Ask any high school senior to define a budget deficit and the chances of getting a correct answer are less than one in four. For that matter, most college seniors cannot define the term either. Given that the federal budget deficit was a key issue in the 1992 presidential campaign, it is sobering that only 51 percent of the general public understands what the term means.
The Problem of Economic Illiteracy
Unfortunately, the federal deficit is only one of many economic concepts Americans do not comprehend. According to a recent National Survey of American Eeconomic Literacy, the general public, high school seniors and college seniors all showed significant deficiencies in their economic knowledge. As stated in the survey overview by William B. Walstad, director of the National Center for Research in Economic Education, and Max Larsen, senior vice president of the Gallup Organization: “Economic illiteracy has the potential to misshape public opinion on economic issues and can lead to policies that have negative or perverse effects on the economy.”
Although of national concern, the problem of economic illiteracy is felt even closer to home. Many high school graduates have difficulty finding jobs because they do not have the practical skills or experience needed to succeed in an increasingly complex business environment. Many other students drop out before graduation because they do not see how their school work benefits their future chances of success.
Interestingly, many young people start their education with a natural entrepreneurial inclination. Research shows that 25 percent of children entering kindergarten possess entrepreneurial spirit. However, this figure falls to only three percent by the time they graduate from high school.
The American educational system — and the economy as a whole — cannot afford to let this entrepreneurial spirit go to waste. Businesses need qualified workers, students need to understand the relationship between school and their future and everyone benefits from improved student retention and achievement. An increasingly popular approach — entrepreneurship education — offers hope in addressing this multifaceted problem and its long-term implications.
Teaching The Teachers
Entrepreneurship education teaches elementary and secondary students the practical skills necessary to start and run a business. It is an expanding field with programs developing across the country. Many of these programs are part of the New York-based National Council on Economic Education, a nationwide network of state councils and 275 university centers providing economic education for more than 120,000 teachers and eight million students each year.
The Barbara Schick Center for Economic Education at the University of Nevada, Las Vegas, is part of this network. The Center offers summer teacher training programs to help educators develop individual entrepreneurship education projects. Working closely with the Small Business Administration, the Center coordinates with teachers and local businesses in teaching fourth, fifth and sixth grade students to develop and run in- class enterprises.
Another member of the National Council on Economic Education is the Center for Economic Education at the University of Delaware. Since 1981, the Center has been running a two-summer program for elementary and secondary educators. As Dr. Jim O’Neill, the director, explains: “Not only do we teach educators ways to introduce entrepreneurship principles in the classroom, but we also help these teachers become entrepreneurs within their own districts. They are the ones who share entrepreneurship education concepts with colleagues and keep the ideas spreading in their schools.”
O’Neill believes the strengths of the program are the teachers it recruits and its unique cooperation with small business. “This is the only program of its kind in the country. We are underwritten by the private sector and an important part of our effort is having individual entrepreneurs and company representatives share their experiences.”
And teachers have responded extremely well to the program, O’Neill emphasizes. “We stay in close contact with a number of teachers who have completed the course. As part of the study, educators develop their own entrepreneurship education programs for their particular situations. We don’t tell them what to do, but instead help them implement their own ideas.”
Elementary Education — EconoM&Mics
Ronni Cohen is an educator who has remained in close contact with the Center for Economic Education. She teaches fourth grade in Wilmington, Delaware, and has developed her own instructional unit that has been used throughout the state for grades two through eight. “The kids love it,” Cohen claims, “and they learn basic economic and entrepreneurship concepts with ease.”
The M&Ms® unit is an integrated one that incorporates lessons related to science, math, social studies, language arts and critical and creative thinking skills. Students evaluate why M&Ms are certain colors and not others. They use imagination exercises to invent new types of M&Ms and then determine whether these new types would be profitable. Supply and demand, graphing and ratios all play a role. And the students find the experience enjoyable as well as educational. “They don’t think it’s school,” Cohen explains.
This school year marks the beginning of a new project for Cohen and her school. Through cooperation with Wilmington Trust and the Delaware Council of Economic Education, an official branch bank of Wilmington Trust is opening in the school one day each week. This first year the fourth grade students will open non-custodial accounts; grades five and six will be added next year.
“We had to get permission from the banking commission because this is no simulation but, in fact, a branch bank,” explains Cohen. “We’re really very fortunate, because Delaware supports entrepreneurship and technology and has laws that are very friendly to banks.” The banking program is unique in the state, and according to Cohen, the teaching component was developed in cooperation with the Center for Economic Education.
Cohen attributes the strength of her entrepreneurship programs to the support and encouragement of the Center for Economic Education and the backing of her superintendent and principal. The success of EconoM&Mics led to Cohen’s receiving the National Federation of Independent Business (NFIB) 1992 award for elementary education.
Secondary Education — Tiger Mart
Gary Zirbes, principal of Rothsay Public School in Rothsay, Minnesota, was awarded the 1992 NFIB Secondary Education Award for Rothsay’s Tiger Mart Grocery Store.
Tiger Mart was once a bankrupt local grocery store. Tiger, Inc., a corporation comprised of junior and senior students from Rothsay High School, took on the challenge of regenerating the operation. With the legal assistance of an attorney, the students cleaned and staffed the store, successfully applied for and received grants for inventory, stocked the shelves and reopened the business.
Tiger Inc. is a legal corporation and Tiger Mart is a legitimate enterprise. Rothsay Public School serves as a fiscal agent for all grant monies awarded to Tiger Inc., acts as adviser, and establishes mentorship programs to ensure ongoing training of students. The business decisions that affect the daily operation of Tiger Mart rest with the students, so in effect they determine whether the operation succeeds or fails.
