The solution to youth unemployment

02.27.14 Thumbnail TeenworkBY ERIC FRUITS

Because they have little chance of working for someone else, today’s teens need to be entrepreneurs. But, first, we must teach our teens that entrepreneurship starts small.

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02.27.14 TeenworkBY ERIC FRUITS

My son turns 16 soon and his thoughts are turning toward getting a summer job to earn some money. When I was a teenager, the summer job market for teens was bursting with opportunity. Back then, finding a fast food job, retail job, or amusement park job was simply a matter of filling out an application, putting on khakis, and not blowing a 10 minute interview.

Today, it’s much different. When was the last time a high schooler took your order at McDonald’s or rang up your purchase at Gap? Oregon has the second highest minimum wage in the country, with an “all in” hourly cost of as much as $15 an hour. Teenagers face huge hurdles finding the part time jobs that will give them much needed work experience. That puts them in a Catch 22: Without work experience, they face an uphill battle getting jobs that demand experience.

Because they have little chance of working for someone else, today’s teens need to be entrepreneurs. But, first, we must teach our teens that entrepreneurship starts small.

We live in a world where our ideas of entrepreneurship are skewed toward the grandiose. My wife was an elementary school teacher in a somewhat poor school district in Southern California. When she’d ask her students what they see themselves doing later in life, one said he wanted to be a professional poker player and another said he was going to play in the NBA. Today, I hear of my kids and their friends plans to make the next Flappy Birds—an insanely addictive mobile app that was reported to be bringing in $50,000 a month for its creator. Facebook offered SnapChat $3 billion and purchased WhatsApp for $19 billion. As the kids say, “That’s redonkulous!”

But, let’s be realistic.

The chances of our kids making the next Flappy Birds or WhatsApp are only a little bit better than their chances of joining the NBA or making a living on the professional poker circuit. Entrepreneurship is about finding the small spaces in the market and exploring the gap. Many entrepreneurs see those spaces and fill the gaps. In many cases, entrepreneurship is about small ball, not the NBA.

Last spring, I was working at my dining room table when I heard a knock on my front door. It was a middle aged man, dressed in work clothes. He explained that he had been laid off and had to raise money to pay his rent. He remarked on my out of control wisteria and overgrown shrubs around my side porch. He was right: The vegetation was out of control and overgrown. The man reached into his pockets, held up some pruning shears and declared, “I can take care of that for $50.” I offered him $40. Two hours later, he had $40 in his pocket and I had some cleaned up shrubbery.

Did I exploit Pruning Man by shaving $10 off his asking price? No, because he accepted it. There are about 1,800 houses in our neighborhood. If he didn’t like my counter offer, he could have stood fast to his $50 offer or moved on to the next house. But he didn’t and $40 it was. Remember, for every worker who claims he or she is underpaid, you can probably find a job application where he or she asked for that job at those wages.

About once a month, a woman walks through our neighborhood dragging a red cooler, shouting, “Tamales!” Her English seems to be limited to “Five dollars” and “How many?” They are pretty good tamales. And the fact that she returns to the neighborhood indicates that she has pretty brisk sales in our part of town. With her limited English, I doubt she could find any employer willing to incur $15 an hour in labor costs to hire her.

The Pruning Man and the Tamale Lady demonstrate that entrepreneurship is not limited to high technology. They are an example for our job seeking teens (or anyone, for that matter). Here are some baby steps for the budding entrepreneur:

  • Find the gap and fill it. So many times I looked out the window and thought about trimming the shrubbery. But I didn’t do it. Then, Pruning Man showed up and satisfied a demand. A kid can drag a rake and lawnmower through the neighborhood on a weekend and get several gigs helping out homeowners. That’s entrepreneurship.
  • When pricing your services, ask what it’s worth, not what does it cost. Too many times, we get in a public sector mind set where we think in term of hourly rates and prevailing wages. An entrepreneur prices his or her services to provide value to the customer. The Pruning Man understood that I’d be willing to pay $40 to avoid cutting back my vegetation. I didn’t care that it worked out to $20 an hour. Sure I could have hired someone for less, but he was there ready to work.
  • Negotiation is a big part of entrepreneurship. Make an offer and consider the counter offer. If Pruning Man didn’t accept my offer of $40, he would have had to find another job opportunity or head home to watch Judge Judy. Think about your opportunity cost and—just as importantly—your client’s opportunity cost.
  • Do a good job, follow up, and get recommendations. Sure, as a teen you make take a little longer to finish the job. That’s OK. Take the time to do a good job. When you’re finished, get feedback from the customer. Then, hand them your email or phone number and tell them you’ll be back for more work in a week or so. Ask them to pass your contact information around and recommend you to others.

In my first year at college, one of my dorm mates had a really nice pick up truck. (I went to Indiana University, and “nice truck” is one of the highest compliments you can pay to a Hoosier.) I asked how he did it. He explained that, in high school, he started mowing yards. That turned into a landscaping business, and he bought his truck as soon as he turned 16. Then he sold the business after graduation and used the money to pay for his first year of college. It’s no Flappy Birds, but it’s real entrepreneurship. That’s what we need to teach our teens.

Eric Fruits blogs on finance and the economy for Oregon Business.