The Small Business Workforce Challenge: Causes, Impacts, and Solutions — Rachel Greszler, U.S. Senate (June 8, 2022)
- Issuer
- Congressional materials
- Date
- 2022-06-08
Summary
Written testimony titled The Small Business Workforce Challenge: Causes, Impacts, and Solutions, delivered by Rachel Greszler, a senior research fellow at The Heritage Foundation, before the U.S. Senate Committee on Small Business and Entrepreneurship on June 8, 2022. The testimony addresses three small business concerns it identifies: inflation, the labor shortage, and the skills and education gap. It cites an 8.3 percent annual inflation figure for April 2022 and argues that federal COVID-19 spending, including the $1.9 trillion American Rescue Plan Act, regulations and energy policy contributed to inflation. On the labor shortage it cites 11.4 million job openings and argues that welfare-without-work policies reduced willingness to work. It closes with recommendations to cut federal spending, remove barriers to work and replace federal job-training programs with employer-driven ones.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“The Small Business Workforce Challenge: Causes, Impacts, and Solutions — Rachel Greszler, U.S. Senate (June 8, 2022).”
Dated 2022-06-08. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2022-06-08-greszler-testimony/
, SHA-256 49c3c851c2e7856fad93b228ed081590d18b7080adf45e00c0a81ee298ca6a71.Full text
The Small Business Workforce Challenge:
Causes, Impacts, and Solutions
Testimony before the
Committee on Small Business and Entrepreneurship
U.S. Senate
June 8, 2022
Rachel Greszler
Senior Research Fellow in Economics, Budgets, and Entitlements
The Heritage Foundation
My name is Rachel Greszler. I am senior is the unprecedented labor shortage. The
research fellow in Economics, Budgets, and workforce is interconnected to what has
Entitlements at The Heritage Foundation. The recently become small business owners’—and
views I express in this testimony are my own most ordinary Americans’—biggest concern:
and should not be construed as representing any inflation. Thus, my testimony today will
official position of The Heritage Foundation. address three primary small business concerns:
(1) inflation, (2) the labor shortage, and (3) the
The Biggest Struggles of Small skills and education gap. I examine the causes
Business: Inflation, Labor Shortage, and impacts of each of these struggles
and Skills and Education Gap separately, but, as the issues are in many ways
interconnected, the final section on solutions
Workforce issues have been a primary concern pools the many policy recommendations
for small businesses over at least the past four together.
years. According to the National Federation of
Independent Business (NFIB), business owners Inflation Overview
reported labor quality as their single most
important problem every month between 2018 Inflation is at 40-year highs, with the latest
and 2021, with the exception of April and May April 2022 figure showing an 8.3 percent
2020 during the widespread COVID-19 increase over the past year. Food prices are up
shutdowns. Included in those workforce issues 9.4 percent while energy prices have surged
30.4 percent. 1 Advance economic indicators, Most notably, Congress passed the $1.9 trillion
such as shrinking inventories after adjusting for American Rescue Plan Act (ARPA) more than
inflation, indicate additional inflation a year after the pandemic began and when the
headwinds. economic recovery was already well
underway. Less than 10 percent of the bill went
According to the NFIB, 32 percent of business towards public health. The bulk of the bill went
owners said that inflation was their single most towards welfare expansions that exacerbated
important problem in May 2022. 2 That the labor shortage, bailouts that incentivize
compares to 3 percent in January 2021, and an reckless behavior at taxpayers expense, 5
average of 3 percent over the 35 years prior to giveaways to state and local governments that
2021.3 were already abundant in revenues, and $1,400
stimulus checks that further increased the gap
Inflation Causes and Impacts between demand and supply—and the value of
which has since been entirely erased by
Inflation is caused by too many dollars chasing spending-induced inflation. 6 Larry Summers,
too few goods. The federal government— chairman of President Obama’s National
including the Administration, Congress, and Economic Council expressed his concerns that
the Federal Reserve, are primarily to blame for the ARPA was so costly that it could backfire
this predictable inflation. and hurt the economy. He was right.
Federal Spending Spree. The federal The Administration’s proposal to fight
government has authorized more than $6 inflation by spending more money—including
trillion for COVID-19 packages—the things like “forgiving” debts owed by the most
equivalent of more than $50,000 for every U.S. affluent Americans—and growing the size of
household. In response, the Federal Reserve government is perverse. Jimmy Carter realized
has purchased more than $3 trillion in that, and after years of presiding over high
government bonds, and trillions more in other inflation came up with a plan to reduce it:
assets by printing money, spurring a nearly 50 restrict federal spending, reduce the budget
percent expansion in the money supply, which deficit, cut the federal workforce and eliminate
has grown more over the past two years than it government waste, get rid of needless
did over the prior 10 years.4
1U.S. Bureau of Labor Statistics, “Consumer Price Commentary, May 16, 2022,
Index Summary,” Economic News Release, May 11, https://www.heritage.org/budget-and-
2022, spending/commentary/three-things-congress-can-
https://www.bls.gov/news.release/cpi.nr0.htm do-get-serious-inflation
(accessed June 6, 2022). 5 Rachel Greszler, “What Taxpayers, Workers, and
2William C. Dunkelberg, “NFIB Jobs Report: Over Retirees Need to Know About the Union Pension
Half of Small Businesses Have Unfilled Job Bailout That Has Nothing to Do with COVID-19,”
Openings,” National Federation of Independent Heritage Foundation Issue Brief No. 6059, February
Business, May 2022, 26, 2021,
https://www.nfib.com/foundations/research- https://www.heritage.org/sites/default/files/2021-
center/monthly-reports/jobs-report/ (accessed 02/IB6059.pdf
June 3, 2022). 6David Ditch, “Eight Things You Must Know About
3Data available for download from: NFIB Research Deeply Flawed COVID-19 Package,” Heritage
Foundation, http://www.nfib-sbet.org/indicators Foundation Commentary, February 22, 2021,
(accessed June 4, 2022). https://www.heritage.org/budget-and-
4Joel Griffith, “Three Things Congress Can Do to Get spending/commentary/8-things-you-must-know-
Serious on Inflation,” Heritage Foundation about-deeply-flawed-covid-19-package
2
regulations, and bring back competition to the The Environmental Protection Agency and
American economy.7 Transportation Department are finalizing
fuel-economy standards on cars and
The Administration’s War on Conventional heavy-duty trucks that are so stringent they
Fuels and Affordable Energy. On the make it nearly impossible for a
presidential campaign trail, candidate Joe conventional gasoline- or diesel-powered
Biden promised voters, “Look into my eyes: I vehicle to comply by the end of the decade.
