Oceans of Opportunity

the DMV | a model for inefficiency

This past Friday was a model lesson in economic efficiency, and a clear representation of why our country is where it is.

Some might ask why I frequently write about fundamental economics and basic business. Well, today in particular, we need to strive towards a model of societal efficiency in a way that balances the world’s supply/demand scale, makes the best use of information technologies, and keeps people employed (the hard part). This balance is currently out of whack for a number of reasons. In even *thinking* about a future where humans inhabit the ocean floor, it would be greatly irresponsible on our part to take the plunge at any grandiose scale with the lethal inefficiencies that are embedded in our working system.

So back to Friday’s escapade…

I drive half an hour to the Rhode Island Division of Motor Vehicles. Park, take a number (#474), and wait. The number being served is #308. So, 166 people in line before me, and this is just people there to renew a driver’s license, or apply for a new license. On one hand I was stupid for tackling the DMV on a Friday afternoon, but on the other, I figured this would be a unique social experiment, so packed a book and made the excursion.

I sit, and wait.

and wait…

and wait. For THREE hours.

There were easily more than two thousand people at the DMV…it was more crowded than a Downtown Providence nightclub. I was fortunate that ONLY 166 people were in line in front of me for a license transaction.

Now of course, I thoroughly checked out the DMV website to see if my renewal was possible to complete online, and it wasn’t.

So let’s break this down:

-166 people helped in 3 hours by 5 DMV employees. That equates to 11.1 people helped per employee per hour. Pretty good from a customer service standpoint.

-Let’s assume these 11.1 people had the same half hour drive in that I had, for a total DMV experience of 4 hours. That means 4 hours away from work, not earning any taxable wages, per person. In the State of RI, the estimated per capita annual income is about $36,000, or $18 per hour (per 2006 US Census). With RI’s unemployment rate at 12%, 1.3 of these 11 people are unemployed, so we’ll leave them out of this calculation, and work with 9.7 employed people (though not at work) served per hour per DMV employee.

-So, 9.7 people x 4 hours x $18/hr = $698 of taxable wages not being earned, nor TAXED mind you. With a State income tax rate of 7% for the above average salary, the State of Rhode Island is losing $16 PER HOUR with people having to take 4 hours out of work to renew their driver’s license, FOR EACH ONE OF ITS DMV EMPLOYEES!

Now, I am not saying that the DMV employees are not doing an excellent job. Quite the contrary…as working with 11 agitated people an hour is pretty good. It’s the tools they have to work with that don’t make things efficient. So let’s take it a step further…

-Let’s assume that one DMV employee earns the average salary or $18/hour. Figure 50% of that on top for various benefits and we’re at a $27/hour cost to the State. Collectively, that’s a cost of $43 per hour, in which time we can renew 11.1 driver’s licenses.

There are other costs of course…rent of the DMV building, office supplies, machinery, communication costs, paperwork, paperwork, more paperwork. Let’s give them the benefit of the doubt and just leave this out of the number game.

So, this one department of 5 DMV employees, working 8 hours per day, cost the State $1720 per day, and can process 444 licenses or renewals in a day. Figure they work 5 days a week, 50 weeks a year, that’s a cost of $430,000 per year (at just one DMV location) to process 111,000 licenses or renewals.

That’s alot of money, but probably not even on the radar with the State Budget Office as a problem since it’s under a mil, and is keeping those 5 people employed.

Now, I’m not a business expert, nor am I an expert economist. However, let’s put some common sense to work. Alas, its the small things that make big differences. Let’s put a freeze on issuing new licenses and renewals for one year. Give these 5 people a raise to $20/hour ($40,000 per year – which they surely will not object to) and take that time to train them on troubleshooting ‘the new system’ which will be online in one month after you hire a great systems architect to redesign and automate the entire process for less than $100,000 using highly secure, but off the shelf software.

So, now all renewals can be done from home or at work, where the State never again loses that $16/hr in income tax, it saves money in the process, and gives raises to 5 State employees who now have high paying ‘tech’ jobs (making the State look better in a jobs census) who in turn, pay higher taxes, and so on.

Not to mention, 444 people per day have no more psychological battle scars from braving the DMV for 4 hours.

Automation at work. I guess you see my point. It’s time to take these sorts of steps. In just a few years, we’re talking about millions of dollars saved, from just one 5-person department.

If it were me…take it even further. Issue every US citizen a government based login/password associated with your social security number, and integrate everything into one ID – license, medical records, passport, finances, etc. Invest the millions to do it now, and we’re talking BILLIONS in saving from eliminating all these wait in line services, and waiting for paper records, and the associated postage, and more waiting, and more waiting, and so on. Better yet, stick a chip in my brain at birth. Invasion of privacy…absolutely not. You can only go so far on this planet and if you are worried that you are doing something wrong, you probably are. Ethics police, have at it…

OK, that’s my piece for the day. I’m no techie guru, otherwise, believe me, the plan would be at the Governor’s doorstep…but it’s there for the taking. And the point is that this thought process, while crude and fundamental, can really make a difference in our operating efficiently. It’ll make the world a better place.

At least I made good use of my time at the good ole DMV!

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