The Small Business Workforce Challenge: Causes, Impacts, and Solutions (Senate Small Business Committee hearing, June 8, 2022)
Summary
Printed record of the Senate Committee on Small Business and Entrepreneurship hearing of June 8, 2022, The Small Business Workforce Challenge: Causes, Impacts, and Solutions, S. Hrg. 117–327. Chairman Benjamin L. Cardin and Ranking Member Rand Paul gave the opening statements. Witnesses were Dr. Annelies Goger of The Brookings Institution; Rachel Greszler of The Heritage Foundation; John Arensmeyer, founder and CEO of Small Business Majority; and Michael Faulkender, Dean's Professor of Finance at the University of Maryland and visiting fellow at the America First Policy Institute. The appendix adds statements from Senator Risch and from Phillip Crosby of Dan-O's Seasonings, and responses to questions from Senators Hirono and Risch. Cardin closed on levelling the playing field and on the role of resource partners; the Committee adjourned at 3:52 p.m.
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“The Small Business Workforce Challenge: Causes, Impacts, and Solutions (Senate Small Business Committee hearing, June 8, 2022).”
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S. HRG. 117–327
THE SMALL BUSINESS WORKFORCE CHALLENGE:
CAUSES, IMPACTS, AND SOLUTIONS
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
JUNE 8, 2022
Printed for the Committee on Small Business and Entrepreneurship
(
Available on: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
48–247 PDF WASHINGTON : 2022
COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
SEAN MOORE, Democratic Staff Director
WILLIAM HENDERSON, Republican Staff Director
(II)
C O N T E N T S
OPENING STATEMENTS
Page
Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland .............. 1
Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky .................. 3
WITNESSES
Goger, Dr. Annelies, Ph.D., Fellow, The Brookings Institution, Washington,
DC .......................................................................................................................... 4
Greszler, Ms. Rachel, Senior Research Fellow, The Heritage Foundation,
Washington, DC ................................................................................................... 14
Arensmeyer, Mr. John, Founder and CEO, Small Business Majority, Wash-
ington, DC ............................................................................................................. 34
Faulkender, Hon. Michael, Ph.D., Dean’s Professor of Finance, University
of Maryland, Visting Fellow, America First Policy Institute, College Park,
MD ......................................................................................................................... 42
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Arensmeyer, Mr. John
Testimony .......................................................................................................... 34
Prepared statement .......................................................................................... 36
Responses to questions submitted by Senator Hirono ................................... 69
Cardin, Hon. Benjamin L.
Opening statement ........................................................................................... 1
Crosby, Mr. Phillip, CEO, Dan-O’s Seasonings
Statement dated June 8, 2022 ......................................................................... 65
Faulkender, Hon. Michael
Testimony .......................................................................................................... 42
Prepared statement .......................................................................................... 45
Goger, Dr. Annelies
Testimony .......................................................................................................... 4
Prepared statement .......................................................................................... 7
Greszler, Ms. Rachel
Testimony .......................................................................................................... 14
Prepared statement .......................................................................................... 16
Response to question submitted by Senator Risch ........................................ 67
Paul, Hon. Rand
Opening statement ........................................................................................... 3
Risch, Senator James
Statement dated June 8, 2022 ......................................................................... 64
(III)
THE SMALL BUSINESS
WORKFORCE CHALLENGE:
CAUSES, IMPACTS, AND SOLUTIONS
WEDNESDAY, JUNE 8, 2022
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:29 p.m., in Room
428A, Russell Senate Office Building, Hon. Benjamin L. Cardin,
Chairman of the Committee, presiding.
Present: Senators Cardin, Cantwell, Booker, Coons, Hirono,
Rosen, Hickenlooper, Paul, Ernst, Inhofe, Hawley, and Marshall.
OPENING STATEMENT OF HON. BENJAMIN L. CARDIN,
CHAIRMAN, A U.S. SENATOR FROM MARYLAND
Chairman CARDIN. The Senate Small Business and Entrepre-
neurship Committee will come to order.
I want to welcome our witnesses today and thank you for your
participation. As is the custom of our Committee, your entire state-
ments will be made part of the record and when you are recognized
you may proceed. We ask that you try to summarize your state-
ments in about five minutes.
Today’s hearing will examine the workforce challenge that our
Nation is facing, especially with regards to how it is holding back
the prosperity and growth of America’s small businesses. Small
businesses employ nearly half of America’s private sector work-
force, and they are the driving force of innovation and growth in
our economy. However, the deck is stacked against them in the
competition for strong workers because they lack the resources and
capital to offer wages and benefits that compete with larger compa-
nies, they have limited access to training and apprenticeship pro-
grams, and they often require in-person work at a time when many
workers want flexibility.
These historical challenges have been made worse by what econo-
mists are calling the Great Reshuffle. In February of this year, for
example, 4.4 million workers quit their jobs, but more than half of
those workers went on to find better jobs or an entirely different
field of work.
Small businesses are not only facing difficulties in attracting
workers, but they also struggle to keep them, which is a further
draw on the finite amount of time and capital that small business
owners have. A study conducted by the U.S. Chamber Foundation
(1)
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found that high employee turnover cost small businesses as much
as $3 billion per year. Those are resources that could be put into
growth and innovation to boost our economy. If small businesses
cannot find the workers they need, they cannot grow. According to
Goldman Sachs’ 10,000 Small Businesses Voices report, 97 percent
of survey respondents reported that the difficulty hiring was affect-
ing their bottom line, a 17-point increase from September 2021.
Congress has a duty to our small businesses to support them as
they confront these challenges because our economy can only go as
far as our small businesses can take us. So our goal today is to ex-
plore the causes of these workforce challenges, the effects of these
challenges, and solutions such as investing in workforce training,
leveling the playing field between larger companies and small busi-
nesses regarding benefits employees receive, and increasing the
size of our workforce.
Unlocking the potential of the current workforce through job
training is one way to help meet the needs of small businesses. As
we know, a four-year degree is not a requirement for every career
path and there are many highly skilled occupations that are better
served by an apprenticeship or similar model. There is already a
model for these kinds of partnerships, and many community col-
leges in Maryland, including Prince Georges Community College,
have earned a national reputation for their apprenticeship pro-
grams. However, these programs can be difficult for small busi-
nesses to access, so we must take a hard look at how to connect
these programs to small businesses.