guarantee you we’re going to end fossil fuels.” Less obvious are scores of regulations that
Within his first month in office, President will increase the costs of everyday energy-
Biden instituted a “moratorium” on energy consuming products such as kitchen stoves
production in Alaska and a “pause” on federal and ovens, washing machines and dryers,
lands and waters—despite clear directions to water heaters, lightbulbs, ceiling fans,
the contrary from Congress. This was only the dehumidifiers, dishwashers, microwaves,
start of the Administration’s inflationary and furnaces.9
energy agenda. As my Heritage colleague
Katie Tubb has explained, In addition to higher energy costs, the
Administration’s agenda is driving down the
[T]he administration continues to push value of Americans’ savings and retirement
policies that frustrate future oil, coal, and accounts by allowing fiduciaries that are
natural gas exploration, production, supposed to act in the best interests of investors
distribution, and investment, even as it to sacrifice higher returns in exchange for
saps taxpayers to boost subsidies for funding radical environmental, social, and
renewable energy R&D, investment, governance agendas.
manufacturing and production, and
infrastructure.8 Onslaught of New Regulations Limiting
Output, Increasing Costs.10 During President
President Biden’s actions to remove helpful Biden’s first year in office, his Administration
federal permitting reforms and his “social pushed through more major regulations—69 in
cost of carbon” shadow carbon tax enforced total—than any other President in modern U.S.
by regulators instead of legislators are also history, while publishing 72,000 pages of
driving up energy costs. Tubb goes on to agency notes, regulations, and executive
point out how the Biden Administration is orders. 11 The American Action Forum
subtly restricting the choices and increasing estimated that the Biden Administration’s
the costs of everyday consumer products: “year one” regulations added $201 billion in
regulatory costs and required 131 million hours
in new annual paperwork (the equivalent of
7Jimmy Carter, televised speech on Anti-Inflation 10Diane Katz, “The Biden Administration’s Radical
Program, delivered on October 24, 1978, available in Regulatory Agenda,” Heritage Foundation
text at: Backgrounder No. 3691, March 14, 2022,
https://www.pbs.org/wgbh/americanexperience/fe https://www.heritage.org/sites/default/files/2022-
atures/carter-anti-inflation/ (accessed June 7, 03/BG3691_0.pdf.
2022). 11Jonathan Ingram, “It’s Not Just Spending—Biden’s
8Katie Tubb, “Biden’s Energy Screw Up,” Washington Record Regulations Are Driving Inflation Too,” New
Examiner, March 31, 2022, York Post, May 23, 2022,
https://www.washingtonexaminer.com/restoring- https://nypost.com/2022/05/23/its-not-just-
america/faith-freedom-self-reliance/bidens-energy- spending-bidens-record-regulations-are-driving-
screw-up (accessed June 6, 2022). inflation-too/ (accessed June 4, 2022).
9Ibid.
3
65,500 full-time jobs filling out paperwork).12 and queer (LGBTQ+) persons, those of lower
And that is just the beginning, as the socioeconomic status, and youth.”14
Administration has dozens more major
regulations in the pipelines.13 Supply Chain Struggles. If companies cannot
get the goods they need, they cannot produce
Regulations disproportionately increase costs products and services. And longer wait times
for small businesses, because they do not have result in costly idle operations. Just one
as large a scale to spread the costs across and example I heard: is a grocery store owner can’t
they are less likely to have an in-house stock single-serve pudding in his store because
compliance team. The time that businesses the manufacturer cannot get the glue that seals
spend complying with regulations is time not the aluminum lid to the plastic pudding
spent on their core business functions, and the container.
money they spend paying lawyers,
implementing new workplace policies, altering Many government policies are causing and
or adding infrastructure, changing their exacerbating supply chain struggles. Crony
production processes, and filling out trade restrictions limit the supply and increase
paperwork gets passed on to customers through the costs of domestic shipping. Environmental
higher prices. regulations are increasing transportation costs
and limiting the supply of trucks (especially in
While most regulations go unnoticed by California, where environmental regulations
consumers as their costs are built into the prices prohibit a majority of trucks from entering the
and availability of the things they buy, the baby state).
formula shortage brings to light unnecessary
regulations and ineffective regulatory And union chokeholds—emboldened by the
administration. Regulations that amount to “most pro-union Administration”—are
labeling preferences and a 60-day waiting clogging up supply chains. In the California
period for bringing new formula products to ports, for example, unions opposed 24–7
shelves are just two example of unnecessary operations that exist around the rest of the
regulations preventing otherwise safe baby world’s ports and they’ve fought against
formula from being available. Meanwhile, as automation to protect their six-figure blue-
the FDA waited months to address the collar jobs.
predictable shortage in many babies’ sole
nutrition, it was spending time proposing new Inflation Tax. While the median worker’s
regulations, such as a 56-page proposed rule to wages increased by $3,300 over the past year,
ban “characterizing flavors” in cigars in an inflation erased all of those gains and has left
effort to reduce cigar use among “racial/ethnic
minorities, lesbian, gay, bisexual, transgender
12Dan Goldbeck and Dan Bosch, “‘Year One’: No. 250, December 8, 2021,
Assessing the Biden Regulatory Record Against https://www.heritage.org/governmentregulation/r
Recent Administrations,” American Action Forum, eport/37-biden-administration-regulations-the-
January 20, 2022, pipeline-americans-should-know.
https://www.americanactionforum.org/research/y 14Department of Health and Human Services, “
ear-one-assessing-the-biden-regulatory-record- Tobacco Product Standard for Characterizing
against-recent-administrations/ (accessed June 4, Flavors in Cigars,” Proposed Rule, Federal Register,
2022). Vol. 87, No. 86 (May 4, 2022), pp. 26396–26452,
13Daren Bakst, ed., “37 Biden Administration
https://www.govinfo.gov/content/pkg/FR-2022-
Regulations in the Pipeline that Americans Should 05-04/pdf/2022-08993.pdf (accessed June 6, 2022).
Know About,” Heritage Foundation Special Report
4
the average worker $1,550 poorer. 15 For a Labor Shortage. Employment should have
typical household that spends about $61,000 a surged in 2021. A year’s worth of pent-up
year, the 8.3 percent inflation rate translates household savings due to COVID-19
into a $5,100 inflation tax.16 lockdowns, and trillions of dollars in new
federal spending enacted in the name of
Government Policies Holding Back Labor COVID-19 relief, massively increased the
Force Participation Are Driving Price demand for goods and services. Yet, as the
Increases. As discussed in more detail below, population ages 16 and above has grown by 4.1
government policies that restrict the supply of million, the U.S. economy has 822,000 fewer
workers require employers to increase jobs today than before the pandemic. 19
compensation to attract and retain the workers Economists have also noted a significant
they need. The U.S. Bureau of Labor Statistics decline in the desired hours of work, which has
(BLS) reports that labor costs make up more roughly doubled the magnitude of the labor
than 60 percent of the value of output produced force decline.20
in the nonfarm business sector. 17 Despite
record-high job openings, the labor force has Employers are struggling to get the workers
declined and is now 3.2 million below pre- they need with fewer workers and increased
pandemic rates.18 When employers have to pay demand caused by the surge in government
workers more to do the exact same thing, they spending. With 11.4 million job openings, 1.9
have to raise prices on their products and jobs are available for every unemployed
services. worker. 21 Labor shortages exist across all
industries and skill levels. According to the
Labor Shortage Overview NFIB’s May 2022 survey, a record-high 51
percent of employers reported job openings
The U.S. currently faces an unprecedented they could not fill. 22 Forty-two percent of
labor shortage that is adding to inflation and owners reported job openings for skilled
supply chain struggles, and making it harder for workers, and 25 percent reported openings for
small businesses to operate. unskilled workers.23
15News release, “Real Earnings—April 2022,” U.S. 19U.S. Bureau of Labor Statistics, “Databases, Tables
Bureau of Labor Statistics, May 11, 2022, & Calculators by Subject,” Monthly Employment and
https://www.bls.gov/news.release/pdf/realer.pdf Labor Force Data through May 2022,
(accessed June 4, 2022). https://www.bls.gov/data/home.htm (accessed
16U.S. Bureau of Labor Statistics, “Consumer June 3, 2022).
