President Obama focused squarely on the middle class during his third State of the Union address. He declared that, "We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules."
Obama's speech has set off flares from the right about "class warfare" and from the left about "the disappearing middle class." There's no denying that the wealth gap is widening. In June 2010, a report from the Center on Budget and Policy Priorities confirmed that the gap between rich and poor in the United States had reached levels not seen since 1929. Currently, the United States ranks fourth in the world in income disparity, after Chile, Mexico and Turkey.
The fact is, the middle-class is in serious trouble. The key question is: What are we going to do about it? As the founder of the Network for Teaching Entrepreneurship (NFTE) and an educator of at-risk youth who has been in the poverty trenches for over thirty years, I can tell you that I've seen only one thing consistently create new members of our middle-class: Owner-entrepreneurship education.
At NFTE, we call our programs owner-entrepreneurship education, in order to stress the power of ownership as a means to create wealth. Disadvantaged youth are seldom let in on this secret to wealth creation. I once asked a leading venture capitalist and philanthropist, who has donated millions to helping low-income children attend private schools, "What about teaching kids the ownership skills that made you your fortune, so they can become financially independent?" He responded, only half-jokingly, "But then who would do the work?"
His comment illuminates a core issue in our society: If only the wealthiest people own the increased profits resulting from the better education of our low-income youth, how much has really been accomplished in helping our most impoverished citizens achieve the American dream?
This is why NFTE teaches owner-entrepreneurship education. We teach not only entrepreneurial skills like record keeping, sales, finance, negotiation, opportunity recognition, and marketing, but also the power of ownership. Our students learn how to properly value and sell a business, and how to build wealth utilizing franchising, licensing and other advantages of ownership.
Let me share with you the story of two courageous at-risk youth who traveled from extreme poverty into the middle-class through the power of owner-entrepreneurship education. Jabious and Anthony Williams were living crammed in with their mom and eight other family members into their aunt's two-bedroom apartment in Anacostia, a violent southeast Washington, D.C., neighborhood. Every day the boys walked miles to the nearest Exxon station to pump gas for tips. "Typically, we would earn about thirty to fifty dollars a day to help support my mom," says Jabious Williams.
Luckily, the Williams brothers met Mena Lofland, a caring NFTE-certified business teacher at Suitland High School in Maryland. She got the boys into a NFTE entrepreneurship class. NFTE currently reaches over 60,000 students a year in the United States, as well as in ten countries. There are 400,000 NFTE graduates globally.
Like many of our low-income students, Jabious and Anthony experienced tough childhoods that encourage independence, toughness, salesmanship and hard-won street smarts, and as a result, both showed great aptitude for entrepreneurship. I've seen this repeatedly: Our at-risk youth are uniquely equipped to handle the risk and uncertainty inherent in entrepreneurship. They also have valuable insights into their local markets.
The Williams brothers started their own hip-hop clothing line, for example, with support from Lofland, and two local mentors -- Phil McNeil, managing partner of Farragut Capital Partners, and Patty Alper, a dedicated volunteer, philanthropist and former entrepreneur.
Now 24, Jabious is a scholarship graduate student at Southeastern University and operates Jabious Bam Williams Art & Photography Company. Anthony heads a youth-mentorship program. They recently gave their mom $5,000 as a down payment on a house. "If it weren't for the NFTE classes and the support of our teachers and mentors, we would have likely dropped out of school," Jabious notes.
The story of the Williams brothers is just one of countless examples from NFTE's files that beg the question: If entrepreneurship education can create jobs, prevent students from dropping out, and provide economic rescue for people in our low-income communities, what's it going to take to open a conversation about making owner-entrepreneurship education standard in every high school in America?
Professor Andrew Hahn of Brandeis University points out the social consequences for an entire generation brought up in poverty that has never set foot in a workplace-and the potential benefits of entrepreneurship education. Hahn notes:
Research shows the scarring effects of early unemployment. The lack of work experience among minority teens contributes to a host of more serious challenges in their early twenties. Studies demonstrate that NFTE's entrepreneurship programs create jobs and are among the few strategies that work during these periods of massive youth joblessness.
