hire 10 currently unemployed individuals to work in the company within three years. This would add 1 million new jobs to the economy. If 5 percent of the companies succeeded and added 100 employees, you would have 500 million newly employed people.
Anton Rivera (’04), brand manager, Hartz Mountain Corp., Brooklyn, N.Y.
Bid out infrastructure work
Accept that the home market isn’t coming back in the short- to mid-term future and acknowledge that the critical infrastructure (water, electric, bridges, highways, etc.) are rapidly falling into ruin. Begin a schedule of “leasing” improvements to private companies. A government agency puts a project up for sale to a group of private entities. Private entities bid on a known cash flow from the agency and then one manages the construction/operation stages of the project for the next 20-50 years. Infrastructure is improved, people are hired to construct/operate it, the state retains long-term ownership and lowers/spreads the cost of making necessary improvements.
Errol Rice (’02), project development, Transystems LLC, Great Falls, Mont.
Award tax cuts for hiring
Implement a tiered, two-year, corporate tax-rate reduction for firms that expand their head count. For example, expand your headcount by 1 percent, get a 2 percent reduction to your corporate tax rate for 2 years. Expand your head count by 2 percent, get a 4 percent reduction, 3 percent for a 6 percent reduction, etc. with a cap at 10 percent reduction.
Bryan Lamb (’98), development executive, Clark Realty Capital, Encinitas, Calif.
Retain top immigrants
The Ewing Marion Kauffman Foundation has performed some intriguing research on how “highly skilled” immigrants start and meaningfully contribute to early stage companies at an exceptionally high rate. The U.S. is unwittingly forcing too many talented foreign students to go back to their home countries upon graduation. Revise U.S. citizenship/visa policies for highly skilled immigrants. Create a capital-matching venture fund focused exclusively on technically advanced immigrant-centric businesses. And provide enhanced U.S. government economic incentives for new business creation over the next 12 to 24 months.
Jeffrey Lampe (EMBA ’05), principal, Hopewell Ventures, Chicago
Volunteer for work reductions
Share jobs through a volunteer program. There are Americans who would be willing to go to a reduced work week for someone else to have a part-time job. Some older workers, mothers with small children, people who are bored, and people who need some income but really would prefer not to work 40 hours might volunteer if given certain guarantees by their employers regarding benefits, job protection, etc.
Warren Albright (’59), retired advertising executive, Scottsdale, Ariz.
Reduce unemployment benefits
Although this may sound contrarian, the best way to reduce unemployment right now is to end federal subsidies for unemployment. My company operates a manufacturing plant in Tulsa, Okla. We have trouble hiring people because our
entry-level manufacturing positions pay about the same as someone can get from collecting unemployment. This is not a political statement; it is a cold, hard fact. Worse yet, we have learned through local media that people work jobs “under the table” while collecting unemployment, which means they make even more and the government makes even less since their extra income is unreported, further exacerbating the government debt crisis.
Kevin Doherty (’88), vice president, human resources, Carlisle Brake & Friction, Olmsted Township, Ohio
Create a recovery fund
Form a private foundation and tap the generosity of the American people to fund low-cost, higher-risk efforts such as public-works projects for the state, and small-business loans for individuals. An appeal to the American people to give to a recovery fund managed by notable public figures with no personal-gain issues might light the spark of patriotism and garner large sums of seed money. Leaders such as a Warren Buffett, Bill Gates or Kenneth Feinberg come to mind to champion or be on the board of such a cause.
Edward DaDura (’67), retired manager of new business development at Mobil Oil, now living in Naples, Fla.
The infrastructure that was built to get the United States out of the Great Depression served to bring us to the forefront of the global economy in the decades to follow. Without the dams, bridges and Interstates of the ’30s, there never would have been the prosperity of the ’50s and ’60s. It is time to take this principle into the 21st century. A concerted effort to modernize the U.S., both in terms of energy and information technology, would be a boon both in the short and long term. Building wind and solar farms (and the infrastructure needed to efficiently put this energy to use) would give jobs now and wean us off of foreign oil. Reinvigorating national connectivity (ethernet, WiFi, 4G wireless) would keep the U.S. on top of the cresting wave of technology instead of letting us get swamped by it.
Kevin Ritt (’11), assistant media planner, Draftfcb, Chicago
Boost investment in startups
Allow an accelerated write-off of equity invested in startups. To create jobs, you need to create companies, and that takes capital. If an investor can write off the investment today and offset against current income, it gives them extra incentive to invest. The government will get the money back if the company is successful via capital-gains taxes. A company can currently take a 100 percent deduction on capital purchased today. Why not let angel and venture investors do the same with an equity investment?
Nicole Lawrence (’96), vice president, PPM America, New York
Reconsider home appraisals
New housing starts are down approximately 80 percent since 2006, which pulls down all related industries and destroys consumer wealth and spending. Mortgage rates are at an all-time low, which should be creating an enormous amount of additional cash through refinancing and should stimulate new- and existing-home sales. It hasn’t done either, because banks are afraid to take any risk on residential mortgages. One factor is the appraisals that are used to make lending decisions. The snake-bit appraisers have now pushed the pendulum to the opposite extreme, making refinancing almost impossible. Solution: Allow a 10-15 percent deviation from current appraisal for a homeowner who has owned the property and has been current for the last five years. My background: 25 years in retail banking and 12 years of ownership of a building-supply company. I’ve been on both sides of the equation.
Richard Molyneux (’72), chairman, United Ventures, LLC, Washington, D.C.
Fuel energy independence
The United States should embark on a government-sponsored “Manhattan Project” to become energy independent. Modern technology has helped our nation discover abundant new reserves of oil and natural gas, the size of which was undreamed of five years ago. Let’s give domestic energy companies incentives to relocate, retrain and employ the hundreds of thousands of unemployed construction workers to accelerate the development of
Matt Williams (’03), vice president, Annuity Product Management, Merrill Lynch, Philadelphia
Train while on unemployment
Unemployment-insurance recipients should be allowed to train with a potential employer while continuing to receive unemployment. This would be non-paid training and employers would have no obligation to hire the person at the end of the pre-established training period. Still, the unemployed persons would acquire new skills, expand their network, and possibly receive a job at the end of the training. The program would allow employers to attempt to grow, but it would also provide downside protection in the event that growth doesn’t transpire or the trainee is not the right fit for the company.
Brian Milligan (MBA ’10), associate, Standard & Poor’s, Chicago
Pass trade agreements
Pass the three pending trade agreements with Panama, Colombia and Korea. Doing so would create 250,000 U.S. jobs, according to the White House. (President Obama signed the Korea, Panama and Colombia Free Trade Agreements this past October.)
Eric Friedman (EMBA ’09), assistant to the vice president for public
affairs and gorvernment affairs, The Dow Chemical Co., Midland, Mich.
Put small businesses first
Eighty percent of all jobs in the U.S. are supplied by small businesses. Small businesses have gone into storm-shelter mode and are hunkered down waiting for a recovery before they hire people back and spend any money. If the government wants to spend money on a stimulus, target it directly to these businesses. Not tax credits for hiring people—that’s good, but it won’t have an immediate impact. I don’t need tax credits right now, I need revenue and cash flow! Also, streamline the government-backed business-loan process. This process needs to be 30 days or less. The Small Business Administration takes three months.
Gabe Powers (’89), entrepreneur, Phoenix Business Systems and Clover Creek Brick Co., Brandenburg, Ky.
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To view the top 25 ideas submitted by Mendoza alumni, click on the link on the right.