Congressional Hearings
SMALL BUSINESS AND THE AMERICAN WORKER
Congressional Hearings
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| AUTHORITYID | CHAMBER | TYPE | COMMITTEENAME |
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| sssb00 | S | S | Committee on Small Business and Entrepreneurship |
[Senate Hearing 116-26]
[From the U.S. Government Publishing Office]
S. Hrg. 116-26
SMALL BUSINESS AND THE AMERICAN WORKER
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
MARCH 6, 2019
__________
Printed for the Committee on Small Business and Entrepreneurship
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SIXTEENTH CONGRESS
----------
MARCO RUBIO, Florida, Chairman
BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho MARIA CANTWELL, Washington
RAND PAUL, Kentucky JEANNE SHAHEEN, NEW HAMPSHIRE
TIM SCOTT, South Carolina EDWARD J. MARKEY, Massachusetts
JONI ERNST, Iowa CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma CHRISTOPHER A. COONS, Delaware
TODD YOUNG, Indiana MAZIE K. HIRONO, Hawaii
JOHN KENNEDY, Louisiana TAMMY DUCKWORTH, Illinois
MITT ROMNEY, Utah JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
Michael A. Needham, Republican Staff Director
Sean Moore, Democratic Staff Director
C O N T E N T S
----------
Opening Statements
Page
Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida......... 1
Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from
Maryland....................................................... 3
Witnesses
Cass, Mr. Oren, Senior Fellow, Manhattan Institute, New York, NY. 5
Stevenson, Dr. Betsey, Associate Professor of Economics and
Public Policy, Gerald R. Ford School of Public Policy, Ann
Arbor, MI...................................................... 40
Lettieri, Mr. John, President and CEO, Economic Innovation Group
(EIG), Washington, DC.......................................... 25
York, Ms. Caryn, Executive Director, Job Opportunities Task
Force, Baltimore, MD........................................... 47
Alphabetical Listing
Cardin, Hon. Benjamin L.
Opening statement............................................ 3
Cass, Mr. Oren
Testimony.................................................... 5
Prepared statement........................................... 8
Lettieri, Mr. John
Testimony.................................................... 25
Prepared statement........................................... 28
Responses to questions submitted by Senator Hirono........... 80
Rubio, Hon. Marco
Opening statement............................................ 1
Stevenson, Dr. Betsey
Testimony.................................................... 40
Prepared statement........................................... 42
Responses to questions submitted by Senator Hirono........... 82
York, Ms. Caryn
Testimony.................................................... 47
Prepared statement........................................... 50
SMALL BUSINESS AND THE AMERICAN WORKER
----------
WEDNESDAY, MARCH 6, 2019
United States Senate,
Committee on Small Business
and Entrepreneurship,
Washington, DC.
The Committee met, pursuant to notice, at 2:33 p.m., in
Room 428A, Russell Senate Office Building, Hon. Marco Rubio,
Chairman of the Committee, presiding.
Present: Senators Rubio, Risch, Scott, Ernst, Young,
Romney, Hawley, Cardin, Cantwell, Shaheen, and Rosen.
OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A U.S. SENATOR
FROM FLORIDA
Chairman Rubio. Today's hearing of the Committee on Small
Business and Entrepreneurship will come to order.
I want thank all of you for being here. I extend a welcome
to our witnesses. We will introduce them in a moment.
I am very happy that we are holding today's hearing titled
``Small Business and the American Worker,'' and the hope is to
explore the ties between the health and dynamism of small
business and the well-being of American workers.
For far too long, in my opinion, policymakers have focused
almost exclusively on consumer welfare. We pay very little
attention in public policy to the welfare of workers. The idea
that any type of economic efficiency is beneficial, so long as
those left behind can rely on some sort of government safety
net, overlooks the fundamental role of the dignity of work. It
is through dignified labor and dignified pay for that labor
that American workers create the stability and the vitality of
families, communities, and country.
Yes, of course, we want to see strong economic growth, but
we want strong economic growth that creates good and dignified
jobs, not just good statistics. You need both.
It is instructive to note that as GDP has risen from
roughly $2.6 trillion in 1979 to almost $21 trillion in the
last quarter of last year, the percentage of means-tested
government transfers to middle-income recipients has more than
doubled according to a study by the Brookings Institution. It
tells us that a broad swath of Americans, despite all this
growth, have been left behind.
This is evident in our stagnant labor force participation
rates and falling annual incomes of high school-educated
workers. It is evident in the precipitous decline in community
life and engagement with the institutions that are critical to
a thriving society.
Americans now find themselves feeling more disconnected and
alone than ever before. We are not powerless to act. It is
incumbent upon us to find innovative policy solutions that
empower a broad range of American workers and place the
vitality of the labor market at the forefront of our decision-
making. In doing so, we must not disregard the power of free
markets and competition as an engine of economic growth. It is
the most powerful engine of economic growth man has ever known.
But as this Committee heard from a panel of witnesses last
week, our failure to respond to Made in China 2025 and other
foreign industrial policies diminishes our core productive
capabilities and eliminated the livelihoods of thousands of
small business manufacturers and millions of American workers.
There was once a notion in this country that if you work
hard and you put your mind to it, you could support a family,
buy a car and a home, and live the American dream. It is
unrealistic to believe that this social contract can be
replaced by a check from the government. Our country cannot
have the sustained benefits of economic growth without a strong
productive sector which increases social mobility, advances
small business dynamism, and strengthens our Nation's overall
productive capacity.
At the core of this reorientation must be a policy
framework that encourages businesses to invest in physical
capital, as well as their workers' skills and their workers'
productivity.
Long-term growth also requires investment from government
in infrastructure, education, and research and development as
well as a commitment to aligning regulation with labor market
needs.
Such investment should take the form of a national
innovation strategy, which will enable small businesses to
modernize and compete on a global scale, as the Committee
discussed last week.
In working toward this strategy, this Committee will focus
on orienting the programs within the Small Business
Administration to foster greater innovation and small business
growth.
Strengthening America's labor markets also entails a
focused effort to improve the conditions under which this
market operates.
Harmful artificial restrictions, such as burdensome
occupational licensing and one-sided non-compete agreements for
low-skill and entry-level employment, those things impede
worker mobility and choice. These obstructions to work are most
acutely felt by Americans with fewer job opportunities, and
they must be removed.
In addition, policymakers have often overlooked the
fundamental role of the family and nongovernmental social
institutions in the vitality of our labor market and country as
a whole.
I fought personally to reduce the tax burden on middle-
income families and foster an economic environment conducive to
family formation and prosperity through efforts such as
increasing the Child Tax Credit.
We need to consider policies which allow for flexibility in
training and work. One such idea is a Federal program to enable
parental leave, such as the one I have introduced last Congress
and ideas that others, including members of this Committee, are
working on separate bills that would do the same.
Under this plan, workers would be empowered to engage in
family life without sacrificing their ability to make ends meet
in a way that balances fiscal priorities and the needs of
employers.
Ultimately, for the sake of our Nation's long-term success,
it is the responsibility of our government to emphasize
dignified work in a production-focused economy.
And so I look forward to today's discussion that will
explore policy solutions to America's labor market challenges,
in particular, as it relates to small businesses in this
country.
And now I turn it over to Ranking Member Cardin.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, A
U.S. SENATOR FROM MARYLAND
Senator Cardin. Well, thank you, Mr. Chairman, and thank
you very much for convening this hearing dealing with small
business and the American worker. To me, it is a critically
important topic. I listened very carefully to your opening
statements, and I am very encouraged that I think we will be
able to work together to advance the interests of our workforce
as it relates to small business and helping our economy.
As we begin the new Congress, wages and employment will
once again be center stage, and rightly so. The story of the
American worker over the past three decades has been bleak.
Between 1980 and 2014, the top 1 percent saw their pretax
incomes grow 204 percent, while incomes for the bottom 50
percent remained virtually flat. And the gap between those at
the top and everyone else is widening. The top 1 percent takes
home more than a fifth of all income in the United States,
about double their share in 1980.
If we do not take swift action in Washington to address
income inequality, we run the risk losing the promise of upward
mobility at the heart of the American dream.
Small businesses play a vital role in keeping that dream
alive. We all know the numbers. Small businesses employ nearly
half of our Nation's workforce and create two out of every
three new jobs. They incubate breakthrough innovations,
contribute to the health and dynamism of local communities, and
provide the economic foundation for millions of American
families.
But we know that small businesses cannot survive without
high-quality talent. Small firms face a unique set of workforce
challenges. During the periods of low unemployment, they
struggle to compete with larger businesses that have more
resources to attract talent. We know that they cannot provide
small businesses the same type of complete benefit package. We
know they do not have a human resources department. They start
with a disadvantage.
The National Federation of Independent Businesses in an
April study of last year showed that 88 percent of small
businesses on job openings have few or no qualified applicants.
The number of unfilled positions have more than doubled since
2012. We need the right workforce development system, and that,
I hope, will be part of the work of this Committee.
In my own State of Maryland, we are taking our industry-
driven approach to workforce issues. I think that can help us a
great deal. The governor has established a Skilled Immigrant
Task Force. I think that is a step in the right direction, and
we will hear from Caryn York about the Job Opportunity Task
Force that advocates on behalf of low-wage workers.
We have opportunities in this Congress. We will be
considering the Workforce Innovation and Opportunity Act. It
will not come through this Committee, but it will come through
the United States Senate, and I hope this Committee will be
active in how that bill is tailored. We want to have strong
small business input into workforce plans.
We also can look at innovative approaches to help small
businesses; for example, ensuring apprenticeship programs are
tailored for small businesses, recognizing that there is a
source of opportunity here and returning citizens and how can
we help small businesses in dealing with a larger labor pool.
Workforce issues give us an opportunity to close the gap
that I referred to in the opening of my statement. We will have
opportunities during this Congress to deal with related
issues--the Higher Education Authorization Act, which we will
take up in this Congress. Education to me is the great
equalizer. The Chairman mentioned it in his opening comments.
Higher education is key because those who participated in
higher education have a wage premium. We all know that. They
make more money. We should be doubling down to make access to
higher education available to more of our citizens who today
cannot afford it because of tuition costs.
