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Shift 5% of Workforce Training Funds to Advance Entrepreneurship

America’s economic recovery from the COVID-19 pandemic requires new business growth. An estimated 60% of business closures due to the pandemic appear to be permanent, and new businesses create virtually all job growth in America. Here’s one solution: shift 5% of government workforce training funds to support entrepreneurs. That shift would boost the Maker Movement, as makers could better apply their entrepreneurial talents to create new incomes and build their own businesses.

 

America invests about $18 billion of federal funding, plus many more billions of state and local dollars, training our workforce each year. Federal workforce funds are mostly provided by the U.S. Workforce Innovation and Opportunity Act (WIOA). Those funds are allocated to states, which in turn direct them to local workforce boards to develop programs. The federal legislation already allows those funds to be used for entrepreneurship training. However, the problem is that – by the time the funds reach the local level – they are typically used for corporate job training and placement, not entrepreneurship training. In short, they help people take jobs, not make jobs.

 

Our workforce system is a holdover from an outdated industrial-era approach to economic development. It treats people as either employers or employees. It favors larger established corporations over emerging entrepreneurs. There is certainly a need to prepare local workers to fill corporate jobs. But established corporations, as a whole, do not create job growth. Supporting an entrepreneur in growing her new business does. Supporting a community of entrepreneurs spreads the benefits even wider.

 

Fortunately, shifting just 5% of workforce training funds to entrepreneurship training would dramatically enhance entrepreneurship. It would require zero additional taxes. And the shift would hardly be noticeable to large corporations. Yet the benefits would be multiple.

 

First, more individuals who want to start or grow a business could get training. Those entrepreneurs-to-be are an extraordinary, under-tapped, national resource. They already have a passion, and we should nurture the flame. They are our nation’s pipeline of innovation. And much of that pipeline flows from the Maker Movement, which fosters the joy of invention, engineering, product development, and problem-solving, which are often the precursors to business creation. Strengthening that pipeline would enhance the impact of the Maker Movement.

 

Second, entrepreneurship training builds community. It connects like-minded individuals, pairs novices with experts, and facilitates mentoring that’s vital to business success. No one understands the value of community better than the Maker Movement. Reinforcing a sense of community to drive new business activity is vital to our nation’s economy.

 

Third, it would support makerspaces as entrepreneurial hubs. Makerspaces don’t just provide people with technical tools. They also teach people how to create useful products, transform talents into practical skills, nurture products into businesses, and connect individuals with shared interests who didn’t know one another. Makerspaces play vital roles, not only within their facilities but also in their communities and regions.

 

I recently spoke with Grace Belangia, Executive Director of The Clubhou.se, a nonprofit collaborative workspace in Augusta, Georgia that also runs a program called Make Startups, which provides community development services for entrepreneurs and startups. I had the pleasure of visiting The Clubhou.se and seeing it in action a few years ago, but my latest conversation with Grace underscored her organization’s impact and the far-reaching consequences that shifting 5% of workforce training funds could have for entrepreneurs.

 

The Clubhou.se is, first and foremost, a convener – a gathering space for innovators and those who help propel them. Yet that core role has many dimensions, as The Clubhou.se is many things wrapped into one. It’s a makerspace, a coworking space, a code school, a startup accelerator, a prototyping lab, a mentorship network, an organizer of events, and a think tank.

 

The Clubhou.se is located in downtown Augusta, so it’s central to that urban economy, but its reach is far wider. It directly serves the surrounding two-state, seven-county, Central Savannah River area, where it has attracted 230 members and helped grow 100 companies creating more than 1,000 jobs. It also serves, through Make Startups, as a support resource for organizations elsewhere growing their local innovation economies. Make Startups is now piloting initiatives in five other communities in Georgia and two in Colorado.

 

The Clubhou.se has fortunately grown into a sustainable nonprofit, but many makerspaces struggle to survive. Shifting 5% of workforce training funds to entrepreneurship training would provide a much-needed financial boost to makerspaces and energize their impact. Imagine hundreds of organizations like The Clubhou.se spread across our nation.

 

When you consider the impact that a 5% shift of workforce training funds could have, it’s mind-boggling that such a shift hasn’t already occurred. How did we end up in 2021 with a workforce training system focused on filling existing corporate jobs, when new businesses are actually what power job growth?

 

The Maker Movement shows the way to our economic future. It has fueled our nation’s pipeline of innovators. It has energized the makerspaces that convene those innovators. It’s long past time to shift 5% of workforce training funds to entrepreneurship training, so we can extend the impact of the Maker Movement to power economic recovery in communities nationwide.

 

Victor Hwang is Founder and CEO of Right to Start, a campaign to rebuild the American economy by putting entrepreneurs first.

 

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Victor W. Hwang

Victor W. Hwang is an economic growth expert whose ideas have shaped the economic lives of millions of people worldwide. He is founder and CEO of Right to Start, a campaign fighting for the rights of entrepreneurs. Previously, he was Vice President of Entrepreneurship at the Kauffman Foundation, the world’s leading philanthropy supporting entrepreneurs. At Kauffman, he led initiatives that impacted over 200,000 entrepreneurs in 200 cities, including efforts in catalyzing capital formation, transforming economic development practices, launching a national policy roadmap, and breaking barriers for underserved entrepreneurs. Victor was CEO and co-founder of T2 Venture Creation, a venture firm that built startup companies and designed ecosystems that fostered entrepreneurial innovation in dozens of countries and cities. Victor was co-founder and CEO of the startup Liquidity, a Silicon Valley venture-backed firm making safe drinking water filtration based on nanotech manufacturing. He was President and Chief Operating Officer of Larta Institute, an organization commercializing technology from key government agencies, such as the National Science Foundation and the National Institutes of Health. He was chief strategy officer of Veatros, a video startup where he led the company’s acquisition by a public company. Victor practiced corporate and technology law with the firms of Mayer, Brown & Platt and Irell & Manella. He has been a contributing columnist to Forbes, The Wall Street Journal, TechCrunch, and Entrepreneur, and his opinions have been cited in The New York Times and the Los Angeles Times, among others. National Public Radio named his graduation address to Austin Community College one of “the best commencement speeches ever.” His book, The Rainforest, was awarded Book of the Year, Gold Medal, by ForeWord Reviews for “a big idea that defines a way of thinking.” Victor is a graduate of Harvard University and the University of Chicago Law School.

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