When Kija Kim set out to hire a manager for her software company's new Washington (D.C.) office, she knew it wouldn't be easy. Still, she had reason for hope: Since the dot-com bust, applications for programming jobs had risen considerably. Alas, after four months of searching, Kim's optimism waned. She had sifted through dozens of resumes and interviewed six candidates, but none had the combination of technical and management skills she sought. Reluctantly, Kim decided to hire not one, but two, people for the top job.
"It was very frustrating," says Kim, founder of Harvard Design & Mapping Co., a 20-employee enterprise that creates software applications for use with geographic information systems technology. "We can't grow if we don't have the people to do it."
While such complaints are muted by news of layoffs, plunging stock prices, and worries about a recession, Kim's experience is a reminder of what many entrepreneurs consider the greatest long-term threat to the nation's economy: the shortage of skilled workers. "Even with the downturn and all the cuts, we're still going to have hundreds of jobs go unfilled in the tech field," says Douglas Mellinger, chairman of the National Commission on Entrepreneurship, a Washington-based group funded by the Kauffman Center for Entrepreneurship. "And you can't manufacture those people overnight."
THRIVING REGIONS. Long the cry of individual entrepreneurs, such warnings are increasingly coming from new sources: politicians and public-policy experts. More than anything else, they say, it's the availability of skilled labor that determines not just whether a particular startup succeeds but whether an entire region thrives. It's no coincidence that places like Silicon Valley, Boston, and Austin were all home to high concentrations of scientists, engineers, and other tech workers long before the last decade's boom.
And that's why education -- more than tax breaks and other incentives -- has emerged as the hottest topic in economic development, from the local to the national level. While entrepreneurs in a few areas, notably Texas and California, have long called for greater accountability in public education, the mad scramble for high-tech workers has given the issue greater visibility in recent years. Indeed, at a recent conference on entrepreneurship and public policy at Harvard's Kennedy School of Government, speaker after speaker linked innovation and economic prosperity to the need for education reform, particularly in math and science.
"If we're going to have successful entrepreneurs, it matters very much who their workers are and what kind of skills they have," declared Michigan Governor John Engler during the two-day gathering, which was co-sponsored by the National Commission on Entrepreneurship.
ALSO RANS. Common sense? Perhaps. Yet plenty of indications show that today's students are, on the whole, ill-prepared for the Information Age. Among the worrisome signs: In 1999, eighth-graders in the U.S. ranked 18th in science and 19th in math among 38 nations whose students participated in the Third International Mathematics & Science Study. Countries outscoring the U.S. included Japan, England, and Australia.
In addition, enrollment of science and engineering graduate students in the U.S. declined for five straight years in the 1990s before rising 2% in 1999. And that increase was due largely to foreign students on temporary visas.
But the problems aren't limited to science and math. Despite years of efforts to improve literacy, fourth-grade reading levels declined during the 1990s in 18 out of 36 states, according to the National Assessment of Education Progress, a federal report card released earlier this month. And the gap between the highest- and lowest-performing students is widening. "It's very hard to talk about fixing the digital divide in America if we can't fix the reading divide," says Michael E. Porter, an economist at Harvard Business School.
REAL ACTION. Seasoned entrepreneurs agree. In focus groups conducted by the National Commission on Entrepreneurship last year, they complained of difficulty in hiring not just high-tech workers but entry-level employees with good communication skills as well.
Few answers are easy when it comes to education reform. There's also little consensus on how to pay for such universal goals as smaller class sizes or better-qualified teachers. And there's little agreement on whether standardized testing is a good thing.
But some hopeful signs beckon. While every governor would undoubtedly list education as a top priority, some states, such as Michigan, have begun to take real action. In an effort to shed its Rust Belt image, the state has boosted K-12 spending 84% over the past decade, broadened school choice, and provided access to advanced-placement courses online. In addressing the conference at the Kennedy School, Michigan Governor Engler made it clear that those steps weren't motivated purely by altruism. Job creation is the ultimate goal, he said, "and the state with the best schools is the state that wins."
Perhaps most interesting and encouraging is that entrepreneurs, elected officials, and policy wonks are talking -- and listening -- to each other at all. Yes, daunting gaps still remain. But that's a far cry from the view typically voiced by entrepreneurs -- that the best thing government can do is simply get out of the way. By Julie Fields in New York