We need a balance between those that go on to higher
education and those that need career and technical education
for vocational pathways, but that has to be done in a balanced
way because if you come from a disadvantaged community, you
should have equal opportunity as to what is best in your
future, and I would suggest that is not necessarily the case
today.
We should not ignore the immigrant population. The
immigrant population is critically important to small
businesses; 27.5 percent of our Nation's entrepreneurs are
immigrants. One out of every four tech and engineering
companies has at least one immigrant as a cofounder.
We also need, as the Chairman pointed out, to look at the
tools within the Small Business Administration to see if they
are fine-tuned in order to meet these needs. I hope as we do
that, we recognize that one way to close this gap is to make
sure that these tools are focused and helping minority- and
woman-owned businesses because they have not gotten a fair
share of these tools in the past. I think these are all ways
that we can help deal with these critical problems.
So I welcome our panel. We have four distinguished
witnesses that can help us through this to better serve small
businesses, to raise wages, to narrow the opportunity gaps in
our community, and meet the challenges of the 21st century.
Chairman Rubio. Thank you.
I want to welcome our panel of witnesses. Oren Cass is a
Senior Fellow at the Manhattan Institute, where he focuses on
strengthening the labor market. He previously served as
domestic policy director for Mitt Romney's presidential
campaign in 2012, as an editor of the Harvard Law Review, and
as management consultant at Bain & Company.
John Lettieri is the president and CEO of the Economic
Innovation Group, a bipartisan public policy organization
focused on fostering economic dynamism throughout the country.
He has testified before this Committee a number of times, most
recently on opportunity zones in the tax reform bill. Before
joining the Economic Innovation Group, he was the vice
president of Public Policy and Government Affairs for the
Organization for International Investment, and he served as
foreign policy aide to former U.S. Senator Chuck Hagel.
Betsey Stevenson is an associate professor of Public Policy
at the University of Michigan, Ford School of Public Policy.
Previously, she served as a member of the White House Council
of Economic Advisers and as the chief economist at the U.S.
Department of Labor.
Caryn York is the executive director of the Job
Opportunities Task Force, a statewide nonprofit organization in
Maryland that promotes policies and programs to help low-wage
workers advance to high-wage jobs.
We thank all four of you for being here today, and let us
just begin from left to right. Mr. Cass, thank you for being
here.
STATEMENT OF OREN CASS, SENIOR FELLOW, MANHATTAN INSTITUTE
Mr. Cass. Well, good afternoon, Chairman Rubio, Ranking
Member Cardin, and members of the Committee. Thank you very
much for the opportunity to testify today.
My name is Oren Cass. I am a senior fellow at the Manhattan
Institute, where my work focuses on strengthening the labor
market.
My written testimony focused on three topics. The first was
the limitations of consumer welfare as the relevant measure of
economic policy and the importance of focusing instead on
production and people's capacity as workers as we understand
the effects of policy; second, a concept that I call
``productive pluralism,'' which is the idea that the conditions
we should be striving for in this society are ones where people
of all aptitudes in all places have the opportunity to find
work that will allow them to support their families and their
communities; and then, third, the central role of labor markets
and particularly as it pertains to small businesses and
entrepreneurs in creating those conditions.
My central message for the Committee is that a labor market
that facilitates those conditions and allows people to work in
ways that support their families and communities is the central
determinant of long-term prosperity for this country and so
should be the central focus of our public policy.
I will summarize these points briefly here with an emphasis
on the implication for policymakers.
So, first and foremost, why do we care so much about labor
markets? In my view, the answer is because work matters. We
understand that on an intuitive level, but we do not actually
credit it very much in our economic policy. We do not
appreciate the extent to which work is critical to individuals,
their self-esteem, their mental health, their life
satisfaction, and their own economic opportunity over time.
I think even more importantly, work is incredibly important
to families and communities, the foundation of our society.
Work is incredibly important, and here, especially for men,
work is an incredibly important driver of family formation and
family stability. Work is an incredibly important driver of
outcomes for children. Children have better outcomes in
households where adults are working and even just in
communities where adults are working.
And thinking more broadly about these communities, work is
a nexus of community, and conversely, where people lack work,
we see incredible erosion in community, higher levels of crime,
higher levels of addiction, far less investment in social
capital.
So if we want a flourishing society and the dynamic economy
that it produces, it is not sufficient to simply grow GDP to do
what we call ``growing the economic pie'' by whatever means
necessary and then giving everybody a big enough slice. We
actually need everyone to be involved in the process of
producing that pie and, importantly, to be able to be involved
in that from the places they are with the aptitudes that they
have.
This is not something that will happen on its own. It is
incredibly important to recognize that nothing in economic
theory says that just allowing the markets to run, just
achieving the efficient outcome, just maximizing how much cheap
stuff we can buy is going to leave us with a labor market that
gives these opportunities to everybody.
And so I think this is a challenge for policymakers across
the political spectrum. It is a challenge for those on the
right whose tendency is to trust markets because, in fact, the
market outcome is not necessarily going to be the socially
desirable one, but it is also a challenge for policy makers on
the left whose tendency is more often to command an outcome
where the market is not producing the desired one.
As Senator Cardin noted in his opening statement, small
businesses in particular are limited in many cases in the types
of wages and benefits and so forth they can provide to workers,
and so if we want better jobs and a healthier labor market, it
is not sufficient to mandate one. We actually need to create
the economic conditions in which small businesses, in which
entrepreneurs can create attractive jobs and greater economic
value throughout the economy.
I would like to highlight a few ways in which the standard
policy responses that we have been emphasizing I think are
insufficient.
One is that almost by definition, redistribution is not a
solution. We cannot redistribute productive capacity and good
jobs from winners to losers in our economy.
Second, education and training I think are wonderful goals
and things we should continue to invest in, but we also need to
recognize that we have made very limited progress in decades
now in, for instance, increasing the share of the population
that achieves a bachelor's degree. And it is going to be
important to build a labor market that meets people where they
are and supports them in the jobs they are prepared to take
rather than simply hoping they achieve something better.
And then, third, relocation is not a response. We need to
meet people where they are literally as well as figuratively.
We need to pursue a national economy with broad-based
prosperity in which people in wherever they live in the country
have these opportunities. So I think small business and firm
formation are especially important in this respect in ensuring
the economy is not one that flourishes only in isolated coastal
hubs.
There are a number of policy responses we should consider.
I will mention them briefly here, and I hope we can speak about
them more. I think we need to focus on a regulatory environment
that encourages job creation. I think we need to build an
education system and focus much more heavily on those not
pursuing college.
I think we need a trade policy that focuses on balance and
ensuring that we are exporting and creating opportunities for
workers as much as we are importing and providing cheap stuff
to consumers.
I think we need a labor policy appropriate to the 21st
century that allows workers to collaborate amongst themselves
and with employers.
And I think we need a safety net that includes a wage
subsidy and encourages workers to work and supports them in
doing so instead of just supporting them, regardless of work
and in their conditions of poverty.
Thank you very much.
[The prepared statement of Mr. Cass follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Rubio. Thank you.
Mr. Lettieri.
STATEMENT OF JOHN LETTIERI, PRESIDENT AND CEO, ECONOMIC
INNOVATION GROUP
Mr. Lettieri. Chairman Rubio, Ranking Member Cardin, and
members of the Committee, thank you for inviting me to testify
today.
The well-being of American workers depends upon
entrepreneurs, and entrepreneurs are facing serious challenges.
Chairman Rubio. I am sorry. I think your microphone may
have come off.
There you go.
Mr. Lettieri. Sorry about that.
Unless policymakers take action, the future of American
entrepreneurship will remain under threat from structural and
policy forces that have already combined to diminish the
dynamism of the U.S. economy across every sector and every
region.
So how does entrepreneurship benefit the American worker?
New businesses unleash chain reactions throughout the economy
that help ensure the labor market works for working people.
First, new businesses are a critical source of new demand for
workers and a driving force behind net job creation.
New forms also enhance competition, driving unproductive
firms out of business and clearing the way for more innovative
and productive ones to thrive. Through this process, workers
reallocate to companies that enable them to be more productive
and earn higher wages too.
Before going further, I want to address a common
misconception about the labor market, and that is the notion
that workers today experience greater job churn than ever
before. This is simply not the case.
Even today, after a long economic expansion, turnover rates
today only barely match those from the depths of the prior
recession, the early 2000s. This matters because job churn is
vital to workers' interest in the labor market.
Studies show that one-third of early career wage growth
comes from job hopping, and that those early gains are critical
to establishing a lifetime of employment trajectory.
Research also shows that a reduction of labor market churn
has a three and a half times stronger negative impact on young
men with only a high school diploma than it does on those with
a college degree. Young people, those with fewer skills, the
currently unemployed, and the formerly incarcerated are the
first to lose out when job churn slows down.
So we know that workers benefit from the economic effects
of entrepreneurship, but what is the state of entrepreneurship
today?
The state is troubled. Over the past several decades, the
startup rate has declined across virtually all regions and all
sectors of the economy before collapsing with the Great
Recession. This collapse is reflected across every sector, and
unfortunately, the national economic recovery has done little
to improve the rate of business formation nationwide.
Even the post-recession high reached in 2016 left the
startup rate a full 2 percentage points below its long-run
average.
How does that translate for workers? For workers, that
means that each and every year on record since the Great
Recession, roughly 100,000 fewer new companies have come online
to compete for their labor.
Furthermore, the U.S. economy is less dynamic across all
regions today than even a short while ago. At EIG, we evaluated
State-level dynamism across even different metrics from 1992 to
2014. What we found was the most dynamic State today scores
like one of the least dynamic states of the early 2000s--or
early 1990s. This is a trend that leaves no corner of the
country untouched.
Another reason for concern is the strong relationship
between demographics and dynamism. The rate of U.S. population
growth now stands at its lowest level in the last 80 years. EIG
will soon release new research finding that 86 percent of
counties are now growing even more slowly than the country as a
whole, and half of counties are losing population each year.
Worse, two-thirds of counties are losing prime-age adults.
Absent an aggressive policy response, small businesses, new
businesses, and the American worker will find themselves
navigating unfriendly terrain in the years ahead.
So how should policymakers respond? I offered several
policy recommendations in my testimony, but I want to emphasize
two of those in particular now.
First, there is a simple way to boost wages, to boost
innovation, and to increase entrepreneurship without enacting
any new program or incurring any cost to the Federal
Government, and that is by banning the use of non-compete
agreements.
