What America needs: A bumper crop of young entrepreneurs

Compared to prior recessions, something is definitely different this time. If you’ve lost your job, it is harder than ever to replace it.

The New York Times reports that 6.3 million Americans have been unemployed for six months or longer, more than double the next-worst recessive period of the early 1980s.

Tighter credit, outsourcing, globalization, and productivity-enhancing technologies have played a role–and each is here to stay. As a result, many older employees are delaying retirement, making it increasingly difficult for recent graduates to enter the workforce.

Voices across the political spectrum agree that America desperately needs private sector job growth, and many are calling for change. In a recent USA Today editorial, Robert Kiyosaki, the best-selling author of Rich Dad Poor Dad, calls for two different public-school programs: one for employees and one for entrepreneurs.

Mr. Kiyosaki writes, “If I were running America’s school system, I would create the U.S. Business Academy for Entrepreneurs, modeled after our federal military academies. Admissions would be via congressional appointment along with nominations from community business leaders.”

He envisions a U.S. Academy for Entrepreneurs that would produce leaders focused on sustainable jobs and responsible growth. Finally, Mr. Kiyosaki says that his academy could boost results by having “only real entrepreneurs as teachers.”

In my opinion, Mr. Kiyosaki identifies the root problem of America’s job malaise–the need to produce more entrepreneurs. However, I depart from his solution to create more government-run education programs, regardless of how selective or expertly staffed.

As one tasked with educating future entrepreneurs, I would argue that the state of entrepreneurial education has never been more vibrant. Three decades ago, only a handful of colleges offered courses in entrepreneurship. Through the pioneering work of scholars such as Babson’s Dr. Jeffry Timmons and the advocacy of the Kauffman Foundation and others, the field has subsequently flourished.

Today, over 2,000 academic institutions offer at least one course in entrepreneurship, compared with just 16 in 1970. Five hundred colleges and universities currently grant an entrepreneurship degree, up from 175 in 1990. Additionally, 200 university-based entrepreneurship centers collaborate as members of The Global Consortium of Entrepreneurship Centers (GCEC).

As for the notion that the discipline lacks the perspective of “real” entrepreneurs, there has been a concerted effort by top entrepreneurship programs to recruit current or recent entrepreneurs as classroom instructors. Perhaps more than in any department on campuses across America, academic administrators are increasingly receptive to the integration of practitioners.

I am not suggesting that entrepreneurship education cannot be improved. For example, we need a greatly expanded dialogue about ethics, a stronger commitment to service learning, and much more emphasis on how to actually build things.

But America’s aspiring entrepreneurs have more educational choices and more intellectual capital resources than at any point in the nation’s history. So where is the bottleneck in entrepreneurial dynamism? In a word: incentives.

Much like the Great Depression, the current recession has left an imprint on many young people. They have seen their parents struggling with mortgage debt and their classmates floundering in their job searches. It’s no wonder that students are increasingly drawn to “safe” endeavors.

In the current environment, that most often corresponds to government or government-backed jobs. According to The Wall Street Journal, federal agencies have been hiring at a pace not seen since the end of the Cold War.

However, the nation’s entrepreneurial framework requires more creative and lasting solutions–and soon.

That’s because America’s demographics demand a bumper crop of young entrepreneurs.
Nearly one in three American workers will be over the age of 50 by 2012. The “baby boomers,” those born between 1946 and 1965, started small businesses in record numbers during the 1970s and ’80s.

Just as with the massively overbuilt stock of residential housing, supply-demand imbalances often create severe economic shocks. During the next 20 years, the outcome of the so-called “silver tsunami” will be, in part, determined by boomers finding willing buyers for their small business ventures to fund their retirement needs.

However, current and aspiring entrepreneurs repeat a consistent refrain. They want government to control its spending for the sake of long-term interest rate stability. They don’t want to feel like they are on the outside looking in on a state capitalism “green zone.” The entrepreneurial class also seeks relief from the burdens of state licensing and regulatory departments.

Entrepreneurs also crave a better business climate with reduced payroll taxes, tax credits for research and development, and more manageable workers’ compensation and healthcare costs. Many are attracted to states with low or no income and capital-gains taxes.

Finally, we need to help entrepreneurs attract seed capital and make it easier to get new business loans without personal guarantees, allowing them to retain larger equity stakes.

There will be no meaningful job growth beyond the administrative state without a national embrace of those entrepreneurs who create them. A generation of skilled young entrepreneurs stands ready. Is their government ready for them?

Dr. Craig Columbus is a Fellow for Entrepreneurship and Innovation with the Center for Vision and Values. 

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