President Biden’s American Rescue Plan also provides a model
for how the Federal Government can work with state and local gov-
ernments to deliver job training resources to the communities that
need it the most. In Baltimore, for example, the city will invest
$3.8 million in ARPA funds to provide critical workforce develop-
ment training to residents, including summer jobs for young people
and occupational training in high demand fields.
For a small business to grow, we must level the playing field be-
tween larger companies and small businesses regarding benefits of-
fered such as paid leave. In Maryland, Democrats in the Maryland
General Assembly recently passed legislation to provide 12 weeks
of job-protected paid leave to the employees of any organization
with more than 15 employees. The law requires the State to estab-
lish an insurance program funded by contributions from employers
and employees, including sole proprietors. The program will allow
workers to take 12 weeks of paid leave for any family or medical
emergency and could help small businesses compete with larger
companies for employees.
As a former Speaker of the House in Maryland, I know that our
statehouses nationwide are the laboratories of democracy. I will be
following the implementation of this law closely, and I am hopeful
that it could serve as a model for how the Federal Government can
assist small businesses to combat these workforce challenges.
We must also assess how we can increase the overall size of our
workforce through innovative policies. Unfortunately, due to the
Trump administration’s immigration policies, we now have some
catching up to do. Between 2016 and 2020, annual immigration to
the United States was cut in half, which robbed our economy of
3
more than 2 million additional workers today had immigration
kept pace with the 2016 levels.
The effects of our immigration labor shortages are acutely felt on
Maryland’s Eastern Shore, which is reliant on workers for the H–
2B visa programs during busy crabbing season. The prolonged H–
2B visa shortage does not only threaten individual businesses but
entire communities in my home state. By evaluating how to em-
power immigrants to participate in the workforce, Congress can
make it easier for small businesses to find workers and easier for
workers to immigrate to America.
We can also increase the size of our workforce by investing in re-
turning citizens. Nearly 600,000 Americans are released from pris-
on annually, and despite evidence showing that they make excel-
lent, loyal employees, they are often not included in the workforce
development policies and programs that can equip them with the
skills they need to succeed in the workforce. Investing in training
returning citizens would not only help provide stable employment
opportunities for them but also help small businesses looking for
workers.
If the COVID–19 pandemic has taught us anything, it is this:
The problems that small businesses face are difficult but not in-
tractable. And addressing them will take focused, intentional, and
concerted effort, but they are not insurmountable. The pandemic
also confirmed that solving these challenges requires a multi-
faceted approach because there is no single solution.
So I am looking forward to hearing more from our witnesses
about steps Congress can take to address all aspects of our Nation’s
workforce challenges to unleash the growth potential of small busi-
nesses and the immediate and long-term needs.
With that, I recognize my distinguished Ranking Member for his
opening comments, Senator Paul.
OPENING STATEMENT OF HON. RAND PAUL,
A U.S. SENATOR FROM KENTUCKY
Senator PAUL. Small businesses are struggling under the heavy
burden of regulation and taxes. For the last several years, govern-
ment policies at the Federal, state, and local levels have subjected
our Main Street businesses to restriction after restriction. These
onerous regulations, coupled with $6 trillion in government spend-
ing, have thrown the economy into a freefall.
First, it was the lockdowns. Government forced small businesses
to close indefinitely. Then, when they were finally allowed to re-
open, they were saddled with capacity restrictions, mask mandates,
and vaccine requirements for customers. While these government
dictates did nothing to change the trajectory of the virus, they forc-
ibly closed nearly 10 million small businesses, many permanently.
The government’s so-called solutions did not stop at public
health. Congress doled out trillions of dollars in taxpayer money,
the Fed ran the printer 24–7, and government paid people who de-
cided they did not want to work nearly $800 billion from March
2020 to July 2021. It should be no surprise to anybody that labor
force participation is at its lowest point since the Carter adminis-
tration.
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Despite countless warnings, government, Congress, poured even
more gasoline on the fire. Even economists like Larry Summers
and Jason Furman, who worked for Democrat administrations,
agree President Biden’s $1.9 trillion so—called Rescue Plan was too
large and has caused the rampant inflation we are now encoun-
tering.
Only now, Treasury Secretary Janet Yellen, who refuses to tes-
tify before this Committee, admits she was wrong in calling infla-
tion a small and manageable problem. If she had not been delib-
erately blind to the predictable result of unrestrained, reckless
spending, we might have avoided the economic pain the Biden ad-
ministration inflicted on every American family.
And to add insult to injury, President Biden’s anti-domestic en-
ergy policies have created five to seven dollars per gallon gas
prices, which have roughly doubled since he took office.
No matter how many times the Biden administration blames the
War in Ukraine or so-called greedy corporations, the truth remains;
inflation comes from the Federal Reserve creating money to buy
the exploding U.S. debt.
One would think, in the face of such profound failure, politicians
in Washington would show some humility. One would think they
would consider the possibility they do not know economics better
than economists or business better than the small business owners
of America. Maybe, just maybe, problems created by excessive gov-
ernment spending and intervention cannot be solved by more gov-
ernment spending and intervention. We cannot look to the same
people who created this problem for a solution.
Those who think small businesses are telling us they want more
government spending on ineffective Federal job training programs
are not paying attention. What small businesses need is freedom.
The free enterprise system has created more wealth and prosperity
than any government program ever could. Let us let small business
owners do what they do best without government getting in the
way.
Chairman CARDIN. Thank you, Senator Paul.
We will now go to our witnesses. We will start with Dr. Annelies
Goger, who is a fellow at the Brookings Metropolitan Policy Pro-
gram at Brookings Institution. Her work as a fellow involves re-
searching and developing policy solutions to increase economic op-
portunities and decrease work inequality. Since 2019, Dr. Goger
has focused heavily on researching ways to reform unemployment.
I am informed that you are a recent new resident of Maryland,
and that is the reason you are going first.
STATEMENT OF DR. ANNELIES GOGER, Ph.D., FELLOW,
THE BROOKINGS INSTITUTION, WASHINGTON, DC
Dr. GOGER. Thank you, Chairman Senator Cardin and Ranking
Member Senator Paul and members of the Committee.