Expenditures in 2020,” BLS Report No. 1096, 20R. Jason Faberman, Andreas I. Mueller, and
December 2021, Ayşegül Şahin, “Has the Willingness to Work Fallen
https://www.bls.gov/opub/reports/consumer- During the Covid Pandemic?” NBER Working Paper
expenditures/2020/home.htm (accessed June 4, No. 29784, February 2022,
2022). https://www.nber.org/papers/w29784 (accessed
17U.S. Bureau of Labor Statistics, “Labor Productivity April 5, 2022).
and Costs,” Frequently Asked Questions 21News release, “Job Openings and Labor
https://www.bls.gov/lpc/faqs.htm (accessed Turnover—April 2022,” U.S. Bureau of Labor
December 14, 2021).). Statistics, June 1, 2022,
18U.S. Bureau of Labor Statistics, “Databases, Tables https://www.bls.gov/news.release/jolts.nr0.htm
& Calculators by Subject,” Monthly Employment and (accessed June 1, 2022).
Labor Force Data through May 2022, 22Dunkelberg, “NFIB Jobs Report: Over Half of Small
https://www.bls.gov/data/home.htm (accessed Businesses Have Unfilled Job Openings.”
June 3, 2022). 23Ibid.
5
High quit rates are contributing to workforce
struggles and higher costs as 51 million One possible reason for the decline in
workers—one in three—quit their jobs over the employment among 20- to 24-year-olds could
past year.24 Replacing a worker typically costs be that more of them are attending college, but
between six months and nine months of that according to the National Student
worker’s salary, and high quits rates reduce Clearinghouse Research Center, college
productivity.25 enrollment fell by 5 percent in 2020, and by
another 3.2 percent in 2021.29
Labor Shortage Demographics. At the
beginning of the pandemic, lower-wage Labor Shortage Causes and Impacts
workers, women who were caregivers, and
older workers with greater health risks were The pandemic itself is not weighing
more likely to have lost or dropped out of significantly on employment. Rather, many of
employment. Those trends have since shifted. the government policies enacted in response to
the pandemic have reduced workers’
Currently, young workers (ages 20 to 24) 26 willingness and capacity to work.
account for the largest employment decline.
While total employment is down by 440,000 Welfare-Without-Work Policies. Various
(–0.28 percent) since February 2020, government programs and policies enacted in
employment for individuals ages 20 to 24 is response to COVID-19 have made it easier for
down by 536,000 (–3.8 percent).27 Meanwhile, people not to work. A recent National Bureau
employment for teens (ages 16 to 19) is up by of Economic Research study found that the
174,000 (+3.2 percent), employment among pandemic unemployment insurance benefits
workers ages 25 through 54 is up by 386,000 significantly restricted employment. 30 (I also
(+0.38 percent), and employment for people estimate that at least $357 billion went to
ages 55 and older is down by 470,000 (–1.2 people who were not unemployed.) 31
percent).28 Moreover, ongoing expansions in Obamacare,
24U.S. Bureau of Labor Statistics, “Job Openings and into ages 55 through 64, and 65 and older, indicate
Labor Turnover Survey,” https://www.bls.gov/jlt/ that the entirety of the employment declines are
(accessed June 4, 2022). among individuals ages 65 and older.
25Lynchburg Regional SHRM, “Essential Elements of 29National Student Clearinghouse Research Center,
Employee Retention,” October 29, 2017, “Overview: Spring 2022 Enrollment Estimates,”
https://lrshrm.shrm.org/blog/2017/10/essential- https://nscresearchcenter.org/wp-
elements-employee-retention (accessed April 7, content/uploads/CTEE_Report_Spring_2022.pdf
2022). (accessed June 3, 2022).
26The seasonally adjusted data reported here are 30Harry J. Holzer, R. Glen Hubbard, and Michael R.
only available for the age group of 55 and older, but Strain, “Did Pandemic Unemployment Benefits
not seasonally adjusted data that are broken down Reduce Employment? Evidence from Early State-
into ages 55 through 64, and 65 and older, indicate Level Expirations in June 2021,” National Bureau of
that the entirety of the employment declines are Economic Research Working Paper No. 29575,
among individuals ages 65 and older. December 2021,
27U.S. Bureau of Labor Statistics, “Databases, Tables https://www.nber.org/papers/w29575 (accessed
& Calculators by Subject.” Note that employment February 5, 2022).
data, which includes demographic such as age, 31Rachel Greszler, “A Warning Against Embedding
comes from the household survey, which is separate Problematic Pandemic Unemployment Benefits,”
from the establishment survey that contains payroll Heritage Foundation Backgrounder No. 3637, July
jobs data. 13, 2021,
28The seasonally adjusted data reported here are https://www.heritage.org/sites/default/files/2021-
only available for the age group of 55 and older, but 07/BG3637.pdf.
not seasonally adjusted data that is broken down
6
rental assistance, and a 21 percent increase in Medicaid Services (CMS) COVID-19 vaccine
food stamps have made it easier not to work. mandate still applies to roughly 14 million
health care workers. This is almost certainly
As evidence of these welfare program effects, contributing to the outsized shortage of health
a measure called the reservation wage, which is care workers. Employment growth in health
the lowest wage at which individuals will care since vaccine mandates began around
accept a job, surged 26.4 percent between September 2021 has been less than half the rate
March 2020 and March 2021 for workers of total employment growth. Had the health
earning between $40,197 and $50,825. 32 The care sector experienced the same employment
reservation wage subsequently declined in the growth as the rest of the economy over the past
latter half of 2021 when the bonus eight months, there would be 263,000 more
unemployment insurance benefits ended, but health care workers today.35
then resurged in March at a level of $50,643.
