Statistics suggest that Cole Hanauer won’t grow up to be an entrepreneur. The risk-takers of tomorrow are growing up in today’s middle-class families. Data from the nonprofit Ewing Marion Kauffman Foundation suggest that seven of 10 American entrepreneurs have come from the middle class. Only one in 100 was born very wealthy or very poor.
The middle class incubates entrepreneurs because it offers a good combination of time, resources, and motivation to invest in skills and climb the innovation ladder. Put it this way: The comforts that flowed from the Pacific Coast Feather Co., his then-modest family business, provided Nick Hanauer with a house full of books and days full of time to explore big ideas. Think of those comforts as an investment. The eventual return was Hanauer’s venture-capital portfolio. Poor families just scraping by at the margins can’t make those investments, so their children struggle to achieve in school and pursue higher education. Children from rich families may, thanks to their extreme childhood comforts, lack the desire to build wealth and climb the economic ladder, which the Kauffman study found to be a key motivation for would-be entrepreneurs.
The economy sags when kids who could have grown up to be physicists end up spending their lives brewing lattes at Starbucks. Or when a young woman born to be a teacher finds herself babysitting, for peanuts, while she waits for a classroom to open up.
Courtney Carbone, wrapped in a scarf and a nervous smile on a cool spring morning, is a transplant to the Northwest. She grew up in northwestern Connecticut, daughter of a carpentry teacher and a waitress who went on to teach preschool. Her parents were not so different from Nick Hanauer’s, actually.
From the age of 9, Carbone knew what she wanted to do with her life. She was bright and rebellious. At the prep school she attended on loans that her parents took out, she routinely skipped classes when she didn’t respect the teacher’s effort. “That just made me want to be a teacher even more,” Carbone says. “I wanted to be the one who made students want to show up.”
She got her wish after graduate school, landing a job teaching English at a Connecticut prep school. That was 2006. In 2009, the recession brought budget cuts crashing down on her school, and she lost her job. She drifted West in her teal 1997 Nissan Altima to live with a friend and look for a teaching job in Seattle.
She is still looking. Last year, she attended a regional job fair in Northern California, which she compared to speed dating. She got several interviews. No callbacks.
Carbone has nannied and babysat. She has applied for teaching jobs up and down the West Coast. She taught two composition classes at a community college for 11 weeks. She suffered from depression, lost her sense of identity, saw her relationship with her boyfriend dissolve. She moved briefly to Utah last winter to work in a child-care center at a ski resort, earning a season lift pass and less than $10 an hour. Now, back in Seattle, she is caring for a friend’s two special-needs children, for $15 an hour, in cash.
Carbone happens to be looking for a teaching job at the worst possible time. Washington state has shed 6,500 local education positions since 2009, due to budget cuts. “I know that every time I apply for a job, I’m one of hundreds of people,” she says. “But at the same time, knowing something and feeling something are different things. After a while [not getting a job] starts to eat away at your soul.”
Carbone isn’t spending money, isn’t feeding that great middle-class consumption engine of growth. She’s paying a very small amount in sales taxes, which largely fund the state’s road-building and school budgets. She’s not doing her part to support the institutions that help stabilize growth.
“I keep selling things and getting rid of stuff,” Carbone says. “It’s freeing, in a way. But I do keep dreaming of the apartment I had when I was a teacher, full of plants and beautiful things that were mine.”
Carbone’s struggles aren’t rare, even in one of America’s most innovative cities. Seattle hides its erosion better than a lot of other places, away from the rain-soaked microbrew pubs and the towering new Amazon buildings near downtown. “This feels idyllic,” says Jake Rosenfeld, a sociologist at the University of Washington. “Seattle doesn’t seem like a place I’d worry about.”
Except, he does. State forecasters expect no net middle-class job growth in the next decade, The Seattle Times recently reported. The state Supreme Court has declared that Washington’s schools are failing their constitutional mandate to educate all children adequately. Tuition at Rosenfeld’s university now runs 20 percent of a median family income, up from 6 percent two decades ago. The Seattle-based real-estate data firm Zillow reports that middle- and lower-tier homes in the metro area lost an average of 38 percent of their value in the housing collapse, compared with 29 percent for top-tier homes.