The unemployment rate for August 2011 was 9.1% which equates to approximately 14 million Americans without a job. Certainly there are industries out there that could utilize at least some of this available workforce, but how far do we really need to look? I am going to propose an idea here that will not only employ some of these folks, but will also significantly cut-down on the expenses we pay for unemployment programs.
The federal, state, and local government are somewhat restricted in the jobs they can create. They don’t actually own any businesses and the revenue streams they do have are tied to work that other people engage in. For example, taxes in the broadest sense would not be very lucrative if no one worked or made any money for themselves. License plate sales would plummet if we all decided to give up our cars. Of course this is true of many business models but it is worth noting that our government has virtually no impact on job creation because they essentially have no standalone products.
But there are many things the government does provide us that hold value. Some of these things include social security, medicare, unemployment and food stamps. Without such programs our country would be in much worse shape than it already is. Now few people argue the importance of having these “safety net” programs available, but coincidentally there are many of us who believe these programs are often taken advantage of. This slippery slope of needing something but also having concerns about its practicality creates what I believe to be a golden opportunity to create a better system.
We have all experienced the glacier-like pace of getting answers from a government office. How many hours have you waited in line at your local post office, license bureau or social security branch. God forbid you ask a question that doesn’t have a formatted answer posted on a sign causing someone to actually speak to you! The point here is that many government offices are understaffed, especially those in the benefits sector.
There are two major risks to running a store without enough staff. The first is not having enough help to service the customers needs (clearly not a concern for our government). The second risk is the increased probability for worker errors and oversights. This could include things like failing to log inventory properly, or falling victim to scammers and shoplifters. The fewer “eyes” you have on the floor means more opportunities for bad things to happen.
In my opinion this is one of the problems we have we entitlement programs like unemployment, social security, and food stamps. The millions of people who receive benefits from these programs grossly outnumber the staff who monitors them. This leaves the door wide open for those who aim to manipulate the system by receiving benefits they do not qualify for. For example, this article points out that Wisconsin lost over $50 million in unemployment fraud and employee errors in 2009. That is just one program in one state for a single year!
Let’s assume for a minute that ten of our fifty states average the same figures. Suddenly you are up to $500 million dollars in fraudulent claims. The simple fix here is to hire more case managers and supervisors to fight against the freeloaders. Well guess what? There are 9 million people available to choose from for these new positions!
I will take the conservative approach here and say that of the $500 million in fraud mentioned above, only $250 million of that is recoverable by reasonable means (i.e. enforcement and data analysis). Next, I’ll assume the government wants to profit some by hiring more case managers, so the most they will commit to labor cost is 50% of the $250 million in recoverable fraud. No sweat, as I still have $125 million to go out and hire some people.
The new case managers will be paid $45,000 per year plus benefits for a total annual labor cost of $65,000 per employee. With $125 million I can hire 1,923 employees. So almost 2,000 people get a decent paying job with benefits AND the government saves an additional $125 million in fraudulent payments. Am I missing something here? Could it really be that easy? Remember, these are ultra conservative projections for only ten states AND I am only referring to the unemployment program. There is potential to save billions of dollars by the time you add case managers to the welfare and social security programs.
Government enforcement programs are sitting on a potential gold mine. Not only could they slash huge expenses by fighting fraud more aggressively, but they could also put some people back to work in the process. Unfortunately the top executives only tend to see labor as a cost instead of an asset. And so the cycle continues…
