Q: When is a drop in the unemployment rate not good news?
A: When the reason for it is because people have stopped looking for jobs and have dropped out of the job market.
The Labor Department’s employment report for December indicated that hiring stalled during what is often a good month for job seekers. Some economists expected to see close to 200,000 jobs created last month, however the figure was a disappointing 74,000.
Government officials suggested the slowdown might have had something to do with the unusually cold weather. This is nonsense. If you need a job to feed your family, you don't stay home because the temperature dropped below 32 degrees. More likely, workers have gotten discouraged by a lack of opportunities.
Today, colleges and universities seem to be graduating students who don't have marketable skills, and increasing numbers of graduates are finding it difficult to land employment. Compounding this issue is that tuition has skyrocketed over the past two decades, resulting in many college students entering the real world saddled with a mountain of debt. Meanwhile, the AP recently reported that more than half of graduates are currently in jobs that do not require a degree. Parents and their high school age children are beginning to reevaluate what schools they will choose and whether a diploma from that institution will increase job prospects.
I see irony in there being a shortage of jobs, and meanwhile U.S. employers are complaining about a dearth of skills in math and sciences. According to a study conducted by the Workforce Solutions Group at St. Louis Community College, employers say communications skills "remain the most cited shortcoming" among job applicants. Other skills in great demand among employers are organization, writing and leadership.
Something has to change.
If colleges and universities don't do a better job at preparing graduates for the "real world," then they eventually can and should experience a decline in enrollment. Young adults in their 20s are passionate, optimistic, and increasingly entrepreneurial. While we live in a celebrity-driven culture, many of the new celebrities are successful business people. Peter Thiel is one of them. The PayPal co-founder and venture capitalist has created the Thiel Fellowship program that awards young entrepreneurs $100,000 if they skip college and become entrepreneurs.
Meanwhile, The Shark Tank, a reality show in which aspiring entrepreneurs pitch their ideas to investors such as Mark Cuban and real estate mogul Barbara Corcoran, continues to build its viewership on ABC.
While the U.S. has long been a country that encourages business ownership, I believe we are in an age of entrepreneurship that is unprecedented. Financing is increasingly available, and lenders are willing to loan money. Securing startup capital was a big problem during the credit crunch. However, today banks and various non-bank lenders are becoming increasingly active in funding startups.
If ever there was a time to write the business plan and pursue the American Dream of business ownership, now is the time to do it.
Rohit Arora is co-founder and CEO of Biz2Credit, an online resource that connects 1.6 million small business owners with 1,200+ lenders, credit rating agencies and service providers such as CPAs and attorneys via its Internet platform. Since 2007, Biz2Credit has secured more than $1 billion in funding for small businesses across the U.S. Follow Rohit on Twitter @biz2credit.