The students perform all bookkeeping, fiscal, record keeping and reporting responsibilities. They act as store management — assigning work schedules, ordering inventory, supervising customer relations, handling payroll and conducting fiscal inventories and cash register check-out. They are also meat cutters, so they order, prepare and display the meat in addition to operating the cutting equipment safely.
The ongoing training is accomplished through cooperation between seniors and juniors. Each student starts working at Tiger Mart as a junior with a senior advisor. The following year the junior becomes a senior advisor to a new junior. The position of store manager passes to a new senior each year, so the business continues to be associated with the school as students graduate.
The curriculum tie-in is through the mentorship program. The bookkeeping, store management, meat-cutting, fiscal inventory and cash register check-out, interviewing, presenting and displaying responsibilities are linked to Accounting II, Marketing Occupations, Advanced Consumer Math, English and Art classes. Grades reflect the store’s success and its accountability to all state and federal regulations.
Zirbes explains the program’s evaluation policy. “Eighty percent isn’t good enough anymore. The students and the business depend upon performance and mastery. They have to be fully accountable to the banks, the IRS and the state of Minnesota. As only 100 percent is acceptable to the auditors, only 100 percent is acceptable at Tiger Mart.”
Not surprisingly, student performance has improved over time. “Not only has this experience been excellent academically, but the students have a self-confidence they never possessed before. They travel all over the state speaking about our program to auditoriums full of people. They are media-smart, have stage presence and will look you right in the eye,” says Zirbes proudly.
“Mark Paler, our store manager last year, used to be a quiet and shy person. This year when he accepted the NFIB award, he was with 250 businessmen, drinking a coke and talking business. And they were listening to him.”
Regular store employees also gain valuable experience, Zirbes reports. “It’s not uncommon for our graduates to go into an entry level job, say in a fast food restaurant, and be made assistant manager within two weeks. Our students know how to use time efficiently, and it really shows.”
The Skills Small Business Needs
There is no doubt that students who have been directly involved in entrepreneurship education demonstrate increased initiative and self-confidence. They are also more interested in school because they see how it contributes to their future success. Equally important, entrepreneurship education teaches practical business skills and problem-solving techniques.
Those are the skills all business owners would like their employees to possess, and are also the skills necessary to ensure the continuing formation and success of small companies nationwide. If small business is the backbone of the American economy, entrepreneurship education could be likened to the muscle that keeps that bone firmly in place.
Strengthening this muscle is a crucial long-term policy. As the examples in this article show, entrepreneurship education is not difficult to include in the curriculum. If starting a business is beyond the resources of local schools, the total cost — approximately ten dollars — of the M&Ms instruction unit is not. A good program needs creativity and energy, but not necessarily a lot of money.
America’s business environment is becoming increasingly complicated. To succeed in the next century, the American workforce will have to be better trained and educated. Teaching the young the skills they need must be a national priority, for only by mastering these skills will they be prepared to meet the challenges the future holds for them individually and the country as a whole.
Important Entrepreneurship Skills
According to Dr. E. Edward Harris, Director Emeritus of the Illinois Institute of Entrepreneurship Education, all students in a successful entrepreneurship program should be able to:
- Describe the role of entrepreneurship and small business and their contributions to the American economic system.
- Apply general decision-making models to entrepreneurship decisions and have a knowledge of the general types of decisions and skills necessary for entrepreneurship.
- Recognize the need for life-long learning as a process to expand their career options and achieve their goals as employers, managers, investors or entrepreneurs.
and all high school graduates should be able to:
- Identify, through a goal setting process, personal strengths and weaknesses needed to own, operate or work in a successful enterprise.
- Identify business ventures based on community, market and opportunity needs.
- Develop a business plan to include various components such as financing and marketing.
- Identify and utilize support services available from the public and private sectors (e.g., CPA, attorney, family, friends, SBA and SCORE.)
- Implement effective management strategies.
Corporate Cooperation Aids Entrepreneurship Program
“In our program, the kids form and run businesses as part of their classroom learning. We get people in the business community to work with the kids as friends and colleagues,” explains Dr. Clint Daniels, associate director of the Barbara Schick Center for Economic Education at the University of Nevada, Las Vegas. “The business representative is a guide on the side rather than a sage on the stage.”
Dr. Bob Smith, the Center’s director, emphasizes: “Unlike other programs, the business representatives work as part of the classroom company. They sit on the company’s board and help the students with whatever they need to make their endeavor successful. This has a spill-over effect: the self-esteem of these fourth, fifth and sixth graders grows because someone from a real company is working with them. It perks them up and they feel important.”
“This connection with community businesses is an important strength of the program,” adds Thomas Jackson, 13-year member of the Advisory Board of the Nevada District Small Business Administration, Chairman of the Business and Management Department, Community College of Southern Nevada and Consultant-at-Large to the Entrepreneurship Program. “We also have an arrangement with a local bank that has $5,000 set aside for the entrepreneurship program. Once the kids develop their business plan, they determine how much money they need to start and they fill out a loan application. The executive officers of the class company present it to the bank officer in person. If they plan to sell a product of some kind, they present the prototype along with the loan application. Of course their application is accepted, but it shows the kids what starting a firm is really like.”
“The students must present an annual report at the end of the year,” says Pat Allison, Director of the Nevada District of the SBA who has been closely involved in the Las Vegas entrepreneurship program. “They’ve done really well — last year some of the class businesses showed high profits which they shared with charity. However, our purpose is not to make money; it is to help the kids understand the importance of school to their future. We’ve emphasized bringing entrepreneurship education to the primary grades because getting students interested now lays the foundation for their lateryears.”