Roughly one in five workers is covered by a non-compete.
These clauses are almost never negotiated, and they rarely come
with any added benefits to the worker. Why should policymakers
care? It is because non-competes are both unnecessary to
protect trade secrets and are proven to stifle the very forces
of healthy churn that are desperately needed in our economy
today.
Enforcement of non-competes leads to significantly lower
rates of business entry. The new businesses that do form tend
to be weaker, smaller, and more likely to fail within their
first 3 years.
Workers in states that enforce non-competes earn less, they
stay longer in their jobs, and they are less satisfied with
their jobs.
These provisions almost certainly diminish overall levels
of innovation by restricting the mobility of the economy's most
productive workers and lowering rates of entrepreneurship.
Banning them would have an immediately favorable impact on
entrepreneurship, innovation, and wages. I encourage Congress
to do so.
Second, we must enact a coherent immigration strategy. An
effective immigration policy would help us boost
entrepreneurship, spur innovation, and tackle all the
demographic challenges I mentioned, all at once. And I would
emphasize two ideas that get to the heart of the issues I have
covered in my testimony.
First, like a long list of other advanced nations, the
United States should have a startup visa. Any entrepreneur who
can pass a national security check and demonstrates the ability
to fund-raise against a sound business plan should be welcome
to start their business in our country.
Second, we should open new pathways for immigrants,
particularly high-skilled immigrants to connect with
communities facing chronically slow or negative population
growth, enacting a place-based visa. One tied to certain
geographies rather than a single employer would help declining
communities make better use of excess capacity, improve their
fiscal stability, and boost local dynamism to the benefit of
all workers.
Policymakers should move quickly to enact bipartisan
solutions, like the ones I have mentioned in my testimony. It
would help American workers and entrepreneurs and communities
thrive.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Lettieri follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Rubio. Thank you.
Dr. Stevenson.
STATEMENT OF BETSEY STEVENSON, Ph.D., ASSOCIATE PROFESSOR OF
ECONOMICS AND PUBLIC POLICY, GERALD R. FORD SCHOOL OF PUBLIC
POLICY
Ms. Stevenson. Chairman Rubio, Ranking Member Cardin, and
members of the Committee, thank you so much for the invitation
to be here today.
You have heard about the importance of entrepreneurship and
jobs. I want to address the fact that technology is changing
both entrepreneurship and jobs.
Rather than eliminating many types of jobs, as is often
reported in the press or feared, what technological change is
likely to do is change the tasks that workers do in jobs. MIT
researchers have gone occupation by occupation looking at the
multiple tasks that are done and shown that most jobs will have
tasks that are eliminated by technological change, by
artificial intelligence and machine learning, but very few, if
any, jobs will be completely eliminated by that.
So the future holds a world in which jobs, almost all of
them, need to be redesigned, and they need to be redesigned in
a way to take advantage of the comparative advantage of human
workers.
Preparing people for the jobs, the way jobs will change,
requires greater investment in education and worker training.
Today's workers get only a few hours of training from their
employers, while workers generations ago received much greater
training from their employers.
Apprenticeship programs that I know Ms. York will speak
about that receive public funding, provide compensation to
workers, and encourage employers to take a chance on new
workers are essential to this change, but these programs must
adapt to the changing jobs of the U.S. economy. The U.S.
economy is a service-based economy. Eighty-four percent of
workers employed in the private sector are in the services. A
third of our exports is services, and these are where the good
jobs are and the good exports are and where we are growing our
exports.
Internationally, our comparative advantages are a highly
skilled workforce, but we are losing ground to other countries.
To preserve our place in the global labor market, we must make
sure more Americans successfully complete college.
In the last century, we made it possible for nearly all
Americans to get a high school degree, even though other
developed countries told us it was impossible. They said some
people were simply not suited for higher education, ``higher''
meaning high school.
Today, we are making the same arguments about our own
citizens, while other developed countries succeed with a much
higher percent of their citizens completing college.
In the U.S., nearly two-thirds of young people start a
college degree, but inadequate financial support, the
challenges of raising a family while in school for some, and
insufficient education prior to college--in other words, the
failure of our school system before you get to college--mean
that only 36 percent of people in their late 20s and early 30s
have actually completed a college degree. We can, and should,
have the majority of our young people successfully completing
college.
Let me address a second aspect of redesigning work. Total
work hours may decline. The challenge is not about making sure
that work does not decline. It is making sure that it declines
only in a desired way and that it does not create the
marginalization of communities without work.
Historically, technological change has reduced work. We no
longer send children into factories. We now enjoy retirement,
and some people choose to stay home and raise their children,
focus on their families and their communities rather than work.
This is not a bad thing. We have thought that this was a good
choice.
So what can we do to make sure that any change in hours is
done in a positive way? We need to provide an infrastructure
that supports working families and allows some importantly,
broadly shared declines in work, a decline in working while
sick, a decline in working while dealing with a medical crisis
of a loved one, while having a newborn in the home, people
being able to afford to take time out of work and then get back
to work once these crises have passed or once a newborn is
ready to be left in child care.
Too often, people are completely pushed out of the labor
force when they are forced to choose between family obligations
and work. Roughly half of parents say that they have turned
down a job because they could not make it work with their
family needs. That is a lot of parents who are forced to make
very difficult choices.
Paid sick leave encourages workers to stay home when they
are sick. With contagious diseases, this benefits businesses
and improves overall productivity, but sick leave policies that
allow workers to stay home to care for a loved one may not
directly benefit their employer. But they do directly benefit
society, and that is why government has a role in ensuring that
all people have access to that kind of leave.
Similarly, parental leave policies generate benefits for
society providing health and development benefits to children.
The one last thing I want to mention is the importance of
Congress and this Committee to ensure that we are building
trust in society. There has been a large decline in trust, and
some of that decline in trust is connected to not having that
infrastructure that supports working families.
People who do not trust other people are not themselves
trustworthy, and that is something that impedes our
entrepreneurship. It impedes our economic growth because we
divert resources toward monitoring people rather than being
more productive in our day-to-day world.
I will end there. Thank you.
[The prepared statement of Ms. Stevenson follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Rubio. Thank you.
And, finally, Ms. York.
STATEMENT OF CARYN YORK, EXECUTIVE DIRECTOR, JOB OPPORTUNITIES
TASK FORCE
Ms. York. Greetings, Chairman Rubio, Ranking Member Cardin
from the great State of Maryland, and an alum, as I, of the
best high school in the country, the Baltimore City College
High School. I just had to flag that, ladies and gentlemen.
And, members of the Committee, my name is Caryn York. I am
executive director of the Job Opportunities Task Force, and I
am thrilled to join you today to discuss the realities of the
American worker in 2019.
Job Opportunities Task Force, JOTF because it is a
mouthful, is an independent statewide 501(c)(3) nonprofit
organization. Our mission is to help low-wage workers advance
to high-wage jobs. Our mission, again, is to eliminate
educational and employment barriers and is achieved via three
strategies.
Number one, program development. For the past 12 years,
JOTF has partnered with Associated Builders and Contractors,
Baltimore Metro, to run Project JumpStart, a 14-week pre-
apprenticeship construction training program that helps
Baltimore City residents obtain entry-level construction skills
necessary to enter jobs in the building trades with a direct
link to apprenticeships. Approximately 75 percent of city
residents enrolled in Project Jumpstart are unemployed or
under-employed. Many have limited work experience, and most
have a significant history of criminal justice involvement.
Thus, Project JumpStart was designed to address these barriers
by providing a basic set of entry-level construction skills in
carpentry, electrical, and plumbing, a strong focus on
construction math and measurement, and certifications in
safety, OSHA 10, first aid, and CPR.
Associated Builders and Contractors, they cover the
instructional training. JOTF, we provide the critical,
intensive, customized case management services. Each student is
provided with a $25 stipend per class to help mitigate costs
like transportation, and JOTF pays for students to attend
driver's education for $250 to start them on the path toward
securing a driver's license, which we know is crucial to
employment.
Students also receive case management services that include
assistance with housing, benefits screening, legal challenges,
and financial education. Upon completion, graduates receive,
because we also work with them after they have left the
program, job placement support, a set of brand-new industry-
approved starter tools, certifications related to construction
and construction safety, and access to a JOTF-secured low-
interest bank loan for up to $2,500.
But Project JumpStart cannot fix everything. Many times,
our Project JumpStart team will find that there are public
policies that are preventing graduates who are employed from
moving ahead and now risk falling back. This is where JOTF's
second strategy comes in, public policy advocacy.
Our policy priorities generally fall into the following
categories: adult education, postsecondary access, and
affordability; skills training; wages, benefits, and supports;
reducing the impact of incarceration on workers; and
transportation.
Over the years, we have been instrumental and continue to
be a leading voice in successfully educating State and local
policymakers and business leaders about some of the most
critical workforce issues, including but not limited to
investment, investments in adult education and skills training.
JOTF was the original architect of the Maryland EARN
program, Employment Advancement Right Now, sector-based
partnerships, paid leave, unemployment insurance for part-time
workers and new labor force entrants, and the impact on
incarceration that includes ban the box on both job and college
applications, expungement reform, bail reform, occupational
licensing reform, and accessible and affordable transportation
options.
These policies are crucial to ensuring the success of our
folks like Project JumpStart graduates, but to round out our
mission, we also provide research in public education. Our
reports like ``Overpriced and Underserved,'' which highlight
the cost of being poor, housing, transportation, and food;
``Priced Out,'' which focuses on access and affordability for
postsecondary education; and ``The Criminalization of
Poverty,'' which highlights the laws and policies that
unnecessarily penalize and criminalize our poor workers have
helped to educate the public, which includes policymakers and
business leaders and the general public on the barriers that
impact an individual's ability to secure and maintain
employment.
Mr. Chairman and members of the Committee, I provide this
lengthy background to illustrate JOTF's deep understanding of
the barriers that are impacting not just the worker, but
employers and ultimately cities, states, and our country as a
whole.
According to the Georgetown Center on Education and
Workforce, by 2020, about 65 percent of all jobs will require
some form of postsecondary education, and at our current rate
of production, the United States will fall short by 5 million
workers. This is a problem for us all.
