From the May 1999 issue of Entrepreneur

When you couple the critical shortage of skilled labor with the stark reality that many urban areas are economically distressed, it's painfully obvious changes need to be made. Here's what Uncle Sam is doing to help:

Work It

Worker shortages - a frequently cited impediment to small-business growth - are about to come under the harsh glare of a $60 million microscope, thanks to an initiative introduced by Vice President Al Gore at the 21st Century Skills for 21st Century Jobs summit earlier this year.

Under the new program, business, government and educational institutions are encouraged to work together to identify areas suffering from skilled worker shortages and then create model programs to train workers to fill the gaps. The program consists of two parts: providing grants to joint ventures between business consortiums and the educational community to develop training programs; and then allowing organizations that win grants to actually implement these training programs. Most of the funding for the grants comes from the $500 fee imposed on employers who hire foreign workers under the H-1B temporary work visa program.

This is the Clinton administration's big push to solve what many entrepreneurs claim is a leading problem. "Small businesses have been saying the quality of workers coming out of high school, and perhaps even college, needs improvement," says Toby Malichi, founder and president of Malichi International Ltd., a business development and outsourcing firm in Indianapolis.

Could Gore's solution appease despairing employers, who have typically endured lengthy job searches or been forced to hire skilled workers from overseas? The jury's still out a s far as small-business organizations are concerned, though they seem to agree no one solution will fix the problem. "It's very difficult to second-guess what the future holds.but we have to be better at [determining the areas in which] we need people with skills," says Beth Buehlmann, executive director of the Center for Workforce Preparation at the U.S. Chamber of Commerce. Buehlmann, who attended the job skills summit, believes it's crucial for any program addressing the issue to inform entrepreneurs about the resources available.

National Small Business United (NSBU) believes the initiative should also address the issue of worker retention. "Small businesses often train workers who then leave [for other jobs]," says Brian Crawford, a lobbyist for NSBU. Ideally, once the training models are developed, they'll be utilized by the states participating in the Workforce Investment Act passed by Congress last year. Malichi looks forward to this sort of action rather than mere discussion. "It's not a time for research; it's a time for substance," he says. "[It's time] to put money in the hands of people who can provide the [training] services."

Zoning In

The 20 communities recently designated as empowerment zones by the federal government are now eligible to share $3.8 billion in proposed federal grants and tax-exempt bonding authority over the next 10 years. Here are the facts on some of these areas:

*For the first time, American Indian tribes in poverty-stricken areas were allowed to apply for empowerment zone designation. The Oglala Sioux Reservation in Pine Ridge, South Dakota, was the big winner in this category.

*Lake Agassiz, North Dakota, was the first moderate-income area to earn zone status, due to its severe population outmigration.

*Eight banks in the Knoxville, Tennessee zone have invested $650,000 in a Community Investment Fund, which will provide low-interest, short-term loans to nonprofit and for-profit housing and community development agencies.

*Community organizations and residents - not business factions or the government - in Cincinnati launched the initial drive to seek empowerment zone status.

*Columbus, Ohio and Minneapolis have incorporated technology into the redevelopment of their empowerment zones.

Labor Pains

"It's about time."

That was Toby Malichi's initial thought as he exited the 21st Century Skills for 21st Century Jobs summit in Washington, DC. The event highlighted skilled-worker shortages, which Malichi has experienced personally.

For nearly three months in mid-1998, the international entrepreneur had conducted more than 10 interviews to find a trade specialist. "I needed someone who could identify export opportunities abroad and who would also serve as a liaison to us and our potential strategic partner," Malachi says.

While the candidates he interviewed were enthusiastic, he couldn't find someone with the right skills and ultimately left the position unfilled. "That doesn't necessarily mean we have to change direction, but it does slow down our ability to market to and make presentations to potential clients," says Malichi, 49.

Malichi is hopeful that skills training will liken the typical U.S. worker to the old violin that initially couldn't be auctioned for $5 - but that sold for $500 after a little polish. Says Malichi, "Our workers just need a little polish."

Ready to Grow

URBAN ZONES

Boston
Cincinnati
Columbia/Sumter, SC
Columbus, OH
El Paso, TX
Gary/East Chicago, IN
Huntington, WV/Ironton, OH
Knoxville, TN
Miami
Minneapolis
New Haven, CT
Norfolk/Portsmouth, VA
Santa Ana, CA
St. Louis, Missouri/East St. Louis, IL

RURAL ZONES

Desert Communities, CA (Riverside County)
Lake Agassiz, ND (Fargo)
Oglala Sioux Reservation, Pine Ridge, SD
Southernmost Illinois Delta (Ullin)
Southwest Georgia United (Cordele)