Ongoing welfare benefits, along with the Worker Shortage Driving Up Wages
government-spending-spree-induced increase Creates Inflationary Cycle. In response to the
in demand, has almost certainly contributed to workforce shortage, employers have increased
this rise in workers’ reservation wages. compensation. In May 2022, 49 percent of
businesses reported that they increased
Vaccine Mandates. Various states, private compensation over the prior three months, and
businesses, and medical facilities began 25 percent said they plan to increase
implementing COVID-19 vaccine, or vaccine- compensation over the next three months.
and-testing, mandates in the late summer and Since labor accounts for 60 percent of the cost
fall of 2021. The Federal Reserve’s October of goods and services, when employers have to
2021 “Beige Book” noted that vaccine pay workers more to do the same thing, that
mandates were contributing to high turnover translates into higher prices for consumers.
and production slowdowns, and that impending Despite the fact that the median wage has
“federal vaccine mandates were expected to increased by $3,300 over the past year, the
exacerbate labor problems.” 33 An October average worker is $1,550 poorer in real terms
2021 “Vaccine Monitor” survey from the after accounting for inflation.36 This is creating
Kaiser Family Foundation reported that 5 an inflationary cycle in which employers have
percent of adults said they would leave their job to pay workers more to account for higher
if their employer required them to get a vaccine inflation, and then they have to increase prices
or get tested weekly, and that figure jumped to to account for higher wages.
9 percent if weekly testing was not an option.34
Government Attempts to Restrict
While some vaccine mandates have ended, the Independent Work Limit Labor Force and
federal government’s Centers for Medicare and Hurt Smaller Businesses. Independent
32U.S. Federal Reserve, Center for Economic Data, 28, 2021, https://www.kff.org/coronavirus-covid -
Survey of Consumer Expectations, Job Search 19/pollfinding/kff-covid-19-vaccine-monitor-
Survey, March 2022, available for download at october-2021/ (accessed October 31, 2021).
https://www.newyorkfed.org/microeconomics/dat 35U.S. Bureau of Labor Statistics, “Employment,
abank.html (accessed June 4, 2022). Hours, and Earnings from the Current Employment
33U.S. Federal Reserve, “The Beige Book,” October Statistics Survey,” https://www.bls.gov/data/
20, 2021, (accessed June 3, 2022).
https://www.federalreserve.gov/monetarypolicy/b 36U.S. Bureau of Labor Statistics, “Real Earnings
eigebook202110.htm (accessed June 6, 2022). News Release,” May 11, 2022,
34Liz Hamel et al., “KFF COVID-19 Vaccine Monitor: https://www.bls.gov/news.release/realer.htm
October 2021,” Kaiser Family Foundation, October (accessed May 13, 2022).
7
work—which includes contracting, politicians’ election outcomes). By definition,
freelancing, gig-work, and self-employment— independent workers choose to be their own
has become an increasingly popular form of bosses—they don’t want a union boss speaking
primary work and a new opportunity to earn for them or imposing rigid schedules and
additional or “on the side” income. Last year, collective compensation schemes on them.
59 million Americans participated in Restrictions on independent work will reduce
independent or freelance work.37 the number of people who can participate in the
labor force and limit Americans’ income
During the pandemic, it was a lifeline to many, opportunities.
with 12 percent of the entire workforce starting
freelancing in 2020. Independent work is Government Policies: Increasing
growing because people want it. They report Construction-Worker Shortages, Driving
greater work-life balance, less stress, and better Up Costs. In addition to the Davis Bacon Act
health, with the same, or higher, incomes.38 For that already drives up federal construction costs
many people, it is independent work or no by an estimated 9.9 percent, the Administration
work, as more than half of freelancers say they has imposed significant restrictions on work
are unable to work for a traditional employer. that receives federal contracting dollars.40 For
example, an executive order and the $1.2
Moreover, independent contractors are critical trillion Infrastructure Investment and Jobs Act
to small businesses that do not have the same require federal construction projects to include
scale as larger companies. Businesses with one project labor agreements, which effectively
to four employees use 6.7 contractors on means the work must be done by unionized
average.39 labor.41
Yet, the Administration and many lawmakers Yet, only 13.6 percent of construction workers
in Congress want to restrict independent work. are unionized. 42 Already, business owners in
The reason is that unions do not like the construction industry report the highest
independent work, since those workers are rates of job openings (with 59 percent having
harder to organize (and unions are key to liberal
37Adam Ozimek, “Freelance Forward Economists businesses-300775712.html (accessed June 5,
Report,” commissioned by Upwork, 2021, 2022).
https://www.upwork.com/research/freelance- 40James Sherk, “Repealing the Davis–Bacon Act
forward- Would Save Taxpayers $10.9 Billion,” Heritage
2021#:~:text=Upwork%E2%80%99s%202021%20 Foundation Web Memo No. 3145, February 14, 2011,
Freelance%20Forward%20survey%20confirms%2 http://thf_media.s3.amazonaws.com/2011/pdf/wm
0the%20finding.,the%20eight%20years%20that%2 3145.pdf.
0we%20have%20been%20surveying.?msclkid=af3 41The White House, “Executive Order on Use of
8e75aa94311eca0aa2072597d624b (accessed May Project Labor Agreements For Federal Construction
3, 2022). Projects,” February 4, 2022,
38FreshBooks, “Women in the Independent https://www.whitehouse.gov/briefing-
Workforce—2nd Annual Report, 2019,” room/presidential-actions/2022/02/04/executive-
https://www.freshbooks.com/press/data- order-on-use-of-project-labor-agreements-for-
research/women-in-the-workforce-2019 (accessed federal-construction-projects/ (accessed June 5,
June 6, 2022). 2022).
39“New Paychex Data Shows Independent 42U.S. Bureau of Labor Statistics, Economic News
Contractor Growth Outpaces Employee Hiring in Release, “Table 3. Union Affiliation of Employed
Small Businesses,” PR Newswire, January 9, 2019, Wage and Salary Workers by Occupation and
https://www.prnewswire.com/news-releases/new- Industry, 2020–2021 Annual Averages”
paychex-data-shows-independent-contractor- https://www.bls.gov/news.release/union2.t03.htm
growth-outpaces-employee-hiring-in-small- (accessed June 6, 2022).
8
openings they are unable to fill). 43 Spending left.” 46 My analysis of unpublished
hundreds of billions of dollars on new federal demographic data from the Bureau of Labor
construction projects will drive up construction Statistics finds that workers with young
projects across the country. Restricting the children make up only 16 percent of the total
supply of workers on federal contracts to fewer employment gap today. In fact, women with
than 14 percent of construction workers who children have experienced a significantly
are unionized will result in less work being smaller employment gap of –1.3 percent,
done at a higher cost for taxpayers. Already, 81 compared to the –3.0 percent gap among
percent of construction firms reported raising women without children.47
prices in April.44
Childcare is expensive and can be difficult to
Childcare Struggles Not Causing find, but a new federal childcare entitlement
Employment Declines; New Federal would drastically increase childcare costs and
Childcare Entitlement Will Drive Up Costs restrict the number of providers. 48 Taking
and Limit Access. Multiple economic studies money from some people and giving it to others
find that childcare is not the cause of to purchase a more expensive, government-
employment declines. A study by Jason controlled service does not qualify as reducing
Furman (former Chair of President Obama’s costs.