It is an honor to testify before you today about the challenges
facing small businesses. My name is Annelies Goger, and I am a
fellow at Brookings Metro, and my specialty is in U.S. workforce
policy, inclusive economic development, and global supply chains.
This is also a personal topic for me because my father is a small
business owner. He owns a lightning rod installation company with
5
two or three employees, and he has consistently struggled to find
and retain quality talent. I believe my father could have really ben-
efited from more management training on how to more effectively
manage his teams and reach out to pools of talent that he could
not find.
But for the last 30 or 40 years we have had a very lean approach
to supporting small business ecosystems. And this, in a normal
time, looks like a Darwinian survival of the fittest, but in the pan-
demic it quickly devolved into a Squid Games scenario. And the
carnage was all around us.
The temporary relief that was provided helped avoid some of the
worst effects of this carnage and helped to prevent this from cas-
cading into the rest of the economy. But today, small businesses,
as you have both noted, really face major challenges with workforce
as a massive pain point, and I believe we need to do more to think
about how we can support a vital ecosystem.
So what is causing this pain? I would argue that it is actually
a complex perfect storm of factors, some of which were pandemic-
related, but some are actually longer-term trends. The pandemic
trends including immigration, lack of child care—actually, 256,000
Americans of prime working age passed away from COVID, so
there are those workers that we unfortunately no longer have.
Also, the reallocation that happened as things like hospitality com-
pletely collapsed and then there was massive growth in things like
warehousing, that reallocation of workers and matching employers,
there is a lot of friction there, and it takes a lot of time to resolve.
But there are also much more long-term shifts which include de-
mographic shifts such as an aging workforce. The pandemic actu-
ally accelerated the retirement of many Baby Boomers, and the
younger generation of workers is not only a smaller pool, but it is
a much more diverse pool. Historically, we have underinvested in
Black and Latino or Hispanic talent, and they have had less access
to quality jobs and higher education.
In addition, the Digital Age is going to create an ongoing need
to keep people fresh, not just workers but also managers and man-
ager training, and this is really costly for employers to bear as
well.
So what should we do about this? I think in the short term ex-
panding immigration and including work visas, but also helping
employers understand like extension services, to help them under-
stand how they can reach talent that is on the sidelines, like the
long-term unemployed, people with disabilities, people who were
formerly incarcerated. That is something we can do.
But I think in the long run we need to think about three things.
One, employers in the Digital Age need to shift from being just con-
sumers of talent to also co-producers of talent. So we have done
some studies in my previous job on incentives to small and me-
dium-size and large businesses to train their workers where they
would be reimbursed for their training. What we found was that
there is a sweet spot for medium-size in particular, 18 to 100,
where investing in their training and subsidizing that leads to
greater revenue and greater employment, but for small businesses
they were actually harmed by these subsidies.
6
And so I believe we also need to think about things like pooling
costs and sharing training costs, which happens in some of the
most mature systems where you have applied training. Finally, I
think we really do need to expand that management and super-
visory training and manufacturing extension to many more indus-
tries, such as the service sector.
Number two, we need to rethink our talent model from pro-
grams—we have 43 across 9 Federal agencies, often duplicating ef-
forts—to more of a systems approach. A systems approach is what
small businesses can participate and act part of. They cannot cre-
ate their own bespoke training programs. They just cannot afford
it. Things like apprenticeships happen in a system in countries
that do it the best.
And finally, diversity inclusion is not about charity. If we fail to
engage the talent, our diverse talent that makes up not just work-
ers but also entrepreneurs, if we fail to get them off the sidelines
and into our economy, we will fail to innovate, we will fail to have
regions that are vital, and moreover, we will fail to really have an
‘‘American Dream’’ in this country anymore, where there is a level
playing field for people that do not have wealth to access it.
My father is approaching 70, next fall, and he has confided in me
that he does not think he can retire fully. He has never had—for
most of his adult life, he has not had health insurance even though
he stands on roofs all day.
I think really if we are going to think about creating the vibrant
ecosystem that we need in this country to compete with China and
other countries we need to think more about creating that level
playing field and investing in our diverse talent.
Thank you very much.
[The prepared statement of Dr. Goger follows:]
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Chairman CARDIN. Thank you for your testimony.
Our next witness is Rachel Greszler. She is a senior research fel-
low at Heritage Foundation, focusing on retirement and labor poli-
cies such as Social Security, disability insurance, pensions, and
worker’s compensation. Her work focuses on policies that promote
economic growth, individual freedom, and well-being.
Before joining Heritage in 2013, Ms. Greszler was a senior econo-
mist on the staff of the Joint Economic Committee of the Congress.
That is a good pedigree, coming from Congress.
Glad to hear from you.
STATEMENT OF RACHEL GRESZLER, SENIOR RESEARCH
FELLOW, THE HERITAGE FOUNDATION, WASHINGTON, DC
Ms. GRESZLER. Thank you. Thank you for the opportunity to be
here today.
Small businesses continue to struggle to find workers who are
willing to work and who have the skills that they need. In fact, em-
ployers listed labor quality as their single most important problem
every month between 2018 and 2021, with the exception of March
and April 2020 with the COVID shutdowns. These struggles have
gotten worse since the labor shortage. The current 11.4 million job
openings equates to 1.9 jobs available for everyone that is looking
for work.
And yet, small businesses now say that inflation has become an
even bigger problem than their workforce struggles, with 32 per-
cent of small business owners reporting inflation is their single big-
gest problem. That compares to 3 percent in January 2021. Forty-
year high inflation has created many struggles for businesses.
Surging input costs means that contracts come in over budget,
sometimes even at a loss. Employers have to increase workers’ pay
to keep up with rising consumer costs and to compete in a labor
force that is now 3.2 million below its pre-pandemic rate.
But this creates an inflationary cycle. When businesses have to
pay workers more to do the exact same thing, they have to raise
their prices. In April alone, 70 percent of businesses said that they
increased their pay or they plan to increase it at the same time
that 63 percent of businesses increased their prices. Higher wages
have not made workers better off, though.