I've seen firsthand that entrepreneurship education gets disaffected teens excited about school again, and about their futures. It teaches them that they can participate in our economy and make money. They quickly realize that to do so, they must to learn to read, write and do math. I've also seen how owning even the simplest small business fills a teen with pride.
Owner-entrepreneurship education is a great way to teach basic subjects to children who are failing to learn through traditional academic approaches, because it provides concrete incentives. Owner-entrepreneurship education teaches young people that they can create jobs for themselves and do not have to be victims of this economic downturn, but rather view it as an opportunity to start a business. It also makes them more employable in the long-term, because by running their own small businesses, they learn how business works and what makes an employee valuable. This shift in viewpoint can immeasurably benefit the psyche of an unemployed teenager, and also benefits companies that hire them.
Currently, our national strategy to combat poverty among low-income youth is built around improving K-12 education. That's a good choice, yet we're not teaching entrepreneurship, even though most Americans would probably agree with President Obama that small business is the driving engine of our economy.
Instead, most of our national education efforts seek to teach low-income youth to become better workers. Given the widening gap between rich and poor in this country, I'd like to raise one critical point: Why aren't we also teaching them how to own? If entrepreneurship is the engine of the American economy, why aren't we raising more creative entrepreneurs like the Williams brothers?
On an income statement, workers are located on the "wages" line. Professional business owners, venture capitalists, and private equity firms have a distinct advantage in the creation of wealth because they can sell the profits generated by workers for a multiple of a business's earnings. One dollar of profit can become $3, $10, or even $50.
This is how fortunes (and jobs) are created -- an entrepreneur starts a business, sells some or all of its ownership, and uses the resulting capital to start and build other businesses that he or she can sell in the future, creating more capital. Workers, on the other hand, spend their lives selling only their time for hourly wages, or perhaps a salary.
Teaching business skills without also teaching the power of ownership potentially creates wealth for an owner down the line, not necessarily for the entrepreneur who created a business. Even well-educated entrepreneurs can find themselves at a disadvantage when dealing with professional owners who are experts in valuation and procuring a high rate of return in exchange for investing in a business.
We seek to demystify wealth creation for our low-income students, so they will have the same knowledge that a child of wealthy parents might pick up at the dinner table. Owner-entrepreneurship education empowers young people to make well-informed decisions about their future, whether they choose to become entrepreneurs or not. They become aware of five assets that every individual has: time, talent, attitude, energy and unique knowledge of their communities. They learn to use these assets strategically as they move along in their careers -- which may include creating businesses and jobs, and building wealth in their communities.
Owner-entrepreneurship education reveals that anyone can start a business and use it to create wealth. This awareness can be a matter of life or death for at-risk young people like the Williams brothers. Through owner-entrepreneurship education, they discovered the value of their assets and created a business out of a comparative advantage -- in this case, their unique knowledge of hip hop culture and what kind of clothes would appeal to other kids in their community. As a result, they became motivated to stay in high school, went on to college and helped their mother become a homeowner.
As the Williams brothers learned, owner-entrepreneurship education can help solve the youth unemployment crisis, rescue our low-income communities by increasing home ownership and employment, and even bring about a fairer distribution of wealth. We need a national debate on owner-entrepreneurship education, particularly for low-income youth. We must raise the consciousness of those who have been left out of our economic system, so that they comprehend the joys and responsibilities of ownership.
As Jabious Williams says, "Because I own my business, I know I have a future."
Paul Stoller: Class Illusions Revisited
But to the point in your article, it takes a lot more effort to go do your own thing. There is more risk, more work, and potentially more reward. However, a lot of American's want to take the easy way out. They don't want to work hard, they just want to show up and get a pay check. This is the same reason American's don't do well in Math and Sciences. It simply takes more work and our students are too lazy to make the effort. Past generations didn't have this problem as much as the younger generations, IMHO.
My experiences differ from his.
America today doesn't like small business much.
Oh, they say small businesses are the "engine of democracy" and the jobs creators, but then they sit and watch as all their local Mom and Pops go under when Walmart hits town.
