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BY CY THANNIKARY

COMMENTARY

While Jersey's unemployment rate is 11.5%, thirty-eight of the 96 New Jersey communities with more than 25,000 residents, are experiencing higher jobless rates. In South Jersey, Cumberland County has an unemployment rate of 12.7%. Salem and Atlantic counties have over 11.5% jobless rate each. New Jersey's Major cities like Newark has 15.5% unemployment and Camden and Trenton are experiencing little over 18% each. Therefore, it is incumbent upon the new governor to make every effort to create jobs in our urban and rural communities across the state.

Job creation in these communities can be achieved by (1) using new technologies and (2) by introducing a new business model called "Rural Sourcing". Today a number of U.S. companies outsource their back office operations such as insurance data entry, claims processing and billing to companies overseas. By training our unemployed youth and stay-at-home mothers to use computers to process on-line insurance claims, data entry and billing, we can not only create jobs in the urban and rural areas of the state but also keep these jobs here at home. With Newark being the third-largest insurance center in the United States, New Jersey is ideally suited to promote this concept. Prudential insurance and Mutual Benefit companies have originated in Newark. Prudential is still headquartered in the city and Blue Cross and Blue Shield has its offices in Newark. This means the city has considerable corporate base and these companies can be encouraged to outsource their data entry, claims processing and billing services to New Jersey workers.

Other on-line services which our workers can be trained to perform include hotel and car rental booking services and monitoring shut-in patients and elderly. (India has a company that provides patient monitoring services for American insurance companies). These on-line services can easily be provided by stay-at-home mothers and other individuals, without leaving their homes, and get paid on a piecemeal basis.

Another area of using technology to create jobs is to train rural and urban unemployed women and youth to assemble solar panels. These same people can also be trained as "mechanics on call" to provide repair services after the panels are installed (India has a successful program in the rural areas where house wives assemble solar panels and after the panels are installed they serve as "mechanics on call").

New Jersey's Community colleges and vocational schools can be used to train these workers on data processing, green technologies and other computer applications. In fact, the Federal Economic Stimulus package includes $500 million to train workers in "green jobs".

Another job creation mechanism is a new business concept called "Rural Sourcing". Rural Sourcing means large corporations outsource their "back office operations" to companies and individuals in urban and rural areas in the U.S. instead of sending such jobs overseas. Several studies indicate that the salaries paid for an inner city or a rural worker is 30%-40% less than what would cost a company in an up-scale office environment. Typical services these companies can provide would be on-line services mentioned above. This could be the future of "outsourcing. (States like, Arkansas, North Carolina etc., have a number of successful Rural Sourcing companies providing above mentioned services to a number of U.S. companies).

New Jersey, therefore, must develop plans to promote such companies in the state. Here are a number of strategies for New Jersey to consider:

1. As a matter of policy, New Jersey must create an environment to spawn new companies and encourage existing Small and Medium size Enterprises (SME) to form networks and partnerships, sourcing agreements, and other alliances with larger companies to provide services mentioned above.
2. Encourage insurance companies- Prudential, Blue Cross/Blue Shield and car insurance companies - in the state to outsource their online services to N.J. companies in our rural and urban areas.
3. Use the state's Community colleges as "TECH UNIVERSITIES" to train stay at home mothers and unemployed urban youth on electronic on-line services, patient and elderly monitoring and assembling solar panels and training "mechanics on call". (India is in the process of creating a net work of such universities in collaboration with U.S. colleges).
4. Amend N.J's existing UEZ legislation to allow a portion of the UEZ funds to invest in new technology companies that are creating jobs in their respective cities and to pay for the training of unemployed youth, and stay at home mothers in new technology applications.
5. For funding for business creation in rural areas of the state, create a Micro Lending Program modeled after California or expand the existing "NJ Women's Micro Business Credit Program" from which entrepreneurs can borrow funds to start small businesses to bring high tech jobs in rural and urban areas of the state.
6. Enforce the provisions of "Community Reinvestment Act" to force banks to lend money to their low income depositors as a condition of doing business in New Jersey.

Looking at the future, according to leading demographers like Wendell Cox, by 2015 more people will be working electronically at home full time than driving to work which saves energy. Some studies indicate that more than one quarter of the U. S. workers would eventually participate in this new pattern. Such a trend will bring back the corner pizza and grocery stores to the neighborhoods (creating more jobs) and promote improved participation by these work-at-home individuals in neighborhood bowling leagues, Boy Scouts, and Little Leagues — the traditional glue of American communities. These home based workers will also attend fairs and festivals; take their kids to soccer practices, ballet lessons or religious youth group meetings. Such localism would create a renewed sense of identity for urban neighborhoods as well as smaller towns. Such a sense of identity, improved living standards and people's involvement in the community could reduce gang violence and drug activities in our street corners.

This is a WIN, WIN strategy and New Jersey must be a leader this new paradigm.

(A detailed job creation strategy for N.J. is available upon request)

Cy Thannikary is the former Vice President, Policy and Strategic Initiatives & Director of NJ Division of Economic Development at New Jersey Commerce and Economic Growth Commission. He can be reached at: E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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