The median worker has experienced a $3,300 wage increase over
the past year, but inflation has eaten away that entire gain and
actually left them $1,600 poorer.
So what is driving inflation? The Federal Government’s policies.
Inflation is too many dollars chasing too few goods, and the Federal
Government has simultaneously pumped trillions of dollars into
the economy while restricting the supply of goods and services
through policies that discourage or outright prohibit work. The
Federal Government spent 45 percent more in both 2020 and 2021
than it did in 2019, and all of this is deficit-financed. About half
of it came from the Federal Reserve printing money.
The money supply has increased more over the past two years
than it did over the prior ten.
Most problematic was the $1.9 trillion American Rescue Plan,
and it was enacted well after the recovery was underway and
which included less than 10 percent going toward actual public
15
health. The bulk of the American Rescue Plan was welfare expan-
sions that exacerbated the labor shortage, private union bailouts
that incentivized reckless behavior, giveaways to state and local
governments that were already abundant in revenues, and $1,400
stimulus checks that fueled the inflation that has since eaten away
their entire value.
The Administration’s proposed solutions to spend more and
produce less are backward. Things like forgiving college loan debts
owed by the most affluent Americans, enacting a child care entitle-
ment that would drive up costs and crowd out providers, and tax-
ing away the output and the innovation of the most productive
parts of our economy will lead to something that is even worse
than inflation; we will have stagflation.
Moreover, when it comes to the unprecedented worker shortage
and the workforce skill gaps, the government is the problem and
not the solution. The government has effectively put up road blocks
on all of the most efficient roadways to a more productive and ro-
bust economy and, instead, is directing traffic onto a congested toll
road.
Ongoing welfare without work benefits, including Obamacare ex-
pansions and SNAP expansions, are continuing to discourage work,
particularly among young people.
And, Federal COVID–19 vaccine mandates have made the health
care workforce shortage especially pronounced, even life threat-
ening, with health care employment lagging total employment by
263,000 jobs just since the mandates went into effect.
Higher education subsidies and the Administration’s cancellation
of thriving new apprenticeship programs are preventing people
from pursuing lower cost and higher quality education, and Federal
job training programs have been failures. The WIA program is sup-
posed to provide training for in-demand careers, but a gold-stand-
ard study found that only one out of three participants found jobs
in their field of training.
Politicians and bureaucrats cannot know businesses’ needs better
than employers themselves, so they should stop diverting people
into programs that waste their time and taxpayers’ money when
private sector employers can, and are, providing more effective edu-
cation and training.
While the temptation for policymakers is always to do something,
the best solution to fighting inflation and improving the workforce
is to interfere less. Instead of building an expensive new highway,
policymakers should simply remove the road blocks that are pre-
venting people from getting where they need to go in the shortest
time and at the lowest cost.
Thank you.
[The prepared statement of Ms. Greszler follows:]
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Chairman CARDIN. Thank you very much for your testimony.
Our next witness is John Arensmeyer, who is well known in our
Committee, a frequent visitor. He is the founder and CEO of the
Small Business Majority, a national organization focused on uplift-
ing small businesses across the country while ensuring a diverse
and inclusive economy. He works with the Small Business Admin-
istration and has led to the organization providing resources to 30
million small businesses and entrepreneurs. He previously testified
in front of Congress and has worked alongside the White House to
solve issues facing small businesses and the economy.
Glad to hear from you.
STATEMENT OF JOHN ARENSMEYER, FOUNDER AND CEO,
SMALL BUSINESS MAJORITY, WASHINGTON, DC
Mr. ARENSMEYER. Thank you, Chairman Cardin, Ranking Mem-
ber Paul, and members of the Committee.
I founded the Small Business Majority 16 years ago to empower
America’s diverse entrepreneurs to build a thriving and equitable
economy. We have a network of over 85,000 small businesses and
1,500 partners or partner organizations we work with. Before
founding the Small Business Majority, I was the founder and CEO
of ACI Interactive, an award-winning interactive communications
company. So I have had a front row seat for challenges and work-
force challenges faced by small businesses.
The ‘‘Great Resignation’’ has spawned record numbers of new
businesses, which is great. However, it has exacerbated workforce
challenges. Small business owners have overwhelmingly cited labor
shortages as one of the most significant challenges they face. Ac-
cording to a recent survey from Goldman Sachs, 87 percent of small
firms report difficulties filling open positions. Our own polling has
revealed that more than half of small business owners reported
being negatively impacted by workforce shortages.
Small businesses are doing what they can to address these prob-
lems. According to our polling, small businesses have taken meas-
ures to create more incentives for workers, such as increasing pay,
increasing benefits, creating more part-time positions, and hiring
younger staff. However, as emergency financial assistance has ex-
pired and additional support remains stymied by partisan politics,
small firms await the resources they need to sustain a long-term
recovery.
A leading workforce barrier faced by small businesses is the abil-
ity to offer quality, affordable benefits commensurate with those of-
fered by large firms. Since 2014, the Affordable Care Act has been
an essential component of the small business ecosystem. Indeed,
more than half of the ACA market participants are small business
owners, small business employees, and self-employed Americans.
The American Rescue Plan has helped to fill the coverage gap by
expanded tax credits. However, if Congress fails to extend these
benefits, those who work in small businesses will find it difficult
to maintain health care coverage commensurate with that offered
by large firms.
Similarly, many small businesses do not have the resources to
offer paid leave benefits the way large companies do and are look-
ing to the Federal Government to step in with the kind of paid
35
leave programs that exist in every other developed country in the
world.
Likewise, access to quality, affordable child care is essential if we
are to address workforce instability. Women, in particular, have
been forced out of the labor pool due to lack of access to affordable
child care during the pandemic. More than one-third of small busi-
ness owners with children reported that a lack of access to afford-
able, high quality child care was a barrier to starting their busi-
nesses and hiring employees. Congress must expand tax credits for
child care expenses that would allow working parents to receive a
percentage of child care expenses as a tax refund.
The pandemic has highlighted the importance of wealth building
including saving for retirement. Unfortunately, many small busi-
nesses do not have the resources or the administrative capability
to offer retirement benefits. We must expand State Secure Choice
Savings Programs that provide an easy on-ramp for employees to
save for retirement while ensuring that self-employed individuals
have access.
