Put in a nutshell he points out that over a 3-month period the normal trade-in of old clunkers for new is around 200,000 vehicles. If we assume that most of those planning to have traded in the last month or so, plus those incited to do so for this month and next have been down to the show room and bought, then the first 200,000 cars sold in the program provide no gain to overall sales. If one then divides $1 billion by $4,500 then the total sales this will support is 222,000 cars. The gain in sales is thus only 22,000 cars over those that would have otherwise have been sold. Divide that number into the $1 billion, and the actual cost per additional car sold, over those that would have been otherwise is $54,000. Wow!
Now part of that Wow comes from the fact that we didn’t wait, and getting our Fusion, after trading in the Omni meant that we wouldn’t have qualified anyway. The Omni got 22 mpg, though it was 11 years old. But somehow those numbers are a little discouraging. However the PR boost and the “somebody did something” moments are, in the greater scheme of things perhaps worth it, since it might, at some future point, be used as a marker for the bottom point of this recession.
And speaking about the recession, job losses, and the unemployment of graduates continues to be a problem. In the same mode as for the C for C, the British government has come up with a thousand pound per student scheme to send graduates out to support good works around the world. At the same time, to show the other side of the coin, Robert Rapier posted the following table for current average salaries for graduating engineers in the United States.
Current starting salaries for selected professions I thought I might add to this that this is the first year that we have seen students going out (more than one) with starting salaries over $100k, and that word of this has got back to the schools, and my class sizes going into the fall are significantly larger than they were originally intended to be.
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A $2 billion extension to Cash for Clunkers passed the House on Friday and headed for the Senate. Consumers may not be able to do the math but they can recognise free money when they see it.
ReplyDeleteThere's a flip side to high starting salaries for engineering graduates. My daughter took a geological engineering degree from a large Canadian university three years ago. Her class of 17 caught the employment wave. Not one of them went on to graduate school.
a) Re the cash for clunkers, I have read that the program might not get through the Senate as easily as it got through the House.
ReplyDeleteb) In regard to grad students it is actually a bit of a mixed bag. A couple of years ago not only was it hard to get grad students, I had always staffed my research programs with additional undergrads and all of a sudden, even though we had the numbers of students, not so many of them were interested in work.
We rethought the exercise and now have the student numbers that we need, but they are not as indigenous.