Council of Economic Advisers), Melissa
Kearney, and Wilson Powell III found that, It is especially perverse considering that the
“despite the widespread challenges that parents proposed childcare subsidies would
across the country have faced from ongoing disproportionately benefit high-income
school and daycare closures, excess parents: A couple making $343,600 in
employment declines among parents of young Washington, DC, would receive $30,300 in
children are not a driver of continuing low childcare subsidies for two children, while a
employment levels.”45 Claudia Goldin reported couple making $53,000 in Mississippi would
in a study that “the real story” is that receive $17,600, and a couple that chooses to
“employed women…were stressed because have one parent stay home would receive
they were in the labor force, not because they nothing. 49 Moreover, while the majority of
43News release, “New NFIB Report: Industry-Specific 47These demographic employment data come from
Small Business Economic Trends Survey,” National unpublished tabulations from the Current
Federation of Independent Business, May 18, 2022, Population Survey of the BLS. According to the BLS,
https://www.nfib.com/content/press- these data are based on a very small number of
release/economy/new-nfib-report-industry- observations and should be interpreted with extra
specific-small-business-economic-trends-survey/ caution. For further information on the CPS, see U.S.
(accessed June 4, 2022). Bureau of Labor Statistics, “Labor Force Statistics
44Ibid. from the Current Population Survey: Technical
45Jason Furman, Melissa Kearney, and Wilson Powell Documentation,”
III, “How Much Have Childcare Challenges Slowed http://www.bls.gov/cps/documentation.htm
the US Jobs Market Recovery?” Peterson Institute for (accessed January 31, 2022).
International Economics, May 17, 2021, 48Casey Mulligan, “Biden Would Make Daycare Even
https://www.piie.com/blogs/realtime-economic- More Expensive,” The Wall Street Journal, December
issues-watch/how-much-have-childcare-challenges- 9, 2021, https://www.wsj.com/articles/biden-
slowed-us-jobs-market (accessed June 6, 2022). would-make-daycare-even-pricier-child-care-cost-
46Claudia Goldin, “Understanding the Economic quality-regulation-build-back-better-11639084122
Impact of COVID-19 on Women,” NBER Working (accessed June 6, 2022).
Paper No. 29974, April 2022, 49 Rachel Greszler, “Government Childcare
https://www.nber.org/papers/w29974 (accessed Subsidies: Whom Will They Help Most?” Heritage
June 6, 2022). Foundation Issue Brief No. 5231, October 20, 2021,
9
parents who use childcare centers choose faith-
based centers, the proposed subsidies Education and Skills Gap: Causes and
specifically exclude faith-based providers.50 Impacts
Education and Skills Gap Overview Employers have the incentive to educate, or
upskill, workers. And colleges and universities
It is not just the quantity of labor that is lacking, should have the incentive to provide valuable
but also the quality. In 46 of 48 months and effective education at minimal cost. But
between 2018 and 2021, small business owners government policies are getting in the way.
noted labor quality as their single most Government subsidies for select higher
important problem (bested recently by education institutions drive up costs, distort
inflation). 51 Government interventions have college’s incentives to maximize value, and
distorted the higher education market, driving drive out more effective and lower-cost
individuals away from more effective and alternatives. And restrictions on apprenticeship
lower-cost education alternatives as college programs prevent more employer-led and
becomes more expensive and employers report industry-led education.
that graduates are often ill-prepared for the
workforce. Federal Subsidies for Higher Education
Crowd Out More Effective, Lower-Cost
Education plays a significant role in workers’ Alternatives. The federal government spends
future productivity. Although one data point is over $100 billion per year subsidizing select
not a trend, labor productivity fell 7.3 percent forms of higher education in the U.S.—namely,
in the first quarter of 2022—the fastest decline accredited colleges and universities. This has
in nearly 75 years. 52 While some temporary primarily served to drive up costs, with in-state
factors contributed to this decline, continued tuition and fees at public four-year universities
low levels of employment and inefficient nearly tripling between 1990 and 2020 as
education will reduce the rate of economic federal spending increased more than three-
growth, result in smaller real incomes and fold.53 A Federal Reserve Bank of New York
output, cause greater dependence on study found that each dollar in federally
government social programs, require higher subsidized loans that colleges receive leads to
levels of taxation, and exacerbate America’s a 60-cent increase in tuition.54 And tuition itself
already precarious fiscal situation. only accounts for about 40 percent of the total
https://www.heritage.org/sites/default/files/2021- https://www.bls.gov/news.release/prod2.nr0.htm
10/IB5231.pdf. (accessed June 6, 2022).
50Linda Smith, Sarah Tracey, and Ben Wolters, “Are 53Jennifer Ma, Matea Pender, and CJ Libassi, “Trends
Parents’ Child Care Preferences Changing? Overview in College Pricing and Student Aid 2020: Published
of BPC’s Parent Survey,” Bipartisan Policy Center, Tuition and Fees Over Time,” College Board, 2020, p.
February 24, 2021, 12, https://research.collegeboard.org/pdf/trends-
https://bipartisanpolicy.org/blog/are-parents- college-pricing-student-aid-2020.pdf (accessed June
child-care-preferences-changing-overview-of-bpcs- 6, 2022).
parent-survey/ (accessed June 6, 2022). 54David O. Lucca, Taylor Nadauld, and Karen Shen,
51Data available for download from: NFIB Research “Credit Supply and the Rise in College Tuition:
Foundation, http://www.nfib-sbet.org/indicators Evidence from the Expansion in Federal Student Aid
(accessed June 4, 2022). Programs” Federal Reserve Bank of New York Staff
52U.S. Bureau of Labor Statistics, “Productivity and Report No. 733, July 2015, revised February 2017, p.
Costs, First Quarter 2022, Revised,” Economic News 19,
Release, June 2, 2022, https://www.newyorkfed.org/medialibrary/media/
10
cost of college. The Urban Institute estimates Government subsidies have also distorted the
that, in addition to what students and families incentives for colleges to provide high-value
paid themselves, taxpayers spent $29,689 per education and for students to finish their
full-time student in 2019, with expenditures schooling on time. 58 Instructional staff now
ranging from a high of $51,338 per student in account for only 40 percent of full-time
Alaska to a low of $23,208 per student in employees at non-doctoral colleges, and a mere
Nevada.55 28 percent at doctoral universities.59 And fewer
than half of students earn a degree in the
A primary purpose of these subsidies is to expected four years, while only three in five
increase college access and graduation among earn a degree in six years.60
lower-income households. Yet, the subsidies
have disproportionately benefited upper- Enormous federal subsidies for higher
income households. In part, that is because education divert students and resources away
college subsidies are not available for students from more effective education alternatives that
who do not graduate high school. A study by could otherwise be flourishing. The Flatiron
Martha Bailey and Susan Dynarski finds that School and other bootcamp-style programs are
this explains half of the inequality in college teaching a growing number of people, many of
entry. 56 Moreover, Bailey and Dynarski find whom have no technical background, the skills
that, “Even if rates of college entry were they need to succeed in high-demand jobs, such
miraculously equalized across income groups, as data scientist, software engineer, and
existing differences in persistence would still cybersecurity engineer, in only 15 weeks. 61
produce large gaps in college completion” Many of these programs offer the option of an
because low-income students are less likely to income-share agreement (ISA) where the
complete college. 57 The share of low-income programs have a direct financial stake in
students entering but not completing college student achievement by allowing students to
increased from 14 percent in the early 1980s to defer paying tuition up front and instead pay a
20 percent in the early 2000s. small percentage of their post-graduation
salary for a fixed amount of time upon
graduation. 62 Under ISAs, Flatiron and its
research/staff_reports/sr733.pdf (accessed June 6, for Research on Equal Opportunity, March 5, 2021,
2022). https://freopp.org/why-college-is-too-expensive-
55Urban Institute, “State and Local Backgrounders: and-how-competition-can-fix-it-cb2eb901521b
Higher Education Expenditures,” (accessed May 13, 2022).