I also want to touch on two essential workforce pools that are un-
derutilized. The first is immigrants. Immigrants are highly entre-
preneurial, launching small businesses at over twice the rate of na-
tive-born Americans. Moreover, throughout our history, immigrants
have filled essential labor needs. We must pass comprehensive im-
migration reform. Alongside that, we must expand H–1B visa pro-
grams to allow more visas for skilled and low-skilled foreign work-
ers while decreasing the waiting period for rejected applicants.
Also, justice-impacted individuals that the Chairman referenced,
second-chance hiring opens an enormous untapped talent pool for
small employers. Research has shown, and anecdotal evidence in
our own network, that most employers hiring justice-impacted indi-
viduals have positive experiences and notably lower turnover rates.
Some of the tools and resources needed include occupation licensing
reform, implementing clean slate procedures, and creating mate-
rials that will educate small businesses on the benefits of second-
chance hiring.
Finally, as has been discussed here, we must invest more in
helping small businesses access the resources they need to train a
skilled workforce. An example of this is the Lifelong Learning and
Training Account Act that was reintroduced earlier this year.
To conclude, more than two years into the pandemic, small busi-
nesses are slowly rebuilding, but they need a vibrant, stable work-
force to fully recover.
I look forward to your comments and questions.
[The prepared statement of Mr. Arensmeyer follows:]
36
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Chairman CARDIN. Thank you very much for your testimony.
Our final witness is Dr. Michael Faulkender, who is the Dean’s
Professor of Finance at the Robert H. Smith School of Business. He
joined the University of Maryland in 2008.
And I am sure everybody here knows University of Maryland is
the home of the national champion men’s lacrosse undefeated sea-
son. You all knew that.
Senator HIRONO. Hanging on the edge of my seat.
Chairman CARDIN. It was never in doubt.
Dr. Faulkender left that role at the beginning of 2019 to serve
as the Assistant Secretary of Economic Policy at the U.S. Depart-
ment of Treasury. During the COVID–19 pandemic, he assisted in
negotiating the CARES Act and was the senior Treasury official
who led to the implementation of the Paycheck Protection Program,
and I remember being in rooms with our witness as we were trying
to implement this program.
STATEMENT OF HON. MICHAEL FAULKENDER, Ph.D., DEAN’S
PROFESSOR OF FINANCE, UNIVERSITY OF MARYLAND, VIS-
ITING FELLOW, AMERICA FIRST POLICY INSTITUTE, COL-
LEGE PARK, MD
Dr. FAULKENDER. Thank you, Chairman Cardin, Ranking Mem-
ber Paul, and Senators on the Committee. Thank you for the oppor-
tunity to speak with you today on the challenges America’s small
businesses are confronting as they look to meet their workforce
needs.
As the Chairman said, I am a finance professor at the University
of Maryland. I also serve on the Advisory Board of the Maryland
Small Business Development Center, and I am a visiting fellow at
the America First Policy Institute.
During the Trump administration, I had the honor of serving as
the Assistant Secretary for Economic Policy at the Department of
Treasury. In that role, I worked very closely with this Committee
and the Small Business Administration to quickly implement the
Paycheck Protection Program. As a result of our exceptionally
strong partnership, the unemployment rate peaked at just 14.7 per-
cent in April 2020. My co-authors and I estimate that the first
round of PPP likely saved as many as 17 million Americans from
the unemployment rolls.
The situation today, however, is very different from the depths
of the pandemic. The current challenges confronting our economy
are largely the result of overstimulation, particularly the American
Rescue Plan. Excessive Federal spending has buoyed consumer de-
mand, which has resulted in businesses struggling to find enough
American workers to meet that demand. Absent sufficient supply,
prices are rising at a pace not seen in 40 years. According to the
National Federation of Independent Business’ April 2022 report,
‘‘32 percent of small business owners report inflation is their single
most important problem in operating their business, the highest
reading since the fourth quarter of 1980.’’ While the Federal Re-
serve has belatedly started raising interest rates to curb inflation,
policymakers must also focus on ways that we can increase the
supply of available workers.
43
To be clear, the pace of jobs recovery from the depths of the pan-
demic has been impressive. Largely as a result of vaccines gen-
erated by the Trump administration’s Operation Warp Speed, we
have already recovered more than 96 percent of the 22 million jobs
lost from the pandemic recession. For context, it took more than six
years to fully recover the jobs lost during the 2008 financial crisis.
That said, we are still 822,000 jobs short of where unemployment
was in February 2020 even though our population has grown by
nearly 4 million. While the unemployment rate is low, labor force
participation is still more than 1 percent below pre-pandemic lev-
els.
At the same time, households are flush with cash due to the $4.6
trillion in total COVID resources authorized by Congress. With all
of that cash boosting demand, the employment needs of our Na-
tion’s businesses have expanded.
The result is more than 11.4 million job openings at the end of
April, just below the record set in March. Today, there are nearly
two job openings for every one unemployed person.
America’s small businesses are struggling to fully serve their cus-
tomers’ needs. According to data from ADP, while large and me-
dium-size enterprise continue to grow, employment at firms of
fewer than 50 employees has declined this year. Looking at the
April survey of small business owners, ‘‘59 percent reported hiring
or trying to hire in April’’ and ‘‘93 percent of those reported few or
no qualified applicants for the positions they were trying to fill.’’
The fundamental problem is that we have a labor shortage. Our
focus should be on implementing policies that will bolster supply,
including increasing the size of the domestic labor force across the
skills distribution.
First, we must stop providing prime-age, able-bodied adults ex-
cessive amounts of cash payments and social services detached
from work requirements. The Biden administration has proposed
eliminating work requirements from eligibility for child tax credits
and has opposed recent state-requested Medicaid waivers that have
work requirements. Recent work authored by researchers at the
University of Chicago examined the child tax credit proposal and
estimates that ‘‘this change in policy would lead to 1.5 million
workers to exit the labor force.’’
Second, we should reduce the regulations associated with obtain-
ing the training and experience that workers need. The U.S. Cham-
ber of Commerce Foundation estimates that, quote, small busi-
nesses pay on average $11,700 per year per employee in regulatory
costs, and the costs of regulation to small businesses with 50 em-
ployees or less are nearly 20 percent higher than for the average
firm, end quote.
