Mish's Global Economic Trend Analysis

Obama Hails New Solar Energy Jobs at Taxpayer Price Tag of $1,333,333 Each
UK Unions Face Budget Cuts, Pay Cuts, Massively Reduced Severance Benefits
Do Grades Matter? How About the College? One Company Says the Answer is No

Obama Hails New Solar Energy Jobs at Taxpayer Price Tag of $1,333,333 Each

Posted: 05 Jul 2010 08:47 PM PDT

Hallelujah! Obama is cheering the news of 1,500 permanent jobs. The only problem is those jobs are going to cost taxpayers $1,333,333 each.

Please consider Obama awards $2B for solar power, hails new jobs

The government is handing out nearly $2 billion for new solar plants that President Barack Obama says will create thousands of jobs and increase the use of renewable energy sources.

"We're going to keep competing aggressively to make sure the jobs and industries of the future are taking root right here in America," Obama said.

The two companies that will receive the money from the president's $862 billion economic stimulus are Abengoa Solar, which will build one of the world's largest solar plants in Arizona, creating 1,600 construction jobs; and Abound Solar Manufacturing, which is building plants in Colorado and Indiana. The Obama administration says those projects will create more than 2,000 construction jobs and 1,500 permanent jobs.

Obama has said that to bring the nation's economy back from the brink of a depression, it was necessary to add to the country's debt in the short term.

Ignoring marginally attached workers, discouraged workers, and those working part-time who want a full-time job, there are approximately 14.6 million unemployed.

Counting 1,500 permanent jobs at $1,333,333 each, it would only cost $1.94666618 × 10¹³ ($19.47 trillion) to have full employment. That qualifies as aggressive in my book.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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UK Unions Face Budget Cuts, Pay Cuts, Massively Reduced Severance Benefits

Posted: 05 Jul 2010 07:15 PM PDT

As the UK continues with its austerity program, British public unions are screaming loudly.

The Telegraph reports Ministers to slash pay-offs for civil servants.

Generous "golden goodbye" payments to civil servants are to be cut drastically to make it cheaper for ministers to lay off thousands of public sector staff, The Daily Telegraph has learnt.

The changes, which will provoke a major confrontation with the unions, come as government departments are drawing up plans for budget cuts of up to 40 per cent.

With hundreds of thousands of state employees facing the sack, Civil Service managers have been told that tough new restrictions on redundancy payments will be in place within weeks.

Under existing Whitehall rules, some civil servants are entitled to severance payouts worth as much as six years' salary. Ministers want to shrink those packages to bring them in line with the private sector, where workers who are made redundant typically receive the equivalent of a few months' or even weeks' pay.

Treasury figures suggest that more than 600,000 jobs will be lost in the public sector over the next five years as almost £100 billion is cut from public spending.

Ministers have identified the traditionally high cost of laying off staff as a major obstacle to enacting their plans for cuts and improving efficiency.

Some ministries have "pools" of several hundred workers who do not have allocated jobs but who are not sacked because of the cost.

I commend the UK for finally doing something about its bloated public union problem.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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Do Grades Matter? How About the College? One Company Says the Answer is No

Posted: 05 Jul 2010 09:36 AM PDT

On this long 4th of July weekend, here is an Email from "KC" regarding the costs of education. "KC" writes ...

Hi Mish,

I've emailed you before on this subject. Today, I came across an article where a small company has started recruiting directly out of high school.

If education costs soar, I believe this is the future. I've been suggesting to many people for a while now that it's a win-win for both employer and student to hire straight out of high school. The student gets four years of work experience and income which is a tremendous head start compared to the debt of a four-year degree. As the author suggests, after two years the quality of work is indistinguishable between one of his recruits and someone with a degree. For the company, the benefit is lower salaries and a more stable work force, at least until other companies start hiring directly out of high school also.

With fewer students, education costs must come down and this will make it possible for those who want to become academics to pursue a meaningful and rewarding career; academic salaries are just not high enough to compensate for the debt burden while retaining the talented.

Keep up the good work.

KC

Recruiting at Zoho/AdventNet

"KC" was referring to How We Recruit - On Formal Credentials vs Experience-based Education

I was recently interviewed on Fox Business News. The anchor Liz Claman told me one of the things that interested them about Zoho/AdventNet is our recruitment model. It is a subject I am passionate about -in fact, I spend about as much time on it as our products or technology. After all, AdventNet has about 700 people, and we are hiring at a steadily increasing pace, so recruitment, motivation and retention are important topics for us.

Our company in India always faced trouble recruiting, because most college graduates, particularly from well-known colleges, would prefer big-brand-name firms. Simply out of sheer necessity, we started to disregard the kind of college a person graduated from, and the grades they obtained. In India, that task was made even easier, because much of the Indian industry is boringly conventional, and job advertisements that specify things like "Must have a minimum of 80% average in college" are fairly common (so if you got only 79%, don't bother to apply). As a result, we get a lot of the arbitrarily-cut-off category applicants. What we found over time was that there is a lot of really good talent in that pool, which the industry had overlooked. Based on a few years of observation, we noticed that there was little or no correlation between academic performance, as measured by grades & the type of college a person attended, and their real on-the-job performance. That was a genuine surprise, particularly for me, as I grew up thinking grades really mattered.

Over time, that led us to be bolder in our search for talent. We started to ask "What if the college degree itself is not really that useful? What if we took kids after high school, train them ourselves?"

That proved to be an outstanding success. Within 2 years, those students would become full time employees, their work performance indistinguishable from their college-educated peers. We have since expanded the program, with the latest batch of students consisting of about 20, recruited not just from Chennai but smaller towns and villages in the region.

Keeping the US Education Bubble Alive

While Zoho is hiring out of college, President Obama is hellbent on keeping the
education bubble alive by throwing more money at Pell Grants.

Education is generally a good thing, but a policy that pushes everyone receive a 4-year degree is certainly the wrong policy. Countless graduates have found that out the hard way.

Pell Grants are part of the problem as is any policy that helps keep the cost of education up. Worse yet, students graduate from college, deep in debt, unprepared for the real world, and poor job prospects to boot.

I am quite certain that education costs and administrative costs are both going to fall like a rock at some point simply because the current system is unsustainable. What cannot be sustained by definition won't be.

As always, timing of the setup is problematic. However, locking in the cost of a 4-year degree now for kids still in grade school seems unwise.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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Monday, July 5, 2010

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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