We hear that there are no jobs. Nonsense. The jobs are
here, and they are coming. The problem is that our workers
cannot access these jobs.
And so, because I know I only have a little bit of time
left, when we talk about how to ensure that workers can access
these jobs and we talk about it within the context of things
like opportunity zones that have been designated according to
low-income zones, if we want to incentivize businesses moving
into these zones, then we need to make sure that businesses
have access to an educated, skilled workforce.
In my neighborhood in Baltimore City, 40 percent in
Southwest Baltimore, 40 percent of residents lack a high school
diploma, and the median household income is $10,500. And so
there are a number of recommendations that I have highlighted
in my written testimony, but I just want to make sure that I
bring to your attention this afternoon, as we talk about things
like apprenticeships and skills gaps and reentry and what to do
about the excitement surrounding opportunity zones.
I ask the Committee to consider the following: providing
additional funding for work-based training programs, including
pre-apprenticeship programs and apprenticeship opportunities,
career technical education and job training, expanding Pell
grants to people seeking short-term training programs that lead
to in-demand jobs, funding for issues that apprentices may need
additional support to address, such as transportation and day
care; ease restrictions for workers seeking occupational
licensing, particularly workers with a criminal background--
Senator Cardin, Maryland leads the Nation in the most
burdensome restrictions for prospective licensees; we need to
do something about that--reducing the impact of incarceration
on workers via banning the box on both job and college
applications; expanding criminal record expungement,
eliminating criminal justice fines and fees that lead to
criminal justice debt; reform of child support enforcement laws
that are sensible, family supporting, but punitively apply to
noncustodial parents; and create tiered incentives to ensure
low-income residents access to high-income job opportunities,
particularly local hiring, local job creation, community
engagement, and job training within opportunity zones.
This can be done by aligning workforce development with
economic development, investing in skills training, increasing
access and affordability of postsecondary education, reducing
the impact of incarceration on the workforce, and supporting
public policy efforts that ensure workers and families are able
to live, survive, and thrive in today's economy.
Thank you for your time, and I look forward to answering
any--well, it depends on the question.
[Laughter.]
But I look forward to answering questions from the
Committee. Thank you.
[The prepared statement of Ms. York follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman Rubio. Great disclaimer. Perfect disclaimer.
Before we get into questions, he was not here at the
outset, but I wanted to give Senator Romney just a second
because I know Mr. Cass has worked with you for many years, and
he wanted the opportunity to introduce him.
Senator Romney. Has Mr. Cass spoken yet?
Chairman Rubio. Well, he gave his opening statement.
Senator Romney. Oh, he gave his statement. So I get to ask
him a question, then, or do you just want to--first, I want to
say hello.
For those that do not know, Oren Cass was kind enough to be
my domestic policy advisor, and he was responsible for all the
good things I came out with. I am responsible for the mistakes.
[Laughter.]
And, as you all know, he has taken his experience and
perspective and brain power to extraordinary heights in being
an author of a very interesting reevaluation of how we think
about success in this country and how we create not just a
growing economy, but growing happiness and stability and
satisfaction on the part of the American worker and the
American family. And it is an approach which obviously has
garnered great attention from some of the columnists of the
leading papers in the country, but also policymakers and
thinkers. And I appreciate his help in the past and his help in
the future.
Thank you, Mr. Chairman.
Chairman Rubio. And I am going to generally waive my time,
other than the first question to you, Mr. Cass, because I know
there will be a vote here at 4:00, and I want to make sure
everybody here gets to go and do that. I am going to be here to
the end.
Both in your opening statement and in the book that has
gotten a lot of attention, you make the fundamental argument
that American policymakers have been hyper-focused on consumer
prices, raising standards of living, and redistributing income
when in fact--and I will just focus on just growing the economy
at any cost, but that that focus is the wrong one. That,
instead, our focus should be on creating dignified work that
supports strong families and communities, and that that,
ultimately, is what leads not just to sustainable growth that
is positive and raising standards of living and the like, but
it also leads to long-term prosperity.
So I just want to give you a chance to outline that. To a
lot of people, that is a different construct than they perhaps
heard, certainly from my side of the aisle in many cases.
Mr. Cass. Sure. Thank you, Senator, and thank you, Senator
Romney, for that.
You know, I have likened our situation to the romantic
comedy heroine in the kind of generic trailer who has it all or
so she thought, dot-dot-dot. You know, she has the car and the
apartment, and yet something is missing.
What we found, I think, if you look at our economic data,
is that on the terms we have set of growing the economic pie of
raising material living standards, we have succeeded. The
economy has grown enormously. We redistribute more than ever to
the lowest-income households, and everyone's material living
standards have risen. And yet, in conjunction with that, we see
all of these very serious maladies, whether you are talking
about collapsing families and communities, declining personal
health, declining life expectancy, exit from the labor force,
and so on and so forth.
And I think what we have lost is the recognition that what
is ultimately most important to individuals and what provides
the basis for our communities, our families, and for the
economy ultimately is not how much you can consume. It is your
opportunity to engage as a productive contributor in society.
I think in our single-minded focus on just consumption, we
have actually managed to erode, to a significant degree, the
health of the labor market that provides the real foundation
for a healthy society.
So it comes down to a lot of choices we make on a whole
bunch of different dimensions and tradeoffs that we face and
that we need to take a hard look at if we want to really make
sure that, first and foremost, we are giving everybody the
opportunity to, I would say, achieve what truly is the American
dream, which is not in terms of how big your television is. It
is about being able to, a lot of times, grow up in the
community that you grew up in, to stay there, to build a
family, to support it, to contribute, to save for your kids, to
set them on a path to success as well. And I think we are going
to have to make some sacrifices elsewhere on the consumption
front if we really want to put that front and center.
Chairman Rubio. Thank you.
Ranking Member.
Senator Cardin. Well, I thank all four of you. You have all
pointed out that one of the problems we have in getting
qualified workers is the fact that we do not have enough people
who are educated and trained at the level we need, and we have
discriminated against a large segment of our population who
have criminal records. If you are a small business with a
limited pool, you have a hard time competing with the qualified
applicants that are available.
So, Ms. York, I want to just follow up on the point that
you mentioned quickly about Maryland and the problems on
licensure.
It has been estimated as many as 600,000 people return from
prison every year in the United States, and that as much as 64
million Americans, adult Americans, have a criminal record.
That is 25 percent of our adult population.
So this is a huge number, and we talk about opportunities
of returning citizens, and yet we know it is extremely
difficult.
You mentioned in my own State of Maryland, we have
restrictions in regards to licensing. Could you just briefly
tell us what you have been able to do to try to provide
opportunities for those who have served a prison term, who are
returning to our community, who have not only an opportunity,
but the skills necessary in order to compete?
Ms. York. Thank you.
You are absolutely right in terms of the stats that were
articulated around the numbers of individuals who are returning
back to our communities from incarceration because we should
all know that if you were not sentenced to life, you are coming
home. And so if they are coming home, it is incumbent upon all
of us to think about how we want them to return and how we can
ensure that they do not return back.
And so, when you take these large numbers of individuals
who are returning back to our communities with a criminal
background, with a criminal record that is used in hiring
decisions and even housing decisions, and then you juxtapose
that against the number that shows us that the majority of jobs
nowadays requires some type of occupational license and the
policies that actually prohibit individuals or that allow
boards to deny licenses to these individuals, then you begin to
see how these criminal justice challenges actually become
workforce challenges.
And that is why an entity like the Job Opportunities Task
Force is actually involved in this work. We found that there is
a significant segment of the working population that is
effectively unemployable as a result of a criminal record.
There are a number of job opportunities, but yet folks were
unable to access them because of their criminal record or
because of the communities that they were raised in, which made
it really difficult for them to access the educational
opportunities that would allow them to access high-wage
employment opportunities.
So whether it is through Project JumpStart, where we are
taking city residents and training them in the trades and then
helping to deal with all of these wraparound case management
services that, quite honestly, business owners and employers do
not have the time to deal with but understand how important
they are, as it is related to someone's ability to actually
secure and maintain employment.
So pre-apprenticeship--we talk about apprenticeship. Pre-
apprenticeship is so important to ensuring that the individual
is actually successful in the apprenticeship program, and then
ensuring that we are supporting those policies that
successfully facilitate the individuals once they are
matriculating through the programs and then afterwards because,
in today's market, you will hear from employers that, you know,
the workforce has changed, and so the workforce is aging. They
are now looking for workers, and that includes workers with
criminal backgrounds, and so how can we fix this disconnect so
that employers have access to qualified workers and workers get
jobs?
Senator Cardin. I am going to look forward to looking at
some of those specific recommendations.
I think we have an opportunity here. This past Congress
passed the FIRST STEP Act, which I thought we came together in
a sensible way on sentencing. Now I think it is important for
us to come together on dealing with the realities of the
population of our country.
All of you have mentioned the importance of higher
education and the availability and access to higher education.
You have all talked about the appropriateness for technical
education. Not everyone should go to college, and the
importance of that.
My concern is that if you look at those that are going to
be on track for higher education and those that may be on track
for technical education, there is a disconnect between the
communities you come from.
So how do we provide equal opportunity so that those who
should be going to college can have a better opportunity for
income are not denied that opportunity because of the community
they happen to come from?
Mr. Cass, do you have an idea on that? You talked a little
bit about equalizing through wage, directly through wages. But
would not it be better that someone who should be in college
has that opportunity rather than saying that we are going to
get you into a technical program, which is important? I am for
technical education, but it should be based upon aptitude and
need and talent.
Mr. Cass. Well, I certainly agree with that.
I think the first step in any system that has multiple
tracks should be to ensure that the choices the students and
their families, which track that they move on to.
Senator Cardin. Would you acknowledge that today that is
not necessarily the case in America?
Mr. Cass. Well, we do not have a multitrack system today in
America. We have a system that attempts, I would say, to push
everybody into a college pipeline and essentially abandons
those who do not reach it.
Senator Cardin. Not if you come from certain neighborhoods.
Mr. Cass. No, not for every neighborhood. But, certainly,
if you look, for instance, with respect to funding at what we
spend money on or if you look at where Federal attention is, it
is almost entirely on trying to increase the share of people
attending college.