Examples to include these—examples to reduce these regulations
include ensuring that the Department of Labor does not micro-
manage apprenticeship programs and by eliminating the excessive
occupational licensing requirements that many states have im-
posed. Further interference by the Federal Government is not the
solution. There are already too many overlapping state and Federal
job training programs that do not provide the skills employers are
looking for.
44
Third, we should re-examine the work disincentives in Social Se-
curity. While retirement age has risen over time from 65 to nearly
67, but early benefits start at age 62, those benefits are subject to
reduction if people work. For example, somebody age 64 who has
started taking benefits but makes $30,000 from working would see
their Social Security benefit reduced by more than $5,000. The cur-
rent Social Security structure tends to discourage Americans from
continuing to work at a time that our labor force is too small.
Finally, our immigration system should be more skills—and
merit-based. The current high-skilled visa program needs to be re-
formed so that we are selecting those that possess the highest
skills needed to grow our economy.
I look forward to participating in this important conversation.
Thank you.
[The prepared statement of Dr. Faulkender follows:]
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Chairman CARDIN. Again, we thank all four of our witnesses. We
will now start five minute rounds.
Before the pandemic, we had hearings in this Committee, and
the challenges for small businesses getting trained workers was
one of the top three issues mentioned as concerns for small busi-
nesses and growth. So we had a significant challenge for small
businesses getting quality, trained workers.
When we created the Paycheck Protection Program, during the
early parts of COVID–19, one of the main objectives was to allow
small companies to be able to maintain their workforce because we
knew if they had to lay them off it would be more challenging to
bring that workforce back because small businesses would be,
again, at a disadvantage at getting the most trained workers. So
we recognized this issue.
Now the pandemic has made it worse. The labor shortage today
has made it much worse. I will give you one example, though, in
regards to government programs.
We have surveys from the National Restaurant Association about
the challenges restaurants are having in being able to attract
workers with the current labor market and the cost of labor. And
those that received the Restaurant Revitalization funds are in a po-
sition where they can keep their workforce; they can get the work-
ers. Those who did not receive it are having a much more difficult
time competing, just mentioning the fact that there is an afford-
ability issue here in addition to finding trained workers.
But several of you mentioned that small businesses do not really
have the capacity to be able to have a training program. They do
not have that. You have to have a shared effort.
We have lots of training programs at the national level. I am fa-
miliar with some of the apprenticeship programs, but it is difficult
for a small business to get engaged in an apprenticeship program.
If you are a large company, you have a much easier time con-
necting with those that have the apprenticeship programs.
So, Dr. Goger, let me start with you. How can we tailor these
training programs so that small businesses can really be engaged
as they partner to be able to get a trained worker to meet their
needs?
Dr. GOGER. That is a great question, Senator Cardin. The issue,
like I said, is that we have programs and not systems, and so that
means if you look at the gold standard places, where these earn-
and-learn ecosystems work well, you have a clear role of the edu-
cation provider that takes some of that training burden off the em-
ployer. You have a clear role often of an intermediary that helps
connect the learner and the employer. Right? And then you have
employers that have a clear role, which is to engage in a longer-
term strategy of training a professional. Right?
So we often treat apprenticeships like they are these bespoke
programs. And the issue with that is like if I ask my dad, why
don’t you start an apprenticeship, which I have, the answer is,
well, in lightning rods, he does not have a curricula for that. He
does not have a registration—he cannot access that registration
process. It is super cumbersome for him.
What if we had a mechanism where all the other lightning rod
providers could get together and work with educators to build that
49
competency-based pathway and then he participates in that? On
the job, he trains to that structured pathway. They all agree, and
periodically they reassess that process. It takes the burden of cre-
ating that whole thing from scratch off of his shoulders.
And in the long run, once it is all set up—you have an up front
investment, a public sector investment. But in places like Switzer-
land, employers get an 8 to 11 percent return on investment, and
that is because some of those heavier costs around who does the
educating and all that, that is not on the small business’ shoulders.
So I think that business model is really critical to thinking
about, and I also think the cumbersome nature of our registration
process—you know, we do not have connections between appren-
ticeships, CTE, community colleges. These are all separate silos in-
stead of a unified system that employers can engage in.
Chairman CARDIN. Mr. Arensmeyer, let me ask you, what would
you like to see Congress do to make it easier for small businesses
to be able to access training programs to be able to get trained
workers?
Mr. ARENSMEYER. Well, I think Dr. Goger said, and the literature
all shows, that these programs, they work well when you are deal-
ing with big companies. But like everything else in the small busi-
ness world, small businesses do not have the capability to navigate,
you know, complicated bureaucracies. They do not have the time to
independently pursue, whether it is connections with community
colleges, directly with training programs, and they need—we need
to consolidate these programs, and we need to improve the edu-
cation and information that is provided to small businesses about
how to access these programs.
I think sometimes the programs are—you know, if they are sort
of looking to get the biggest numbers of impact, they are going to
go to a big business. They are going to be able to deal with one HR
department, and they are going to be able to get those numbers.
But that does not solve the problem of the many small businesses
out there, so I think it is a question of streamlining a system and
making it accessible to small businesses.
Chairman CARDIN. Thank you.
Senator Paul.
Senator PAUL. I am going to reserve my time and pass it down
to another member on my side, if I could.
Chairman CARDIN. Certainly. That would be? I think it is Sen-
ator Inhofe.
Senator INHOFE. It is. Okay. Thank you, Mr. Chairman.
There is no state that is more dependent upon the issues that
are brought in this Committee hearing, and this is the reason I got
on it in the first place. I hear regularly from small businesses in
Oklahoma because we have got a lot of them. Their margins are
shrinking, and I think we can speculate as to why, and it is pretty
obvious.
In April, inflation was up 8.3 percent, and the average American
family is spending an extra $569 every month just to buy basic ne-
cessities. And on top of this, businesses everywhere are raising
wages and offering more benefits simply to survive in the labor
market, but it is still not enough.
So, Ms. Greszler? Is that right?
50
Ms. GRESZLER. Correct.