https://www.urban.org/policy-centers/cross- 60National Center for Education Statistics, Digest of
center-initiatives/state-and-local-finance- Education Statistics, 2021, Table 326.10, “Graduation
initiative/state-and-local-backgrounders/higher- rate from…”
education-expenditures (accessed April 7, 2022). https://nces.ed.gov/programs/digest/d21/tables/d
56Martha J. Bailey and Susan M. Dynarski, “Gains and t21_326.10.asp (accessed April 7, 2022).
Gaps: Changing Inequality in U.S. College Entry and 61Flatiron School, https://flatironschool.com/
Completion,” NBER Working Paper No. 17633, (accessed April 11, 2022).
December 2011, 62Liz Eggleston, “All About ISAs: Income Share
https://www.nber.org/system/files/working_paper Agreements and Deferred Tuition at Coding
s/w17633/w17633.pdf (accessed May 24, 2022). Bootcamps,” Course Report, updated March 30,
57Ibid. 2022,
58Bryan Caplan, The Case Against Education: Why the https://www.coursereport.com/blog/deferred-
Education System Is a Waste of Time and Money tuition-and-isas-at-coding-bootcamps (accessed
(Princeton, NJ: Princeton University Press, 2018). April 7, 2022).
59Preston Cooper, “Why College Is Too Expensive—
and How Competition Can Fix It,” The Foundation
11
competitors only get paid if their students land 2018, and Mazda tackled a skills gap by
a good job upon graduation, and they earn more educating thousands of new workers at its
when their students earn more. 63 These Alabama manufacturing plant.66
programs have a direct incentive to teach
students skills that are highly valued in the Walmart recently launched an education and
labor market, as opposed to the government training program—Live Better U (LBU)—with
spending tens of thousands of dollars per a $1 billion investment over the next five years.
university student whether he or she studies Lorrain Stomski, a senior vice president at
engineering, art history, or gender studies. Walmart explained: “Think about how COVID
has just accelerated the digital transformation
Employers Report: Higher Education Not for all companies. That produces new jobs, new
Adequately Preparing Workers, So They roles. So, we have to upskill our associates.”
Are Stepping Up. Even prior to the pandemic, LBU is tuition free and provides many
employers were already investing in their labor programs—ranging from foundational
force in alternative ways. In addition to programs like English as a Second Language
providing an estimated $90 billion per year for and High School Diplomas to short programs
education and training, some employers have like project management, to degree programs
started programs to educate workers from the in business, health, and technology, and college
ground up, often replacing the need for higher credits. The result has been tens of thousands
education. of participants learning valuable skills that
have translated into more promotions and pay
Employers are doing this because, as Apple raises, while the company has benefitted from
CEO Tim Cook has noted, colleges typically do reduced absenteeism and participants being
not teach the skills that businesses need most.64 less likely to leave the company.
Employers, on the other hand, are typically
more adept at providing timely and practical Government Monopoly on Apprenticeships
education to meet their needs. For example, Stifling Paid Education Opportunities. For
tech companies are creating their own roughly 80 years, the government’s Registered
certification programs and curricula based on Apprenticeship Program (RAP)—which
skills not degrees, such as Google Career requires conforming to government standards
Certificates, Amazon Technical Academy, and and includes federal funding, tax credits, and
IBM’s multiple training programs. 65 Bank of other federal resources—has dominated
America launched a Pathways Program in apprenticeship programs in the U.S. While this
63Mary Clare Amselem, “Income Share Agreements amazon-helps-employees-become-software-
Have the Potential to Revolutionize College engineers-in-9-months (accessed March 2, 2022),
Financing,” Heritage Foundation Issue Brief No. and Sonia Malik, “Start on the Path to Lifelong
4910, October 19, 2018, Learning and Employability with IBM,” IBM Training
https://www.heritage.org/education/report/incom and Skills Blog, June 1, 2021,
e-share-agreements-have-the-potential- https://www.ibm.com/blogs/ibm-training/start-
revolutionize-college-financing. on-the-path-to-lifelong-learning-and-employability-
64Nate Swanner, “Apple CEO Reminds Us Tech with-ibm/ (accessed April 11, 2022).
Degrees Aren’t Delivering Necessary Skills,” Dice 66Bank of America, “Career Development,”
Insights, March 11, 2019, https://careers.bankofamerica.com/en-us/join-
https://insights.dice.com/2019/03/11/tech- us/career-development (accessed April 5, 2022),
degrees-delivering-skills/ (accessed April 5, 2022). and TRANSFRVR, “Training the Next Generation of
65Amazon, “Amazon Helps Employees Become Workforce at Mazda Toyota Manufacturing,”
Software Engineers in 9 Months,” updated February https://resources.transfrvr.com/training-the-next-
2, 2022, generation-of-workforce-at-mazda-toyota-
https://www.aboutamazon.com/news/workplace/ manufacturing (accessed April 5, 2022).
12
model has been successful in some (IRAPs) which threaten to undermine
occupations, it has failed to meet the changing registered apprenticeship programs.”70
workforce needs as it is concentrated in only a
few industries. A report by Isabel Soto at the Yet, organizations across the political spectrum
American Action Forum notes that while the have noted the failure of RAPs to meet
health care sector accounts for six of 10 of the workforce demands, particularly due to their
most rapidly growing occupations, health care overly bureaucratic and burdensome nature. A
apprenticeships only make up 2.5 percent of 2021 Brookings Institution report noted that
RAPs.67 Moreover, while women make up 47 registered apprenticeships are concentrated in
percent of the labor force, they account for only legacy and historically male trades, and fail to
9 percent of all active federal apprenticeships.68 meet growing demands in the health care and
technology industries. The report noted the
To help to expand apprenticeship programs and overly onerous process for employers to
better align them with industry needs, the establish apprenticeship programs, concluding
Trump Administration created a new Industry- that “[a] robust apprenticeship system has the
Recognized Apprenticeship Program (IRAP). potential to increase earnings and reduce
IRAPs created an easier process for developing occupational segregation in the labor
apprenticeship programs, built on more market.”71
employer involvement, with a goal of reaching
more workers in high-demand industries. Even Federal Job Training Programs Have Been
without access to the federal funding that is Failures. The federal government spends
available to traditional RAPs, more than 130 billions of dollars each year on job-training
IRAPs were created (along with 27 Standards programs that fail to provide workers with
Recognition Entities to recognize and oversee education and experience that helps them to
them). 69 Most IRAPs were focused on find and retain jobs. Even a gold-standard
developing workers for the nursing profession, evaluation of the federal government’s
which faced shortages that have since been Workforce Investment Act, which is supposed
exacerbated by the pandemic. to provide training for in-demand services,
found that only 32 percent of participants found
Yet, the Biden Administration rescinded the occupations in their area of training and the
Trump Administration’s executive order that majority—57 percent—did not believe that
expanded apprenticeship programs and
directed the Department of Labor to reverse
“industry recognized apprenticeship programs
67Isabel Soto, “Industry Recognized Apprenticeship registered-apprenticeships/ (accessed April 8,
Programs and the Biden Administration,” American 2021).