So I think it is very important to recognize that while we
want to make sure we have two robust tracks, the imbalance we
have today is the total lack of a vital non-college track, and
that when we lack that, it is those who would perform best on
that track who we hurt most.
I think a lot of folks look at, for instance, your
observation that we might have a disparity in terms of people
from which communities move on to which tracks and say, well,
therefore, that is a reason not to have tracks. I think that is
the wrong way to think about it.
I think, essentially, we have a track, and it is a college
track, and it is not the appropriate one for many people.
Creating an additional track and giving people the option of
accessing it would be a tremendous benefit to a tremendous
number of people who do not have access to it today and would
bring our system much closer to one where as many people as
possible are on a track that is appropriate for them.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Chairman Rubio. Senator Hawley.
Senator Hawley. Thank you, Mr. Chairman, Ranking Member.
Thank you for calling this very important hearing.
I just want to pick up right there. It seems to me
something you just said, Mr. Cass, is very important, which is
that we essentially have at this point in this country an
educational system, job system that pushes folks toward going
to college, which is great, but if you do not come from the
right background where you have advantages that get you there,
then you are essentially left on your own.
Too often, I think we have an economy where increasingly we
say to folks who have not gotten a 4-year degree, ``Good luck
to you. We cannot promise you a good-paying job. We cannot
promise you will be able to find any good work,'' and we talk
endlessly about getting better jobs for folks who have college
degrees. What about those who do not have college degrees?
I come from a State in which most folks have not gotten a
4-year college degree, but they still want good work, and they
still deserve good work. And our communities and families still
depend on the availability of good work.
I think my question is--and I will just pose it to the
panel, but I will start with you, Mr. Cass, and go down the
line--what should we be doing in order to ensure that we have a
labor market that can provide good, honest-paying jobs for
folks who do not have a 4-year college degree and who do not
live in one of these metropolitan hubs on the coast, but who
maybe come from a State like mine that is majority rural or
majority ex-urban, who still want to have communities that are
prosperous, who want to be able to support and raise a family,
but who want to do that without having to move to someplace
else, and who have not gone to college? A 4-year college was
either not available to them or not for them, but yet they
still want to have access to good-quality, meaningful work.
Mr. Cass. Well, I think it is an excellent question.
I would mention a few things. I think education certainly
has to be at the top of the list, and I like how you described
it, which is people get to age 17 or 18, from whatever
background they come from, with the aptitudes and preparation
that they have, and absolutely, we should be talking about how
to do better reform in society as a whole to make sure that we
get people to that level as prepared for success as possible.
But to the extent that we are not, I think it is a mistake
to just wish that we were and proceed from there.
Given where people arrive at age 17 or 18 today, providing
them with more of the apprenticeship-type pathway that we have
heard I think is critically important. Frankly, investing
Federal money that would otherwise go to the kids who are in
college, I would rather see us investing in the kids who are
not headed for college in a sense. So I think that is very
important.
Then one other thing I would mention is just our regulatory
infrastructure right now wildly undervalues work and physical
economy, whether it is farming, whether it is infrastructure,
construction, resource extraction, manufacturing, and favors
finance and technology. And we should not be surprised that
that is where all the investment goes, and I think we need to
recognize and put a much higher premium on the value of the
work that people do in the physical economy.
Senator Hawley. Thank you.
Mr. Lettieri.
Mr. Lettieri. I agree with much of that, so I will just add
on the demand side.
A tight labor market, strong demand pulls people into the
labor market and boosts wages for lower-skilled employees,
lower-paid employees. So I think that is very important to
overall labor market stability and the health of people who
have less of an education or less skills entering the
workforce.
I would also say, as I mentioned in my testimony, a healthy
churn in the labor market is important for everybody,
particularly marginally attached workers, and so the more--I
will connect this back to entrepreneurship. The more firm entry
you have in the business market, the more that chain reaction
flows to the benefit of marginally attached workers, many of
whom we have talked about here, who face a number of challenges
entering the labor market.
One of those is demand, and one of those is a static
economy. So, when we have static economies, many of those
regions you talk about are very static. They are not suffering
from business decline. They are suffering from lack of business
entry, and they are missing that chain reaction that business
entry sets off.
And so, to the extent that we can focus on entrepreneurship
as well, that does create more labor market opportunities up
and down the chain and more demand for work of all different
types.
Senator Hawley. Dr. Stevenson.
Ms. Stevenson. So let me also focus on the demand side,
putting this in a little bit in perspective.
So, among people in their 20s, their late 20s, 64 percent
do not have a college degree. Sixteen percent of our private-
sector jobs are in the goods-producing sector. So there is
nothing that this Committee or this Congress can do that is
going to be able to take most of the people who are not going
to college and get them into some sorts of goods-producing job.
So we need to be thinking about technical training in a way
that is very different from the way we used to think about it,
so things like computer coding, other types of service jobs are
going to be an important place for good jobs. So do we have the
training programs to make sure people can do those kind of
jobs? That is an important question.
And then the spillover effects for things like are we
providing subsidies for high-quality child care, if we provide
subsidies for high-quality child care, it makes it easier for
families to work, and it also pushes up wages in the child care
industry, which is an important industry. And we can make that
a better paying job, a better job for people to feel that both
men and women can enter their jobs of taking care of early
childhood education.
So we need to be both building the skills of the workers
who are able and can thrive by having more skills. We need to
be rethinking what we mean when we say technical training, and
we need to be investing in the parts of our economy like health
care and education services, where there is huge demand, but
right now, those are seen as undesirable jobs. They are
undesirable because they are low paid, and a lot of that pay
interacts with public policy in terms of what is the
reimbursement rate for an elder care worker, for example. So
there are things we can do on that end that will both support
families and work.
Senator Hawley. Ms. York.
Ms. York. Thank you. Great question.
I listed a number of recommendations in my written
testimony, which is five that I want to highlight.
Number one, just understanding and making sure that we are
clear about the fact that the worker is not monolithic, and so
workers are going to be subjected to different barriers and
challenges, depending on where they are from, but also maybe
their race and their ethnicity and their gender, all dealing
with different barriers.
Also, redefining college. A lot of times when we talk about
college and higher education, we are just thinking 4-year
college degrees. Training programs should also be included when
we talk about postsecondary education, and we cannot forget
community college, which leads me to my third point.
Many times, individuals are not able to access additional
credentialing because of access or affordability, and sometimes
community college can even be expensive for our low-wage
workers who are seeking to obtain maybe evening classes or
additional credentialing so that they can access high wages,
and so redefining how we talk about college and then making
sure that we are talking about the affordability of all levels
of college.
And then, lastly, aligning workforce with economic
development. It is so frustrating to me and many other
stakeholders when we talk about economic development and what
businesses are looking for over here and then we talk about
what it takes to actually move workers from A, B, to Z here. It
is important that when we are talking about crafting training
programs that we are listening to employers. What is it that
you need so that we can craft the curriculum that will ensure
that you can draw from these trainees, and then you can hire
them and employ them? So that we are killing a bunch of birds
with one stone.
And so those in addition to all the many recommendations I
have listed in my written testimony, I believe would help
ensure that we are able to get to the labor workforce that we
are looking for.
Senator Hawley. Thank you.
Thank you, Mr. Chairman.
Chairman Rubio. Thank you.
Before I turn it over to Senator Young, yesterday I had a
meeting with NIFB, which represents a lot of small, mid-sized
business. And for the first time in years, the number one
concern in their survey of business owners is the lack. They
cannot find trained workforce to fill the jobs that they need
at the small----
Ms. York. Absolutely.
Chairman Rubio. And they are willing to train people, but
obviously, that is an additional burden that they are facing.
So I think that is a very important question.
Senator Young.
Senator Young. Thank you, Chairman, for holding this
hearing.
I appreciate all of our witnesses for being here.
Mr. Lettieri, you place great emphasis in your testimony on
indicating that we should, at the Federal level, consider
banning the enforcement of non-compete agreements, except for
perhaps under narrow circumstances. It is a bold proposal and
one that, in many ways, I find attractive.
Could you please explain what exceptions might exist to
that ban and enforcement, though?
Mr. Lettieri. Yeah. Thank you, Senator.
The most obvious exception is probably when a business
owner sells his or her business to an acquirer. In that case,
in many cases, the transaction itself would depend on there
being a non-compete. So I think that is the kind of thing that
makes a lot of sense.
In California, the most restrictive State in the country,
when it comes to non-competes, they allow for that exception. I
think that makes sense as a national rule as well.
Senator Young. Okay.
There is another concern that I anticipate, should we go
this route, and it is the states--this has traditionally been
the prerogative of the states to determine whether or not to
ban the enforcement of non-competes, and if so, whether they
banned broadly or more narrowly.
So what would be your response to someone who had these
sort of federalist concerns?
Mr. Lettieri. Sure. I think it is an important question to
address.
It has been the purview of the states because the Federal
Government has chosen not to have a say in the matter, but non-
competes are properly understood as part of employment law, and
employment law certainly is an area where the Federal
Government has a strong interest and set a national baseline
against which states can modify and do other types of their own
prescriptions that are unique to their states.
I think this is clearly a case in which both falling within
employment law jurisdiction and being a matter of such
importance to the overall health of the national labor market,
there is both a compelling economic rationale and certainly a
clear legal rationale as well I think for the Federal
Government to have a say, as it does on many, many other
employment law matters.
Senator Young. Sure.
I can anticipate a number of businesses. I grew up in a
family business, and we would have sales lists, customer lists.
And those were very important to our business model. So there
is certain information that is important to certain types of
businesses. Are there steps that companies can take without the
use of a non-compete agreement under the law that can be used
to protect those legitimate interests?
Mr. Lettieri. I think that is one of the--this is one of
the questions that gets to the heart of why non-competes are so
problematic. It is for the very reasons that employers often
use to justify their use. They are not necessary.
Employers have access to trade secrets protection, to other
protections of intellectual property. They have the use of
nondisclosure agreements and non-solicitation agreements. When
you look at the reasons that employers give for the use of a
non-compete, they often fall into one of those other, more
finely scoped categories. And those categories, those tools do
not carry the same type of broad harm that non-competes carry
throughout the labor market and throughout the economy.
So if you have alternatives that are more finely scoped to
the concerns that employers have, over legitimate concerns,
frankly, for intellectual property and trade secrets, those are
the best tools to apply to those challenges and leave aside the
broad prohibition on the very thing that our economy is based
on, which is competition.
