The Inclusive Economy
Entrepreneurship Opportunities for the Recent College Grad
By Jimmy Crowell on 05/23/2012 @ 01:00 PM
EDITOR’S NOTE: Jimmy’s blog post is the first of a three-part series focused on entrepreneurship in commemoration of National Small Business Week 2012. Check back tomorrow and Friday for the second and third installments in this series
As a wide-eyed 20-something American, I have watched my peers struggle to prove their worth, build their skillsets and find employment in today’s tight job market. I considered myself one of the lucky ones; I had the opportunity to leave my small town in Massachusetts, attend a large university and gain employment in Washington, DC. Now, when I look back at my town and my old high school classmates, most of them, including my peers that attended college, are struggling to start their careers. Today, half of college graduates under 25 are either jobless or underemployed and college debt and defaults are at their highest levels in history. Fortunately, another trend has developed that could be the solution to these epidemics: the growth of youth entrepreneurship.
The labor market is slowly recovering, but prospects for recent high school and college graduates will continue to remain grim for quite some time. With opportunities hard to come by, young adults need to create their own opportunities. Entrepreneurship is one way to do this. However, young adults with little collateral and fledgling credit scores have very restricted access to start-up capital. Not only do aspiring entrepreneurs face these obstacles when trying to obtain capital from traditional financial institutions, there are few alternatives. Microloan programs do not currently reach the vast amount of young Americans trying to develop their entrepreneurial skills. Help from family and friends, as my father relied on when he began his 40 year career as a self-employed commercial fisherman, is no longer a viable option for many young Americans. Family and friends struggling with their own financial problems are less likely to invest in young entrepreneurs. There needs to be a better support system for eager, unemployed Americans with innovative ideas.
One resource that young workers who are receiving unemployment insurance compensation need to know about is the Self-Employment Assistance (SEA) Program. SEA is an optional federal program that states can opt into; it has a more than 20-year history of connecting unemployed workers to entrepreneurship training and development services. Currently, seven states have active programs. In 2011, Senator Wyden’s (D-OR) START UP Act proposed an expansion of SEA so it would be easier for states to start their own programs. Most aspects of this bill were included in unemployment insurance reforms that became law in February 2012. The law allows states to offer SEA to unemployed workers who are receiving Emergency Unemployment Compensation (EUC), the extended benefits available to the long-term unemployed. Workers can participate for up to 26 weeks and can receive between $10,000 and $13,000 in benefits that can be used as start-up capital. Most simple service-based and technical ventures cost a few thousand dollars to get off the ground and to operate, so these funds could help aspiring entrepreneurs usher their ideas to fruition while supporting their basic living expenses. Unfortunately, SEA can’t reach many of the youngest unemployed Americans because they are not eligible for unemployment insurance unless they have been laid off from a job they previously worked at least half-time. We also need additional policies to reach the many high school and college graduates who enter the workforce and are unable to land that first job.
Another option for aspiring entrepreneurs to access capital would be to turn to the emerging field of microlending and microenterprise development. Very common abroad, the popularity of microlending has been growing in the U.S. in recent years. Organizations like ACCIÓN Texas , Grameen Bank, Community Reinvestment Fund and Self-Help offer loans from $1,000 to $50,000 along with other business development services. These organizations often look at the big picture and take into account passion and opportunity, not just credit scores and experience. Programs and organizations that support entrepreneurship, particularly youth entrepreneurship, need to be expanded and taken more seriously as a method for combatting unemployment. For example, the Small Business Administration could make more funding available for microlending via intermediary organizations and establish a funding priority for those who target training opportunities to youth entrepreneurs.
I know first-hand from watching my father that self-employment is a fulfilling career option. Young Americans with good work ethics and an entrepreneurial spirit should be afforded the opportunity to start their own businesses. This entrepreneurial spirit should be fostered from an early age in the U.S. education system with a stronger financial education curriculum. When given the tools and knowledge to succeed, young entrepreneurs can rebuild the American economy. Not only will youth entrepreneurship reduce joblessness among the under-25 age group, it will also help the American economy to recover and prosper.