Mobile Job Centers
The mobile job centers will provide a positive net present value by Year 6, and will add value from that point onward. The project will be deeply in the red for most of the early years. The project has high upfront costs relating to the acquisition and outfitting of the buses. Furthermore, the ongoing cost structure is very high - costs like a Director's Assistant are absolutely unnecessary and driver salary is really high for that type of job. So there are some issues with the cost structure as presently proposed. On one hand, the project will have a positive NPV is left to run long enough, but those results are based on assumptions that may not hold up well into Year 6. Basically, the project's positive NPV rests on long-run cumulative effects, so in order to believe these projections, we would need to see some evidence that this type of effort has succeeded in the past. The project's profitability is rooted in multiplier effects over a number of years – multiplying a figure itself derived from the prior year's multiplier. This escalation of value is ultimately the crutch holding up these numbers, rather than actual positive cash flow. In essence, the benefit figures seem spurious. Also, I have no idea what a seed grant is, or why it has been included in this. An operating grant is fine, but a seed grant wouldn't be an ongoing benefit, per the definition of the word seed.
The project appears to be something to the effect that mobile job centers are going to be built into buses. These buses will apparently help people find jobs. One of the key assumptions is that these job placements will be incremental – that the buses will help better align people with jobs. The job placement figures presented here do not explain how that will happen – it assumes a certain amount of placements, and that those placements are incremental in nature – all of them. That is highly spurious; there are many ways for people to find work. Some jobs placed through the buses would have been placed by other means. Some people would have found other jobs that maybe aren't as good, but that still reduces the incremental benefit. By not factoring in only incremental cash flows, this is an example of misusing a net present value calculation.
Another issue with the assumptions is that the project is going to last at least eight years. That's a couple of election cycles. That's potential a recession that cripples incomes. The reality is that it will be difficult to quantify the benefits, which means that the project will appear to be, on accounting statements, a money-loser. And on top of that, the city's employment rate is a terrible measure to evaluate the success of the project because so many other factors influence that. Without proper measures, it is unwise to assume any project will continue for eight years through multiple changes in leadership and priorities.
As noted above, most of the positive financial impact comes from the cumulative effect of positive early job placements – that people who find themselves in a better starting position will build on...
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