The economy of the last several years has brought home one hard fact: high school graduates entering and reentering the workforce too often lack the skills needed to fill the growing demands of the companies that are hiring. Placing blame like a blanket over the entire education system is not the right answer. Just like there is not one silver bullet to fix the issue, there is not only one entity, group or policy to blame. States do not have the money or enough educators to teach the needed skills; educators do not have access to continuing education opportunities to ramp up their skills; and the fundamental issue of poverty and basic access to resources that can support childhood education has not been adequately addressed. This is why American businesses must help out where they can, and financial literacy is an area in which there is both a great need and an enormous ability to make a real difference. While many businesses are already helping, it is time for companies to step up to the plate and work directly with schools and teachers and leverage their scope, scale and resources to fill the gaps.
Financial literacy is not a luxury to add to the curriculum once students have mastered basic math skills. Rather, it is an essential skill that helps students reason across various subjects and provides them with valuable reasoning capabilities. Some recent findings indicate how important this issue is, and it should especially alarm those of us in the private and education sectors.
A 2011 survey of graduating high school seniors by Capital One found that 44 percent of students planning to take out student loans did not understand how those loans worked. A separate 2011 survey of teenagers by Junior Achievement found that nearly 50 percent were unsure how credit cards worked. Moreover, a recent survey for the National Foundation for Credit Counseling found that 40 percent of U.S. adults gave themselves a C, D, or F on their knowledge of personal finance -- clearly, financial illiteracy is not a problem that magically disappears later in life.
The business community cannot ignore these and other findings. This type of real life knowledge is crucial to young adults who need to understand fully the terms of college and other loans, the way credit cards work, and how these and related matters affect both their present and future. Just as important, this is not solely a problem for individuals graduating high school who lack this knowledge. This is a real dilemma for American business.
This is about the growing talent gap in our country -- the gap between what businesses need their entering employees to know and what they actually know. And the gap's consequences are substantial: resources that could be used in research, development, and improving products and services are diverted to educating entering employees on basic information; businesses are forced to delay strategic plans altogether when they cannot find the employees they need; and those lacking this fundamental knowledge have more trouble finding jobs and managing their economic lives.
As with every serious problem, there is no quick fix. Thirteen states around the country, though, have already begun the work, requiring that students have at least one semester of personal or consumer finance or economics in order to graduate high school. Oklahoma, for example, has included the requirement as part of its College, Career, and Citizenship Readiness Standards. However, these 13 states and those without these programs lack the resources and the relevant training needed to add yet more courses and develop additional curriculum.
This is where businesses can and must step in and help. Here's how.
First, businesses should leverage their core competencies to train teachers, for those with a competency in finance and accounting should impart that knowledge and use their expertise to help train teachers in core principles of personal finance and economics. The University of Wisconsin commissioned a recent study finding that only 20 percent of high school teachers felt able to teach basic economics to their students. Thus, not only are most of our teachers unable to teach basic personal financial and economic literacy, but they cannot develop the curriculum itself. American companies must begin partnering with educators, giving teachers free, easy access to the training they need and helping them find ways to incorporate financial literacy into existing curricula. Math classrooms are obvious places to teach the principles of personal finance and economics, but so are social studies and history classrooms, in which basic reasoning skills and reflection on the growth of capital markets and trade are also crucial.
Second, corporate America must do a better job creating real-world opportunities for students to learn. Through real-world experiences during internships and job-shadowing programs and through classroom visits by professionals, students learn not just substantive knowledge, but how personal finance and the greater economy relates to their daily lives and future professional success.
Third, due to a shortage in educators, every American high school will not be able to offer its own financial and economic literacy courses. However, classes can be taught online so that schools in rural or disadvantaged areas have access to this education.
Finally, businesses should partner with educational nonprofits to combine businesses' resources with nonprofits' expertise and existing relationships with educators. Many businesses and nonprofits are already doing this, connecting donors directly with classrooms in need.
Businesses are good at leveraging their people and other resources to succeed. They can apply the same principle here. Training just one teacher can reach more than one hundred students in a school year. If American business, teachers, administrators, and legislators actively engage this problem and work together, they can equip teachers and help students become financially literate. This is not optional for our country's economic future; it is an imperative.
Shannon Schuyler and Mukul Pandya, editor-in-chief of Knowledge@Wharton, co-authored this post. More information on Knowledge@Wharton can be found online.
* Shannon Schuyler is the Corporate Responsibility Leader at PricewaterhouseCoopers LLP. Mukul Pandya is the Executive Director of Knowledge@Wharton at the University of Pennsylvania. As part of its $160 million Earn Your Future Initiative, PwC sponsored 150 teachers to attend a three-day course at Wharton in September 2012 on teaching financial literacy.