Senator INHOFE. Yes, I would like to have you—right now, we
are undergoing this multi-trillion-dollar spending spree, and the ef-
fects that has on small businesses is debatable. You touched on
this in your opening statement, but I would like to have you elabo-
rate as you wish.
Ms. GRESZLER. Yes. So the spending spree has resulted in one
out of every three dollars that is in circulation today having been
printed by the government. That has massively expanded the
amount of demand in the economy, and at the same time, we had
welfare without work benefits that were restricting the supply of
workers. And so it just created this huge gap. As a result of that,
businesses cannot get the workers, and they are in this inflationary
cycle here.
We have to stop the spending immediately. That is one of the
first things, and then I think we get toward the longer term goals
because workforce has been an issue for years and we have, in
many ways, a broken higher education market.
Senator INHOFE. Yes. The spending is something I wanted to get
to because that is something that is not talked about as much.
And I would say to Dr. Faulkender, very similarly—and you
touched on this in your opening remarks, but . . . how can this Ad-
ministration advocate policies—obviously, they are not doing it
right now—that would help level the playing field for small busi-
nesses?
Dr. FAULKENDER. Thank you, Senator. I think some of the most
important things that we can do is reduce, as was stated, some of
the spending but also some of the regulation that is being imposed
on small businesses. Organizations that are operating at smaller
scale, but nevertheless have the same regulatory requirements,
have fewer workers to spread those costs over. It makes it more ex-
pensive per worker, and as a result, we are seeing that small busi-
nesses are struggling more than others to retain workers. Likewise,
as the Chairman mentioned, larger businesses have greater ease in
providing telework, for instance, for their employees. And so any-
thing we can do to make the environment for small businesses
more competitive by reducing some of the costs that we impose
upon them and some of the threats of higher taxation that we are
imposing upon them would be beneficial to assist the small busi-
nesses.
More than anything, we need to increase the number of workers
in the workforce. There just are not enough people that are looking
for jobs relative to the number of openings right now, and so reduc-
ing the disincentives of being part of the workforce, I think, is the
singular most important thing that we can do to help fill those em-
ployment gaps.
Senator INHOFE. It is kind of interesting because I am older than
any of you guys are and I can remember it was not that long ago
when we thought we would love to have a problem like this some-
day. And now it is here, and we are not so sure about it.
But I think it needs to be said over and over again by knowledge-
able people, such as we have here today, on this overspending,
overregulation, the damage that is being done, and I appreciate
your witnessing.
51
Thank you, Mr. Chairman.
Chairman CARDIN. Senator Hickenlooper.
Senator HICKENLOOPER. Thank you, Mr. Chair, and I appreciate
this importance of having someone on the panel who has a family
experience with lightning rods because I think it is fair to say that
Senator Paul sometimes acts as a lightning rod and has frequently
said that I act as a lightning rod. So I think it is appropriate in
some important way.
I was in Colorado last week and met with a group of students
in one of our mountain towns to discuss the success of a program
I started when I was Governor, called CareerWise, which is an ap-
prenticeship program. And one of the students, his name was Bran-
don—and he had worked for the previous three years as he was
working his way through high school, with a construction company,
and he had actually decided he was going to go to college. He was
not going to, but now he was going to go to college, but he was
going to continue working for the construction company. He is a
project supervisor at the age of 19. Anyway, he is going to continue
to work for them as he goes through a degree in architecture.
He made a challenge to us. He said, what are you going to do
to make sure every kid has a chance to get meaningful work expe-
rience while they are still in school, before they actually go out and
get a job? So his challenge was: What are you going to do to get
every kid this opportunity?
So what more can the Federal Government—Dr. Goger, I will
start with you. What more can the Federal Government do to pair
small businesses and younger Americans with these kind of experi-
ential learning opportunities?
Dr. GOGER. That is a great question, Senator Hickenlooper, and
really we need to start much younger. We need to start in K–12.
We should be taking 11-year-olds to meet mentors because infor-
mation asymmetries about what you can do in your job are huge.
People do not know.
Jasmine Hill, a professor at UCLA, she calls it mobility knowl-
edge. They do not know what the options are. There are so many
well-paying jobs that are not being filled purely because people do
not have someone in their family that works there and therefore
can tell them how to access it. Right?
So as the first in my family to go to college, there was a lot of
that mobility knowledge that I did not have, and I think we need
to be taking a more proactive role going into schools and in K–12
curricula starting early with opportunities to get work experience.
Right?
Our average apprenticeship age is 26. We should be thinking
about 16. That is where our young talent really is.
And I think one of the things—if you want to get to specifics, one
of the things that we really need to think about is guidance coun-
selors and teachers. What do they know about the career opportu-
nities available to young people? A lot of times, you know, be a law-
yer, be a doctor, go to college. That is pretty much all people here,
but I think there is a lot more options for the two-thirds of Ameri-
cans that do not end up with a college degree.
Second, we need some permanent funding streams for inter-
mediaries that do that connection, like CareerWise, between the
52
young person, the employer, and that can provide some support.
Let us say the young person needs transportation. That is the con-
nector that we do not have permanent funding for.
Three, we need funding for related instruction. Right? So if you
are going to have someone learning that in the class, ideally, you
have some time in the classroom and some time on the job. It is
a structured program.
In the classroom, you learn—you know, if it is an electrical pro-
gram, you learn the theories around like nodes of electricity. Right?
But on the job you figure out how to actually solve the problem.
And that is where the soft skills get built. That is where someone
builds that professional network.
So I think that we need to really make sure that we are struc-
turing the incentives in K–12 and community colleges so that edu-
cation itself is creating multiple pathways for people and not just
a college-for-all solution because you said an apprenticeship does
not have to be a choice between a degree or not. In Alabama, they
actually created the nation’s first master’s degree apprenticeship in
social work in an HBCU.
Senator HICKENLOOPER. Yes. And I agree with that completely.
There does not have to be that match.
I think it is also worth looking at how do we keep this skills
learning going throughout a person’s life. Kids of all ages are going
to have to keep learning things.
You know, a woman in Colorado started a company called Guild
Education that now is that interface between—some of her cus-
tomers are Starbucks and Walmart, where every single employee,
when they want to pick up any packet of learning skills, the com-
pany will support them, and then Guild is the intermediary that
allows them to make sure they get the right class and they finish
it.