Action Forum, April 6, 2021, 71Annelies Goger and Chenoah Sinclair,
https://www.americanactionforum.org/insight/ind “Apprenticeships Are an Overlooked Solution for
ustry-recognized-apprenticeship-programs-and- Creating More Access to Quality Jobs,” Brookings
the-biden-administration/ (accessed April 5, 2022). Institution blog, January 27, 2021,
68Ibid. https://www.brookings.edu/blog/the-
69Ibid. avenue/2021/01/27/apprenticeships-are-an-
70The White House, “Fact Sheet: Biden overlooked-solution-for-creating-more-access-to-
Administration to Take Steps to Bolster Registered quality-
Apprenticeships,” February 17, 2021, jobs/#:~:text=Apprenticeships%2C%20which%20c
https://www.whitehouse.gov/briefing- ombine%20on-the,%2C%20and%20problem-
room/statements-releases/2021/02/17/fact-sheet- solving%20skills (accessed April 7, 2022).
biden-administration-to-take-steps-to-bolster-
13
their training helped them to find and enable more efficient education and
employment.72 training, policymakers should:
Moreover, individuals receiving the full Reduce Government Spending. The federal
workforce training were less likely to obtain government spent 45 percent more in both
health insurance or pension benefits, their 2020 and 2021 than it did in 2019, all of which
households earned several thousand dollars was financed by adding to the federal debt. 74
less, and they were more likely to be on food The sooner Congress acts to reduce spending—
stamps than participants who received minimal most notably ending recent expansions and
services. The National Job Corps Study (an enacting entitlement reforms—the sooner
evaluation of the federal government’s primary consumers and small business owners will stop
youth job-training program) found that a experiencing declining real incomes.
federal taxpayer investment of $25,000 per Job
Corps participant resulted in participants being Reduce, Instead of Increase, Regulations
less likely to earn a high school diploma, no that already impose an estimated $2 trillion in
more likely to attend or complete college, and costs on the private sector, and which
earning only $22 more per week.73 disproportionately hurt small businesses and
start-ups.75
It is not surprising that federal job-training
programs are out of touch with the needs of Eliminate Tariffs. Congress could
employers in high-demand occupations, immediately reduce prices by eliminating
because politicians and bureaucrats can never tariffs on imports of steel and aluminum;
know businesses’ needs better than employers manufactured goods like cars, trucks, and parts;
themselves. washing machines; and chassis used in
transportation.76
Solutions for Small Businesses
Prevent Tax Increases. When employees and
To help reduce inflation, encourage more employers can keep more of what they earn,
people to pursue their productive capabilities, they will work more and put those higher
incomes toward productive activities.77
72Sheena McConnell et al., “Providing Public 75W. Mark Crain and Nicole V. Crain, “The Cost of
Workforce Services to Job Seekers: 15-Month Federal Regulation to the U.S. Economy,
Impact Findings on the WIA Adult and Dislocated Manufacturing and Small Business,” National
Worker Programs,” Mathematica, May 30, 2016, Association of Manufacturers, September 10, 2014,
https://mathematica.org/publications/providing- https://www.nam.org/wp-
public-workforce-services-to-job-seekers-15- content/uploads/2019/05/Federal-Regulation-Full-
month-impactfindings-on-the-wia-adult (accessed Study.pdf (accessed February 28, 2022).
April 4, 2022). 76Daren Bakst and Peter St. Onge, “Inflation:
73David B. Muhlhausen, “Job Corps: An Unfailing Policymakers Should Stop Driving It and Start
Record of Failure,” Heritage Foundation WebMemo Fighting It,” Heritage Foundation Special Report No.
No. 2423, May 5, 2009, 252, January 20, 2022,
https://www.heritage.org/jobsand- https://www.heritage.org/sites/default/files/2022-
labor/report/job-corps-unfailing-record-failure. 02/SR252.pdf.
74Joel Griffith, “Three Things Congress Can Do To Get 77Adam N. Michel, “The Tax Cuts and Jobs Act: 12
Serious On Inflation,” Heritage Foundation Myths Debunked,” Heritage Foundation
Commentary, May 16, 2022, Backgrounder No. 3600, March 23, 2021,
https://www.heritage.org/budget-and- https://www.heritage.org/taxes/report/the-tax-
spending/commentary/three-things-congress-can- cuts-and-jobs-act-12-myths-debunked.
do-get-serious-inflation.
14
Enable Greater Natural Wage Increases. Protect the Franchising Pathway to
Policymakers should eliminate double taxes on Entrepreneurship. Congress should codify
investments that boost productivity and in law the longstanding precedent, and
wages.78 practical reality, that an individual’s
employer is the one who hires, oversees, and
Make Welfare Work Better Through Work- pays her: the franchise owner.
Oriented Programs. The goal of welfare Prioritize Workers’ Choices About
programs should be to help people achieve Unionization. Congress should prioritize
independence and to break intergenerational workers’ choices and respect unions’
cycles of poverty, including ending COVID-19 resources by simultaneously getting rid of
welfare expansions and including work
forced unionization laws and “exclusive
requirements. representation” laws (which require unions to
represent non-union workers) so that workers
Protect Independent Work. Congress should do not have to pay for representation they do
clarify the test for independent contractor status not want, and unions do not have to use their
under the Fair Labor Standards Act, the resources to represent workers who do not
National Labor Relations Act, and the tax code pay union dues.
based on the “common law” test that
determines how much control an employer Repeal the Davis–Bacon Act and End
exerts over a worker. This would particularly Project Labor Agreement Requirements in
benefit small businesses, which Repeal Laws Requiring Inflated Federal
disproportionately rely on contractors, and Construction Costs. To reduce taxpayers’
individuals who need or want more flexible and costs and prevent further construction price
autonomous work. increases in the private sector, Congress
should repeal the Davis–Bacon Act 79 and
Eliminate Social Security’s Retirement repeal Project Labor Agreement requirements
Earnings Test. Social Security’s in federal construction projects.
misunderstood earnings test is perceived by
workers as a 50 percent tax on their earnings, Expand Accessible, Affordable Childcare.
which causes people to work less, and thus earn Congress should allow parents to use federal
less, than they otherwise would. Policymakers childcare subsidies and Head Start funds at a
should end this paternalistic and economically provider of their choice.80
detrimental policy so that older Americans are
not discouraged from working and earning Remove Barriers to Work and Flexibility.
more. Congress should enact the Working Families
Flexibility Act so that lower-wage workers can
choose to accrue paid time off, and also remove
an unintentional barrier in the Fair Labor
78Jamie Bryan Hall and Mary Clare Amselem, “Time https://www.washingtontimes.com/news/2021/ap
to Reform Higher Education Financing and r/5/why-congress-must-cancel-the-davis-bacon-
Accreditation,” Heritage Foundation Issue Brief No. act/ (accessed January 10, 2022).