In my case, my business survived government taxes (a lot higher when I was paying them, then they are now),
It survived unwarranted government regulations.
I had to comply with DOT regulations requiring that I meet the standards of a professional trucking company because I owned a service truck, and had the audacity to work in more than one state. (Including drivers logs, limits on hours driving/working, physical exams, and DOT inspections on my truck).
My business even survived a serious personal injury (though it took me years to recover, and not fully)
But when my Workers Comp. Insurance carrier decided I was no longer "profitable", I was forced out of business in less than a year.
We all formulate our opinions based on personal experience.
IMPO....This country is OWNED, run and operated by Big Business interests. Small business survives at their leisure. If THEY decide you have become inconvenient. You Will be gone.
America today? There ain't no Justice.............It's Just US............and we're losing.
e.g. Wal-Mart ALWAYs seeks and nearly always gets tax abatements and incentives to come into a town. The mom & pop retailers didn't get anything but grief from the local government, but Wal-mart gets money.
The US should eliminate regulations for companies less than 10 employees because the cost of compliance is simply too high for many smaller businesses to afford.
Manufacturing jobs will never come back here until the liability insurance problems are resolved. Here if you have an accident, you could get sued and fined for hundreds of thousands of dollars or more. In China, the employee's family MIGHT get a couple of grand - total. The solution would be for China to have to step up to our work standards, but that will take a while.
Sorry to hear of your businesses loss.
This form of teaching those who have seen difficult times and do not feel as though a standard education can benefit them can actually reinvigorate them, motivate them to seek out a goal, and to actually focus on a future.
Although the actual creation of a small sustainable business may not be feasible, the real life application and allow these students to grasp on to something real and therefore motivate themselves to focus on reading and writing.
I believe this function of educating needs to be delved in to further, but definitely presents and interesting groundwork to a new opportunity for the education world.
However, the need to get the government out of the way so people can start their own business and create their own wealth is palpable and real. Less government, less taxation, and less of this divisive class hate.
Kai
You sound like you OD' on the Koolade, sorry you are being cut off...
What wealth concentration by the 1%?
Let’s go to the research by the leading person on the subject, who is liberal by the way:
‘Top Wealth Shares in the United States: 1916-2000: Evidence from Estate Tax Returns’
http://www.nber.org/papers/w10399
I refer you to figure 2 (page79), as you can by 2000 the share of wealth held by the 1% not far from its historical low and definitely better than in the 1950’s and 1960’s and it has not changed much since the 1980’s
While I have you on this report, I refer you to figure 3 (page 80), as you can see average real wealth between the 1% and the 99% pretty much have grown at the same rate since the 1980’s (thank you Reagan)
And if I can refer you to figure 13 (page 90), as you can see it was only recently, say since around the late 70’s that France and the UK became as egalitarian and equal as we are.
Would you like some additional data…or would you prefer to just lie back and smoke some more hopium? I suggest you just go with the hopium…it will help ease the pain and humiliation of being wrong.
Kai
Kai
The people who have been successful are the ones holding the rest of the country back.
This gets to how do we empower people who work as waiters and waitress's, people who clean homes. Drives cabs, ring up groceries and other jobs like that, how do we empower these people. With the ability to manage or run these business's and move to the Middle Class or even better. So they become Self Sufficient and are off of Public Assistance indefinitely. And that gets to Education and Job Training. So these people have the skills to run business's, instead of working Dead End jobs at these business's.
Many college degrees become irrelevant in a short time but entrepreneurial skills are always in demand. Our HS's are training workers while our colleges are training managers yet where are the institutions that are training entrepreneurs? American garages are disappearing along with the middle class and that is where most of our current generation of tech entrepreneurs got their training.
Well educated people tend to look for jobs - why? Because the risks are dramatically less, and the chances of success are dramatically higher. How many of the wealthiest people in America were entrepreneurs? Beyond the few every one knows (Jobs, Gates, etc.), the number is unbelievably small. And note most of those people are in one industry - computers. The really wealthy people of America are in finance and banking - and they all work for big corporations. Even when they don't work for the big corporations directly they are contractors for those companies - e.g. Newt Gingrich.