And for workers, their knowledge, their skills, that is the
only thing they have to trade on. So this is the kind of thing
that I would say, going further, really harms individual
liberty and makes it very hard for us to get the kind of
outcomes we all say we want, which is a boost in wages, more
entrepreneur dynamism, more innovation in our economy. So we
have to look upstream from that and say if this is a tool that
is being misapplied, what are the alternatives? And when we ask
that question, we find that there are many that employers have
to reach to.
Senator Young. So you mentioned dynamism, and I know that
is something that you are intently focused on at Economic
Innovation Group. You and I have discussed it at some length.
Do we have economic literature? Is there some good evidence out
there about the impact of non-competes on the marketplace, and
if so, what conclusions can we draw?
Mr. Lettieri. Very clearly, the literature agrees on a few
fundamental things. One, that the enforcement of non-competes
greatly harms new business entry and markets, in some cases, up
to 20 percent. That it harms the overall wage environment for
workers, even those not covered by a non-compete. But in states
that enforce them, it has a depressing effect on everybody's
wages in certain fields and on and on.
I mentioned in my testimony job satisfaction, the amount of
time that a worker stays in a job. All of them are harmed. So
it is very hard to find an issue that unites the academic
literature the way that non-competes does.
It is not really a disagreement among academics as to
whether they are harmful; it is just to what extent they are
harmful. And the more literature we have, the more ways we are
finding that they are harming both workers and entrepreneurs.
Senator Young. Thank you all for being here.
Mr. Lettieri, thank you for answering my questions.
Mr. Chairman, I know it is very un-senatorial, but I yield
back the balance of my time.
Chairman Rubio. You had 2 minutes left.
Senator Shaheen.
Senator Shaheen. Oh, goody. Can I take it?
Chairman Rubio. Yes.
Senator Shaheen. Well, thank you all very much for being
here. I apologize for missing your testimony.
I want to begin with you, Dr. Stevenson, because I sort of
heard the end of the question about child care, but in New
Hampshire, child care, next to mortgage, is the highest expense
that families face. For an average family with a newborn up to
1 year old in New Hampshire, it is over $12,000 a year just for
child care for that one child.
So can you talk about the challenges that presents for
families as they are trying to get in and out of the workforce?
That is often coupled with the fact that most people do not
have access to family medical leave or family leave around the
birth of a child and what challenges that also presents. Where,
on the one hand, they want to go back to work. The costs of
child care are very high. They do not have leave to stay home
with the child, and what kind of conundrum do families face?
Ms. Stevenson. Thank you very much for that question.
I think one of the real surprises in recent years is that
we have been in this long boom, and yet fertility continues to
decline.
Why is it that millennials are finding it so hard to have
children? Well, you touched on part of the reason, which is
that they are graduating from college with enormous amounts of
college debt, and then they are facing down child care costs
that are--that is itself actually equal to the cost of going to
college or even greater.
So those costs combined with many of them having graduated
in a recession, so not having the job changes what they needed
to have to get the wage gains they needed early in their
career, then they face unsustainable costs of child care, they
are in jobs where they may not have access to paid leave,
maternity leave, paternity leave, or flexibility or parental
leave. All of these things are leading some people to say, ``I
cannot afford to have children.'' So we are seeing fertility
decline.
What we see with the challenges from child care and not
having access to what I think of as an infrastructure that
supports families is some people choose not to have children,
but other people get sidelined from the labor force.
We see in the data very clearly that people who have access
to paid leave, women who have access to paid leave are more
likely to stay attached to the labor force, will be in the
labor force for longer, and will have greater wage growth over
the course of their lives.
We see quite clearly in the data that women who feel that
they need to take time out of the labor force have a really
hard time getting back in.
One of the problems with our labor force and with the lack
of dynamism is that we are failing to provide the on ramps when
people take an off ramp out of the labor force. So we get
people who exit for some reason or another, and they cannot get
themselves back in.
For many women and many families, if you sit down--if you
have a 1-year-old child and you sit down and you look at what
is the cost of the woman going to work, what they are going to
pay in child care, the marginal tax rates on the woman's
additional work, the cost of her commute to work, they find at
the end of the day, they are not netting very much.
So many families then put themselves in a situation where
they say, ``Well, maybe we cannot afford to have you stay in
the labor force,'' but when you step out, you come in at much
higher wages or maybe not at all.
As I mentioned before, if we have greater support for child
care, there are a couple things that happen. We invest more in
children, and those children have better outcomes and earn
higher wages. We have a large, large body of literature----
Senator Shaheen. Right.
Ms. Stevenson [continuing]. That shows that early childhood
education reaps benefits for taxpayers over the course of that
kid's life, but it also reaps benefits for families as women
are able to get back to work, as they are able to support their
families. Those kids, particularly lower-income kids, will grow
up in a household with higher income, which generates its own
second set of benefits.
So this issue is very, very crucial to the success of
American families.
Senator Shaheen. I certainly agree, and I hope that we can
find ways in which we provide more support for families around
child care and early childhood education.
My next question is really for any or all of you because
one of the biggest challenges we have in New Hampshire right
now is affordable housing.
We have an economy that is generally doing pretty well,
very well. We have a very low unemployment rate, one of the
lowest in the country. We have a lot of jobs that are going
unfilled, and we have companies that cannot get workers because
they cannot afford housing in the communities that they are in.
So does anybody have any suggestions about how we better
spur affordable housing?
Ms. York. So I will go first.
You know, I am sure that John may have some comments around
how there are a number of initiatives to provide for housing
opportunities within the context of opportunity zones.
However----
Senator Shaheen. And we have those in New Hampshire, and we
are seeing some benefits from those as well as we also have
HUBZones, but they are not providing the incentives----
Ms. York. Correct.
Senator Shaheen [continuing]. That builders need to
actually put in housing that is more affordable.
Ms. York. Correct.
So, you know, from a workforce perspective, this is
something that the Job Opportunities Task Force has recently
started to take on because we are finding that for low-wage
workers, about 40 percent of their wages or more is going
toward housing cost. And we are talking about renting.
There was recently a study on CNN that showed that in
Maryland, we were fifth in the Nation for how much you must
make an hour to rent a two-bedroom home. It was somewhere
around $29.50. So housing instability is a workforce challenge.
So I think that this also goes toward an earlier comment
that I made around aligning economic development with workforce
development because you are absolutely right. Employers and
businesses, in addition to looking for a pipeline of educated
skilled workers to determine where they are going to move, they
are also looking for the livelihood and what is it going to
take to ensure that our workforce is going to be able to live
and thrive, and one of that includes housing. Are there actual
options, and are they affordable options?
So I would highlight, of course, or uplift opportunity
zones as a way to encourage localities and states to get
creative with how to ensure that housing is provided at an
affordable rate across income levels.
I think that you are starting to hear creative options for
whether they be housing co-ops, for particular populations. For
instance, we have individuals that are returning from
incarceration, and they need a place to stay as well. So how do
we provide those housing opportunities for them so that it is
not contributing to the larger homelessness situation?
So that might not necessarily answer your question of what
we can do to incentivize builders and others to move into our
communities to ensure that we are providing this housing. I
would say that the only solution is how can we use opportunity
zones as a way to provide incentives to connect some of these
dots.
I do not know if John wanted to comment on this.
Senator Shaheen. And that may work in 20 years. It is not
going to work next year or in the next 3 years.
Do you want to add something, John?
Mr. Lettieri. I was just going to add that as we look at
housing challenges around the country, the most fundamental
relates to zoning and land use regs that are local, so that the
prohibition on building toward density and scale of housing
close to where the jobs are is a fundamental challenge that no
matter how effective a subsidy, there is no way to get around
that principal challenge, and no subsidy is going to be
effective at overcoming that at scale.
So I agree there is tremendous opportunity with opportunity
zones to make certain types of deals more affordable and
especially I think in workforce housing where there is a huge
missing middle in the labor market. I see that as being a
perfect match, but that does not compensate or only partially
compensates for the fundamental challenge, which is too many
places are far too restrictive about allowing for local
building and density and their housing policy.
Senator Shaheen. I certainly appreciate that. We have a
project in downtown Portsmouth that has been held up around
concerns by abutters. It is multifamily affordable housing that
is right downtown.
Now, I think it is going to go forward, but as you say,
there are too many--there is the ability of too many
restrictions to be put in the place of going forward with that
housing.
Thank you, Mr. Chairman.
Chairman Rubio. Thank you.
Senator Romney.
Senator Romney. Thank you, Mr. Chairman, and to each of the
panelists, thank you for your participation.
It has been a puzzle, I think, for many to see that we are
one of the very wealthy countries in the world, perhaps the
wealthiest of the major nations in the world if you look at a
GDP per capita basis. We have a lot more stuff than we used to
have as middle-class families, 30 years ago. The things we have
in our homes are extraordinary, and yet the degree of anxiety,
unhappiness, anger, anger directed toward our politics and
toward elements in our life that we are not happy with is at a
very, very high level. And I think it has been instructive to
recognize that perhaps some of this is too much focus on, if
you will, GDP and GDP per capita and not enough on some of the
other elements.
You have described as part of the prescription to bring
more family, work-oriented, and more satisfying life
experiences, a dual track, if you will, in education. I want to
put in a plug and then get to my question.
The plug is that some years ago in the State of Utah, a few
of the State colleges decided to make a change and became 4-
year colleges, at the same time said there is no admission
requirement. Everyone is accepted, and you can come in and you
can get certification to go into a job. You can get licenses to
do various things. You can get an associate degree, or if you
want, you can keep on going to get a 4-year degree.
So, as you come in, you do not have to say which one you
are going to do. You take different classes. You find which
ones that you find most compelling and most interesting. You
pursue that course, and off you go. Some go the 4-year route,
some go 2 years, some get certification, but I will put that
aside. But it is a very successful effort in providing people a
wide range of tracks, if you will, in the same institution.
But what I want to turn to is something which I have seen
time and again, which is even with community colleges that talk
to the local business community to say what kind of jobs are
you looking for, what kind of training do we do. It seems to me
that some of the most effective training is done by the
business itself, by the company itself.
