So you went to school, didn’t party much, got good grades, and landed that MBA. Mom and Dad are proud of you. You land that job with the bank you dreamed of working with and the parents are happy to turn your old room into anything as long as you are not sleeping in it. It’s spring 2007 and you are on your way.
Fast forward to the fall of 2008 and the meltdown in the financial markets finally take its toll on you. You are let go from your job. You tell yourself everything is going to be okay. You have over a year and a half experience in banking. You have a MBA. We just elected a young, charming, and confident president who has assured us that everything is going to be okay.
It’s now April 2011. While sending out that 100th resume, a dark thought invades your mind. It usually appears when you are the most depressed or distressed. It is the notion that maybe the degree route is not the best path to income security. Maybe there is something missing.
I believe that something is entrepreneurship. Specifically, our educational system needs to train our graduates to take on the mindset of being a revenue generating unit as opposed to an employee. Our rapidly globalized information-based economy will demand that we not only take on new skill sets, but that we also take on a new world-view toward earning personal income.
First, let’s look at where we are today. According to the U.S. Department of Labor, African American unemployment in the month of March stood at 15.5%, almost double the unemployment rate for white Americans.
Just over 31% of blacks work in transportation, utilities, and government. In the short term, employment in government may be precarious given the budget deficits and other constraints faced by state and local governments.
While close to 36% of whites have a college degree, just under 26% of blacks have attained a college degree.
Where is our economy going from here? According to the Board of Governors of the Federal Reserve Bank, not too far. On Wednesday, the Federal Reserve released its updated economic projections for gross domestic product, personal consumption expenditures, and unemployment.
The Federal Reserve expects overall unemployment to range between 8.1% to 8.9% in 2011; 7.1% to 8.4% in 2012; and 6.0% to 8.4% in 2013. Changes in gross domestic product, our national income, look positive, but may have to increase at a higher rate to absorb millions who lost their jobs in 2007 and 2008. GDP is expected to increase between 2.9% and 3.7% in 2011; 2.9% to 4.4% in 2012; and 3.0% and 5.0% in 2013.
The pace at which we consume our disposable income may be lower than the pace at which we increase our national income. For example, In 2011, personal consumption expenditures are expected to increase between 2.0% and 3.6%. The range falls to 1.0% to 2.8% in 2012 and 1.2% to 2.5% in 2013.
We should pay particular attention to growth in personal consumption expenditures. While not a measure of inflation per se, it is indicative of growth in spending. The less we are spending on goods and services here at home, the less support there will be for hiring additional employees.
If times at home are going to remain lean over the next two to three years, where can we go to find the fat? Some of that fat may be in what are referred to as the emerging markets. Here are a couple examples.
President Barack Obama recently visited Brazil in an attempt to maintain and foster stronger political and economic ties with the Latin American powerhouse. It’s bad policy for the U.S. to ignore a country of 200 million people that has managed to lift 34 million people out of poverty and into the middle class and the work force. These newly created consumerists are demanding houses, washing machines, televisions, and infrastructure.
In India there is also a great demand for infrastructure development. The firm ABB, Ltd was recently awarded a contract worth $900 million to link hydro-powered plants in northern India to 90 million consumers south of New Delhi. ABB has entered into similar contracts with other growing countries including China.
Are national education policies keeping pace with changes in the global economy? There is evidence to suggest that U.S. educational policy is. For example, section 601(c) of the Higher Education Act of 1965 requires that the Secretary of Education consult with federal agency heads in order to receive recommendations regarding areas of national need for expertise in foreign languages and world regions.
Am I saying that we have to be the next Condi Rice in order to make a dollar? No, although you’d probably be in good company if you were. What’s important is identifying where the future long term trends are taking the economy and policy makers and getting in front of them if we are to survive and prosper in a changing economy.
The financial markets and growing economies of what were once lesser developed countries are telling us that we need to re-evaluate our current parameters for revenue generation. The global economy is fluid and requires an ability to be adaptable while developing skills that are fungible, including the ability to learn about different cultures and new languages.
Combined with a knowledge of where the world is going and the will to adapt, we can turn our educations into tickets to limitless opportunity versus creating pigeonholes for ourselves.