The reason America is seeing less and less entrepreneurship is simple, we are killing the goose that laid the golden egg in order to protect our vested positions - the fight against immigration.
The solution is simple, and cheap. Increase immigration - all immigration, and then be real capitalists and let real competition make the decisions.
I totally agree that immigration is also a great entrepreneurial engine for job creation since I've worked for immigrant entrepreneurs more often than not. Immigrants are especially valuable to our global business success since they have connections to their home country that can be made stronger with small business networks. Great article! Thanks for the post and keep spreading the word! I, for one, am with you.
In today's society, such programs would not succeed because parents and schools no longer teach the value of hard work, saving, individual initiative and creative thinking.
Today's we teach kids instant gratification, save them from the consequences of their mistakes and that production is not necessary, just get what you want from the government or seize it.
Most minimum wage jobs, which many people ridicule, do teach basic job skills such as showing up on time, team work, etc. But most people do not want to learn from them, instead, expecting to start out with high paying jobs with easy hours.
A good idea that needs to overcome a lot of resistance.
The truth is that most people don't want to be entrepreneurs or business owners. And most people, even among those who do want to, aren't cut out for it. They fail, or at best, live lives every bit as miserable as Joe Paycheck. Tune in any episode of Kitchen Nightmares to see this in action.
The main obstacle to creatively, speaking from a historical or contemporary point of view, is the government, which regulates and mandates in such a way to inhibit creativity, seizes wealth to squander, or a population that no longer practice virtues such as saving, delayed gratification, independent thinking and hard work.
America needs to revere the right to produce and not the right of entitlements.
Where do you stand?
I see it this way--as long as the world's population is growing (now @ 7 billion and projected to grow to 9 billion by mid-century) there are business opportunities yet to be born selling goods & services to people & to the businesses they create. And, we can use new business models that give ownership to the workers rather than just trading their labor for a paycheck.
If workers own the profits they create they become more productive & more interested in the success of the business because their rewards are direct & visible at the end of every year. Worker turnover is reduced as a result & training costs are also reduced. That makes the business even more profitable. It is a far secure & sustainable model than the one we have now--corporatism, cheap labor & personal debt.
NCLB as implemented has forced states and school districts to put the kibosh on other worthy academic programs. If people want to schools to offer more academic programs, then they need to convince politicians to either change NCLB or get rid of it all together.
Their agenda is only public schools that follow a politically correct agenda and a Washington D.C. mandated curriculum.
Not a red herring.
Much of our national mindset and policy making still smacks of Rockefeller's, "we need a nation of workers" mentality.
These are a few examples:
1. Our education system stresses compliance and passing "national exams" above all. Some of that's good, some of it's a creativity killer.
2. Our educational system stresses migrating kids to college & white collar jobs Ie. "workers." Allowing kids who aren't inclined to college to pursue trades can be an outstanding path to small business ownership.
3. We are the nation of the 30 year mortgage & 5 year car loans, etc. Huge obstacles to having the financial flexibility to start a business. BUT perfect for keeping workers in their jobs.
4. Health insurance is outrageous for the self employed. The big groups/big companies get deep discounts.
5. We've cut deeply into our federal investment in R&D which spurred innovation in the 50's, 60's & 70's. (the cold war race helped) Corporations have slashed this also in favor of immediate quarterly profits.
6. We remain in love with giant corporations. Giant corporations use their deep pockets to tilt the table of rules and regulations in their favor and kill many small businesses.
7. At a personal level - poor people cannot teach others how to attract and create wealth. There is a necessary mindset shift - well articulated by the Rich Dad / Poor Dad author.
*Feel free
Imho, The Rich Dad/Poor Dad author had it backwards. I've also lived & worked with the rich and they seem to be the laziest & most entitled folks in the land. They raise lazy kids who suck off their parents wealth & think they are better than everyone else. They go to school for social contacts, not education, because they believe their family wealth makes education unnecessary & a waste of time.
From the article: "I've seen this repeatedly: Our at-risk youth are uniquely equipped to handle the risk and uncertainty inherent in entrepreneurship. They also have valuable insights into their local markets."