4668, March 28, 2017, 80Rachel Greszler and Lindsey M. Burke, “Rethinking
https://www.heritage.org/education/report/time- Early Childhood Education and Childcare in the
reform-higher-education-financing-and- COVID-19 Era,” Heritage Foundation Backgrounder
accreditation. No. 3533, September 30, 2020,
79Rachel Greszler, “Why Congress Must ‘Cancel’ the https://www.heritage.org/sites/default/files/2020-
Davis–Bacon Act,” The Washington Times, April 5, 09/BG3533.pdf.
2021,
15
Standards Act that makes it harder for The U.S. Department of Education should stop
businesses to offer child care benefits.81 adding gasoline to the fire and allow private
financial institutions to pick up any gap in new
Abandon Federal Vaccine Mandates. Since loans and financial aid.
COVID-19 vaccine mandates began, health
care employment growth has lagged behind Prohibit Blanket Student Loan
total employment growth by 263,000 workers. “Forgiveness.” Congress should immediately
The federal government should abandon the prohibit the Biden Administration’s pending
CMS mandate and allow health care providers proposal for blanket student-loan forgiveness,
to set their own vaccination policies, based on which would be inflationary, morally
the simultaneous goals of providing safe hazardous, regressive, and tip the scales away
environments and ensuring access to quality from more effective education alternatives.
care.
Expand Apprenticeship Programs by
Replace Failed Federal Job-Training Ending the Government Monopoly. A 2017
Programs with More Effective Private and study by Harvard Business School and Burning
State or Local Programs. The federal Glass Technologies estimated that the number
government has a terrible track record on job- of occupations commonly filled through
training programs. Instead of wasting taxpayer apprenticeships could nearly triple (from 27 to
dollars and workers’ time on failed federal job- 74), that the number of job openings filled
training programs, policymakers should allow through apprenticeships could expand eight-
workers to benefit from more effective fold (to 3.2 million), and that the occupations
employer-provided programs. 82 ripe for apprenticeship expansion could offer
20 percent higher wages than traditional
Phase Out Federal Subsidies for Higher apprenticeship occupations.83
Education to Unleash More Effective,
Lower-Cost Alternatives. Federal subsidies The Training America’s Workforce Act would
for higher education inflate total costs, drive up end the government monopoly on Registered
tuition, suppress more effective education Apprenticeships by directing the U.S.
alternatives, and have failed to expand lower- Department of Labor (DOL) to revive IRAPs
income Americans’ share of college graduates. so that DOL-approved entities, such as trade
81Under the Fair Labor Standards Act (FLSA), 82In the case of federal job-training programs used
employers who provide any kind of onsite childcare as part of work requirements in means-tested aid
or childcare subsidies must include the value of programs, such as TANF, food stamps, and housing,
those benefits in employees’ “regular rate” of pay a pay-for-outcomes model should be applied. See
calculations. This complicates and increases costs Leslie Ford and Robert Rector, “Pay-for-Outcomes:
when workers who receive hourly wages work Transforming Federal Social Programs to Expand
overtime because, instead of just paying the worker Individual Well-Being,” Heritage Foundation
1.5 times the wage, employers have to add on 1.5 Backgrounder No. 3550, November 5, 2020,
times the hourly value of any childcare subsidy, https://www.heritage.org/sites/default/files/2020-
even though those subsidies are usually fixed 11/BG3550.pdf.
benefits. Policymakers should exclude childcare 83Joseph B. Fuller and Matthew Sigelman, “Room to
benefits from the “regular rate” of pay calculations, Grow: Identifying New Frontiers for
just as the law already excludes similar benefits, Apprenticeships,” Harvard Business School and
such as retirement contributions, and accident, Burning Glass Technologies, November 2017,
health, and life insurance benefits. This would https://www.hbs.edu/managing-the-future-of-
particularly benefit lower-income to middle-income work/Documents/room-to-grow.pdf (accessed April
workers who are more likely to receive hourly 7, 2022).
wages.
16
associations and educational institutions, could
recognize and oversee apprenticeship
programs.84
Summary
The U.S. is experiencing a labor shortage
unlike any before in U.S. history. Despite high
demand for goods and services, small
businesses are struggling with high inflation
and a lower quantity and quality of workers
than they need.
The federal government bears primary
responsibility for many of these struggles, as it
has fueled inflation, discouraged work, and
continues to distort the higher education
market. Government solutions should be to
remove problematic government policies and
practices, instead of doubling down with even
more federal spending, more regulation, and
new government programs.
To reduce inflation, federal policymakers
should immediately reduce federal spending
and reform entitlement programs, eliminate
needless regulations, and stop fueling higher
housing costs.
Policymakers should remove barriers that are
contributing to the nationwide labor shortage,
such as welfare-without-work programs,
vaccine mandates, excessive labor regulations,
and restrictions on individuals’ ability to work
in the ways that work best for them.
And, to address the growing skills and
education gap, policymakers should phase out
federal interventions in higher education, end
the government’s monopoly on apprenticeship
programs, and replace federal job-training
programs with employer-driven programs.
84News release, “Thune, Scott Introduce Legislation https://www.thune.senate.gov/public/index.cfm/pr
to Combat Workforce Challenges,” John Thune, U.S. ess-releases?ID=EC0FC336-7A34-4B44-BE1E-
Senator for South Dakota, March 7, 2022, 8D987CA1E7FD (accessed April 7, 2022).
17
********************************************************************************
The Heritage Foundation is a public policy, research, and educational organization recognized as exempt
under section 501(c)(3) of the Internal Revenue Code. It is privately supported and receives no funds from
any government at any level, nor does it perform any government or other contract work.
The Heritage Foundation is the most broadly supported think tank in the United States. During 2020, it had
hundreds of thousands of individual, foundation, and corporate supporters representing every state in the U.S.
Its 2020 operating income came from the following sources:
Individuals 66%
Foundations 18%
Corporations 2%
Program revenue and other income 14%
The top five corporate givers provided The Heritage Foundation with 1% of its 2020 income. The Heritage
Foundation’s books are audited annually by the national accounting firm of RSM US, LLP.
Members of The Heritage Foundation staff testify as individuals discussing their own independent research.
The views expressed are their own and do not reflect an institutional position of The Heritage Foundation or its
board of trustees.
18
File and source
- File
- Greszler_Testimony.pdf
- Size
- 453,952 bytes
- SHA-256
- 49c3c851c2e7856fad93b228ed081590d18b7080adf45e00c0a81ee298ca6a71
- Our copy
- Greszler_Testimony.pdf
- Original
- No public link identified.