We give R&D credit when companies are willing to invest in
stuff. We do not give an R&D credit when companies are willing
to invest in people, and I wonder whether you believe that
employer-based education and employer-based training might be a
highly efficient way of helping people find a satisfying career
and whether we might be wise in providing a credit of some kind
to businesses that hire someone who may have been incarcerated,
someone who has been out of the workforce for a long time,
someone who is just coming in for the first time, and then
providing them this credit for training purposes to get them
started in their career.
Mr. Cass. Yeah. Thank you. I think that is exactly the
right way to think about it, which is that employer-led
training is pretty much, as far as we know, the only way to do
training.
I mean, when you have government-led programs that try to
guess what the employers want, they tend to work out fairly
poorly. Partly, it is a function of employers knowing better
what they want. Partly, it is a function of just actually
getting on the job sooner. So the kind of credit you have
described I think is a very good approach.
We actually have, to our detriment, I think, a wide variety
of very targeted credits, so a credit if you hire this exact
kind of hard-to-employ person in this industry and so on and so
forth.
I think a much better model and one that fits with the
tracking concept we have discussed and with apprenticeships
generally is to really focus the model on saying for folks who
are sort of in those late teen years, essentially 17 through
20, that is a period of time when we essentially want to
subsidize the employment. That getting that person into a job,
even while they are still in high school be on the job part of
the time, it is going to be incredibly important to building
skills sooner and ultimately saying we can get someone to age
20 for less than we spend on college with earnings in the bank,
years of experience, and industry credential and a job.
So targeting more of what we call education spending right
now toward supporting that kind of relationship I think is a
very important approach.
Senator Romney. Thank you.
Any others that would like to comment?
Yes, Ms. York.
Ms. York. Thank you.
So I do think you are on to something; however, I do think
there should be multiple options in terms of training.
I mentioned the Maryland program, the Employment
Advancement Right Now. This is an employer-led program, where
the employers--you have the jobs. You know the curriculum that
you are looking for, and so you tell us the curriculum, and we
partner, whether it is a nonprofit--for instance, in
construction, it is JOTF, and we partner with the training
provider, say Associated Builders and Contractors, or it could
be a community college. But you are working with that community
college to come up with the curriculum that is directly aligned
with the jobs that you are looking for.
But I also want to make sure that we are not moving away
from community colleges because community colleges also provide
an opportunity to access that training so that you can access
the jobs, and then we can allow employers to build on top of
that.
Regarding your last point, tax incentives for employers who
may be interested in hiring individuals with a criminal
background, you know, I struggle with this because for the Job
Opportunities Task Force, we are always interested in ways to
incentivize businesses to hire, to incentivize businesses to
ensure that they have a robust workforce.
But the flip side of that is when we talk about individuals
with a criminal background and we talk about providing a tax
credit as an incentive, these are actually very qualified
individuals. They are able-bodied. There is actually nothing
wrong with them, aside from the fact that they have a criminal
record.
So, in today's market, when we have an aging workforce,
when we have all of these challenges where employers are now
having to recruit and consider employees, prospective
employees, that before they did not necessarily have to, such
as individuals with a criminal background, I worry that we may
be sending the wrong message by relying too much on tax credits
to incentivize employers hiring individuals with a criminal
background, when these are probably--would be some of your best
employees because they are hungry, they have something to
prove, and would be eager to come on your job site and would be
eager to be trained by you as an employer and everything that
comes with that, outside of having a tax credit or some type of
tax incentive.
So, I mean, I struggle with it because I understand that we
want to incentivize businesses, but I also want to make sure
that for individuals with a criminal background, we are not
putting them in a box where we are assigning them some
particular handicap because the only handicap is the fact that
they have a criminal record. And we as a society have assigned
the stigma to that record. But they can work, and they are
great workers.
Senator Romney. Thanks.
Ms. Stevenson. So I think what we have learned in recent
years is that when the labor market gets really tight,
businesses hire people that they would not have looked at when
the labor market is not so tight. It is not a big surprise. It
means that incentives matter.
How much of an incentive do they have to hire hard-to-
employ people? How much of an incentive do they have to provide
training?
One strong incentive is a tight labor market. We are not
always going to be blessed with a tight labor market. So I
think it is absolutely a good idea to be thinking about what
are the other ways in which you can build incentives into the
system when there is not a tight labor market.
I do think that it would be very wise for the Committee to
think about a set of incentives that might actually move with
the state of the labor market. You might not need incentives as
strongly today with our 4 percent unemployment, but I would
sure like to see those incentives when employment is 6 or 7
percent. And I would rather you debate that right now than
waiting until we see unemployment at 6 or 7 percent and start
debating it then.
It is possible to have policies that are automatic
stabilizers by increasing the kinds of incentives we provide
employers to hire people as the unemployment rate rises.
So I personally think that the types of tax incentives that
you are talking about are a wise thing for you to be
considering, and I would add to that to think about ways in
which you could thinking about ramping that up and down as the
business cycle changes.
Senator Romney. Thank you.
Chairman Rubio. Just some questions, now reclaiming my time
I did not use at the beginning.
Ms. York, let me ask you. I support--I think we all would--
the goal of helping those who have criminal backgrounds,
convictions in their background, to finding meaningful work,
but we are all aware there is a stigma associated with that.
Some employers shy away from it for a lot of different reasons.
Other than just the market need, we need to hire people. We
are going to have to hire people that we would not have hired
at other times. What have been some of the more successful
methods that you have been able to use to convince employers to
hire people that have had a previous conviction?
Ms. York. So, I mean, one of the methods is actually one
that is not led by JOTF. It is one that Dr. Stevenson just
articulated, just the fact that we have a tight labor market.
So, by default, they are having to consider workers who they
would not necessarily consider.
JOTF is also a member of a number of business associations.
You would not think we are, but we tend to be because we have
to be responsive to both the worker and the employer. We find
that within those groups, those employers that for a long time
maybe have always hired individuals with a criminal background
are now able to anecdotally advise and inform and influence
their colleagues and their partners on what it is like to
actually have an individual with a criminal background on their
job site and how the sky has not fallen, and ``Actually, it is
one of my best employees.''
Outside of that, it is really just getting folks to
actually understand, particularly employers to actually
understand the dynamics of an individual with a criminal
background and add that humanistic approach because a lot of
times, we just focus on the fact that you went to jail. You
have this record, and that is all I see, and that is all I care
about.
These are individuals. These are our neighbors. These are
our brothers and sisters. And, again, if they were not
sentenced to life, they are coming home. So if they do not have
access to employment, then they are going to jeopardize our
communities because they will feel that they have to resort to
an illegal means.
This then becomes a business challenge for those businesses
that are looking not just for a stable, educated, skilled
workforce, but also a safe environment.
So how can we talk about the importance of investing in
these individuals? Not just for the moral, social, feel-good
kind of thing, but making the business case for why this
actually will ensure that our communities are safer and you
have access to workers. But we are really relying on other
anecdotes from other employers. We are relying on the fact that
if you train them and provide them with the supports, quite
honestly it does not matter that you have a criminal background
because if you can get to work on time and if you have the
skills and the training that is necessary, all of that is
irrelevant outside of any regulatory challenges that are
presented with the criminal background.
Chairman Rubio. Mr. Cass, the strategy of productive
pluralism that you describe, I think it could have some
interesting implications for small business.
The primary focus of labor market policy is on connection.
That is what we made it, connecting workers, especially young
workers, to productive employment that is consistent and builds
skills. Then it seems like that might entail greater engagement
for small business and entrepreneurs.
I wonder if you could just discuss that because it sounds
to me like that is tailor-made for connecting workers to the
needs of small businesses, startup businesses, and unique
industries.
Mr. Cass. Yeah, I think that is right.
There are two things that I would say about the special
relevance to small businesses here. One is to recognize the
role that small businesses play in the ecosystem of a local
economy.
Dr. Stevenson rightly pointed out that a very small share
of overall employment is in manufacturer, for instance, but
when you step back and look at the ecosystem of a local
economy, what you tend to have is a few large employers, some
of whom need to actually be sending something out to the rest
of the world, and that then supports a much more robust and
vibrant service sector around it. So I always say we cannot all
serve each other coffee.
So to have a vibrant small business sector, it cannot
simply all be, for instance, child care providers providing
child care for each other. We need to make sure that the
economy is one in which the types of business that small
businesses are likely to engage in can still connect to larger
multinational, nationwide companies, and that is where a lot of
their growth and productivity gains are likely to come from. So
small businesses as kind of a key component of local economies
in particular is very important.
Then the second thing I would say--and this goes back to
what we were speaking about a moment ago with respect to
education--is that small businesses are in an especially tough
place when it comes to training. A small business might need to
hire one person every year or two. They cannot run a gorgeous
global training program with three off-sites a year for their
one worker per year. So for small businesses in particular, it
is really important to have structures at the local level that
allow multiple small businesses to come together to collaborate
with larger businesses, a little bit like Ms. York was
describing, where you design the curriculum. Maybe it is hosted
at the community college, and then all the small businesses
that need a particular skill set have access to those trainees.
So having small businesses be able to collaborate in that
respect is critical to having to be able to take on new
workers, where they are not going to be able to invest in a
full training program themselves.
Chairman Rubio. I also wanted to ask you about--it is
really impossible to talk about work today without automation,
and when people think of automation, they tend to think of a
robot or a computer that was going to replace their job
entirely.
I guess I can open this up to the entire panel.
I know you, Mr. Cass, have a different view on this.
Perhaps those of you have different views on it. But how should
workers understand both the challenge and the opportunity
embedded in automation and in technology, which does, as
always, create the potential of displacement, but it also
creates the potential of increased productivity and thereby
higher pay and new fields opening up?
You talk to people particularly in the small business
world, but even in larger firms, there is just a lot of fear
among workers that they are going to get replaced by a robot.
So what is the best way for us to focus on that, particularly
as it impacts entrepreneurship and startups?
Go ahead. I will just go from left to right.
Mr. Cass. Yeah. I will say one thing about it. I realize
the more I talk about this that we have a real problem that we
anthropomorphize robots, and so it sounds like it makes sense
to say a robot could take your job.
But a robot is just a new form of technology. You would
never say electricity took my job. That would sound ridiculous.
You would never say many of the sort of technological
breakthroughs that have made people more productive over time
took your job. It happens that the kinds of robots we are
picturing look more like a worker, but at the end of the day,
the effect is the same.
As Dr. Stevenson said, rarely do they actually replace the
person. They replace some portion of the person's tasks, and so
the key is going to be for workers to collaborate with
technology and to recognize that the technology is what makes
the worker more productive.
I think the one other thing we could focus on as we talk
about it and as policymakers talk about it is to realize that
workers are actually the constraints on how quickly we can
deploy technology.
When we talk about these jobs that we cannot find the
worker for the job or we say jobs are going to change in these
ways and workers are going to have to catch up, that is not
actually true. Jobs can only change as quickly as we have
workers to fill them, and one way of understanding the skills
gap and these other challenges we have right now is that
businesses have designed processes and tried to deploy
technologies for which the workforce is not ready.
So one effect of that is that is going to slow down the
rate at which automation actually happens, but a second is to
reconfirm the fact that this is going to accrue to the benefit
of workers and really finding ways to design technology for the
workers we have and equip workers to work with that technology
is going to be the secret sauce for a labor market that
thrives.
Mr. Lettieri. Count me in as an automation apocalypse
skeptic. I do not think there is evidence to back up many of
the concerns that we often hear thrown around about the rise of
automation as it relates to replacing workers.
To Oren's point, there are very few jobs that can actually
be replaced in full by a robot of any form.
I think the key is that we are missing the kind of safety
net that robust business dynamism used to provide. We have
always had industries and jobs being phased out of our economy.
That has always been true. Productivity gains, by definition,
are displacing of some future potential worker as we get more
efficient at doing certain things.
The difference is we have not felt that in previous eras
because we have had a more robust firm entry that has caught
more of those being left out of certain jobs or taken out of
certain industries and brought them back into productive use.
So areas of the country that are particularly un-dynamic
are the ones not with high death rates of firms, but of
incredibly low birth rates of firms. That is what is missing.
One of the major things that is missing I think as we think
about the worker piece of all this, we need to think about the
entrepreneur as well. Incumbent businesses tend to shed jobs on
net every year as a whole, of any size, and so where we get net
job creation is disproportionately from new businesses. When
that fades--that is the engine of job creation--that is the
missing safety net for workers.
Ms. Stevenson. So my testimony focused much on this because
this is something that I am thinking a lot about, and as has
been repeated, the idea that automation does not take jobs. It
takes tasks.
But that creates an enormous opportunity for us to create
jobs that are more meaningful, and this is one of the things I
am looking at in my research. It is which are the tasks that
are being taken, and are they the tasks we like to do or the
tasks we do not like to do?
In the past, what has happened with technological changes,
our jobs have gotten better. We have seen an increase in job
satisfaction. We like the stuff that we are able to do more.
I certainly know that my job being a university professor
is something that is much more common today because of all the
technological change that has come before, and I like my job a
lot more than I would have liked working in an agricultural
field.
So there is a lot of promise that comes from this, but I do
think it is worth keeping in mind that there is a lot of
disruption. When I go to conferences on AI, I will tell you
that I am shocked at how fast the technology is moving.
I agree very much with Oren Cass that we can only move as
fast as our workers are ready for us to move. So there is a
real limit that comes from our workers, but the technology is
moving quite rapidly. And we need to make sure that our workers
can keep up. It is one of the reasons why I have such concern
that in the race between technology and education, technology
seems to be racing in front of education, and I think we need
to correct that problem, quite rapidly.
I do want to emphasize that these kinds of technological
changes, this AI, is going to allow us to produce services that
are more tradeable. So the idea that--when we hear services,
you think cup of coffee. I think that is not the right way to
think about it. The U.S. is really succeeding with a lot of
trade and business services that are a really important source
of not just international trade for us, but, of course, cross-
national boundary trade.
Remote work is allowing people to live in places that they
could not have lived having the kind of job that they were
having before. So technology will create a lot of
opportunities. We need to make the space for it to happen, not
try to get in the way of it, and then help make sure that the
prosperity that comes from it is shared, so that lots of
workers are able to benefit from this change and not just the
few owners of--the people who own the technology.
The anecdote I always like to tell people is I had a long
conversation once with an Uber driver who told me that he
thought self-driving cars were the worst thing in the entire
world, and toward the end of 20 minutes of him railing against
how terrible self-driving cars are, I asked him, ``What if you
owned the car? What if you were the one sending it out to do
your work and you could stay home?'' And, all of a sudden, his
attitude toward self-driving cars changed a lot.
So the real question about this technology is not going to
be that it replaces workers. It is going to be about who owns
it.
Ms. York. I have nothing else to add to the remarks of my
eloquent panel, besides that absolutely for workforce
advocates, we are looking at how we can use these opportunities
to turn them into training opportunities for workers, but we
are also struggling because we also like self-checkouts at the
grocery store but also know that that is taking real jobs away
from real people. So how do you balance efficiency and easy
access and quickness with ensuring that folks are able to still
be employed and have good jobs?
Chairman Rubio. Do you have something?
Senator Cardin. Just two quick observations. One, as you
point out, innovation is where job growth will take place and
good jobs will take place, whereas where we started because
innovation occurs much more frequently among small businesses
than large businesses. So our tools to preserve a healthy small
business community very much is part of having the type of
economy we need and the type of jobs that we want. So I would
just make that--sort of bring this together.
The second observation is on these tax credits. We
recognize that the labor market changes at times. So there are
different periods in which employers have different incentives.
But I can tell you as one of the champions of the Work
Opportunity Tax Credit and having talked to a lot of employers
who have used the Work Opportunity Tax Credit, there is a
higher risk factor by those employers, and it has to be
compensated somehow.
We can talk about getting good workers, as we all want, but
we know that our workforce programs are not equitably
distributed, particularly people coming off of welfare,
returning citizens, and people who are unemployed. If you are
an employer and you have a choice between trying to take
someone who currently has a job or somebody who is unemployed,
there is a natural bias in favor of someone who is already
employed. So long-term unemployed individuals have a much more
difficult time in getting the attention. And the Work
Opportunity Tax Credit has compensated for that, and it has
worked very well over time.
I just really want to put that on the record because there
was some conversation about the values of tax credits or
compensation issues, and I certainly understand that
discussion. And we really need to focus on what is the right
policy, but I do believe that our current tool of the Work
Opportunity Tax Credit is one that has worked well and is very
valuable.
Chairman Rubio. I want to thank all four of you for being
here and all the members that attended. This is really
meaningful to us for two reasons. One is the jurisdiction of
this Committee, small business and entrepreneurship, and it is
important to mention those two because they are not always--the
focus of small business, obviously we have oversight
responsibility over the Small Business Administration, and we
are going to be undertaking the task, I hope, of reauthorizing
it because it gives us the chance to help modernize its
programs to deal with some of the things we are taking
testimony on.
And on the entrepreneurship side, the notion that we want
to continue to be an economy in a society in which new business
and new idea are being pursued, and in many ways, technology is
intimidating to people, but it also has lowered the barrier to
entry in a lot of fields.
It used to be that in order to have a business, you had to
have a big marketing department. You had to have people you
could send out to find customers. Today, a small business is
everything from an Uber driver who is an independent contractor
to someone selling things online, and they do not have a
massive sales force. So technology has empowered entry into the
marketplace that would not have been there.
It has actually, in many ways, opened up entrepreneurship,
access to markets, but it also has lowered the barriers to
entry in a business that you would normally need more
traditional constructs around in order to pursue.
So these are the kinds of things that we need to be
thinking about as we not just try to reauthorize and modernize
SBA, but writ large public policies that help incentivize all
of this.
So, again, we are grateful to you for your time, for your
forward-thinking ideas across the board on strengthening the
Nation's labor markets, which I think go hand in hand with
enhancing small business dynamism and entrepreneurship.
The record for this hearing is going to remain open for 2
weeks, and if there are any statements or questions for the
record by any of the members, they should be submitted by
Wednesday, March 20th, at 5:00 p.m.
With that, thank you again. This hearing is adjourned.
[Whereupon, at 4:09 p.m., the Committee was adjourned.]
APPENDIX MATERIAL SUBMITTED
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
[all]
| MEMBERNAME | BIOGUIDEID | GPOID | CHAMBER | PARTY | ROLE | STATE | CONGRESS | AUTHORITYID |
|---|---|---|---|---|---|---|---|---|
| Cantwell, Maria | C000127 | 8288 | S | D | COMMMEMBER | WA | 116 | 172 |
| Cardin, Benjamin L. | C000141 | 8287 | S | D | COMMMEMBER | MD | 116 | 174 |
| Hirono, Mazie K. | H001042 | 7913 | S | D | COMMMEMBER | HI | 116 | 1844 |
| Risch, James E. | R000584 | 8274 | S | R | COMMMEMBER | ID | 116 | 1896 |
| Coons, Christopher A. | C001088 | 8297 | S | D | COMMMEMBER | DE | 116 | 1984 |
| Young, Todd | Y000064 | 7948 | S | R | COMMMEMBER | IN | 116 | 2019 |
| Scott, Tim | S001184 | 8141 | S | R | COMMMEMBER | SC | 116 | 2056 |
| Paul, Rand | P000603 | 8308 | S | R | COMMMEMBER | KY | 116 | 2082 |
| Rubio, Marco | R000595 | 8242 | S | R | COMMMEMBER | FL | 116 | 2084 |
| Duckworth, Tammy | D000622 | S | D | COMMMEMBER | IL | 116 | 2123 | |
| Booker, Cory A. | B001288 | S | D | COMMMEMBER | NJ | 116 | 2194 | |
| Ernst, Joni | E000295 | S | R | COMMMEMBER | IA | 116 | 2283 | |
| Kennedy, John | K000393 | S | R | COMMMEMBER | LA | 116 | 2303 | |
| Rosen, Jacky | R000608 | S | D | COMMMEMBER | NV | 116 | 2339 | |
| Hawley, Josh | H001089 | S | R | COMMMEMBER | MO | 116 | 2464 | |
| Romney, Mitt | R000615 | S | R | COMMMEMBER | UT | 116 | 2466 | |
| Inhofe, James M. | I000024 | 8322 | S | R | COMMMEMBER | OK | 116 | 583 |
| Markey, Edward J. | M000133 | 7972 | S | D | COMMMEMBER | MA | 116 | 735 |
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