If I can just get 30 seconds, I wanted to ask a little bit just about
the visa application process, Mr. Arensmeyer, just because I see so
much of this workforce. I mean, if we had a streamlined visa proc-
ess, I think that could go a long way in a lot of these places where
we have real workforce—I was a small businessperson myself, so
I am painfully aware of the importance of this.
Mr. ARENSMEYER. That is absolutely true. I mean, some indus-
tries, like the hospitality industry and the construction industry
rely on heavily on foreign-born labor.
And along those lines, it is absolutely true we need to increase
the H–1B visa program for high-skilled workers, but we need to ex-
pand it to low-skilled as well. Talking to small business owners
across the country, they are lacking workers at every level.
Senator HICKENLOOPER. Right.
Mr. ARENSMEYER. As I said, construction, hospitality, and other
industries. So you know, we have grown our economy over the dec-
ades, over the centuries, with foreign-born workers. And we have
constraints on that right now, and we are hearing from businesses
across industries that that is a huge problem. So we need to, you
know, responsibly ease some of those restrictions.
Senator HICKENLOOPER. Well, maybe the next thing we will have
a hearing on comprehensive immigration reform and work from
that point of view.
53
Anyway, thank you. I yield back. Thank you for being concise.
Chairman CARDIN. You are ambitious.
Senator Paul.
Senator PAUL. I just wanted to interject on the immigration issue
just very quickly.
Senator HICKENLOOPER. I told you I was a lightning rod.
Senator PAUL. Well, here is the thing. We never do anything on
immigration, and the reason is this, is people want the whole thing
done or nothing. If you would break it into small pieces and look
at the H–2A program, the H–2B program, or the employment-
based visa program, there are fixes that both sides could come to-
gether.
But the big thing is there are 20 million people here illegally.
One side wants them to vote; the other side does not think imme-
diately voting is a great idea if you came here illegally. That is a
big bugaboo, and it has stifled us.
I have a bill that doubles the employment-based visas. There is
1 through 5. And there is no reason why we should not be able to
get bipartisan support on that and pass the bill. There are 70,000
employment-based visas, EB–1 through 5. I believe we ought to
double it. I think a lot of Democrats would support that, but it has
not gotten anywhere because everybody wants everything or noth-
ing.
I have another bill that takes the H–2A program—and the H–
2B are another category; they are capped. But H–2A is agriculture;
it is uncapped. I would take some of the H–2B workers, put them
in the H–2A, the uncapped, which would give us more workers, and
they would now be called H–2A. It would be mostly like landscape
workers, but it would be probably several hundred thousand land-
scape workers. You would move them over. And I think there could
be bipartisan support for that, too.
We take the H–2A program and make it work better by making
the government respond to you within a certain amount of days. It
is electronic. If you are bringing back the same workers, there is
less work, and they run through the system much easier. We make
it year-round. All these things are very practical that there is prob-
ably no partisan disagreement on.
Not everybody is going to vote for it, but it is not a really, really
pitched partisan battle. But we do not get to it because the sticking
point is do we let 20 million people vote or 15 million people vote
who came illegally. So I think if we got to smaller portions of this
we might have a chance.
And I will go back to the regular order.
Chairman CARDIN. We might differ a little bit the way you ex-
plained it, but I do agree that we——
Senator PAUL. I am always right.
[Laughter.]
Chairman CARDIN. But I do agree we need to make progress.
Senator Ernst.
Senator ERNST. Thank you very much, Mr. Chair.
And thank you, Senator Paul. ‘‘Bugaboo,’’ that is the word for the
day, folks.
But I do want to chime in on some of the thoughts that have
been expressed by our witnesses today and thank you all so much.
54
And, Dr. Goger, I am going to agree about a phrase that I use
all the time. It is: You only know what you know. Right? So we ex-
perience this throughout our population. You only know what you
know, and you do need those examples out there.
I am the first in my family to get a four year degree.
My sister has a degree from a community college, and my broth-
er is—he did not to go to school, and that is probably a good thing.
But he is doing quite well because he had skilled training in heavy
equipment, and he went directly into the workforce. He works for—
he is a union laborer with the Burlington Northern Santa Fe rail
line, and he operates heavy equipment for them. And out of all the
three of us kids, he probably does the best. So there are just dif-
ferent types of opportunities for different individuals out there, but
you are right; you only know what you know.
And so to that, Dr. Faulkender, thank you so much for being
here. I would like to say thank you because I do think we need to
get more engagement in the workforce, and finding ways to do that
is extremely important for so many small businesses that are really
struggling. Some of them are closing their doors because they do
not have workers. So we really have to do something about that.
And Federal apprenticeship and job training programs are—they
exist in abundance, as you pointed out. I have actually worked for
one of those job training programs at a technical college in South
Carolina, but there are so many of them. So how can we put re-
forms in place, do a better job of maintaining those programs, get-
ting the types of skills out there? What reforms would you rec-
ommend?
Dr. FAULKENDER. I think first and foremost we need to make
them significantly more flexible. You know, one of the things that
I learned during the pandemic in running the Paycheck Protection
Program is that we may think of businesses as operating a par-
ticular way, but when you are then rolling out a program nation-
wide you are exposed to the diversity of businesses out there and
the different situations they confront. And the idea that we can cre-
ate this one-size-fits-all and have it work for everybody just does
not work if you start putting lots of constraints in place.
We need to let businesses, states, municipalities have the flexi-
bility to do it for themselves. And so for instance, when you have
the Department of Labor put a lot of conditions on apprenticeship
programs that then disqualify them from participation, that is
going to make it more difficult for industries and businesses to find
ways that work for them and their unique circumstances. So let us
provide flexibility and otherwise get out of the way.
Senator ERNST. And I agree 100 percent, and I am going to tout
a program that I visited last week while we were on recess. I vis-
ited the John V. Hanson Career Center in Forest City, Iowa. It is
a career center that is sponsored by the local community college
and four of the high schools and obviously a very generous em-
ployer in the area. It did not take the Federal Government to come
up with this career center, and it is very focused on the needs of
local employers.
And it allows juniors and seniors to go to the career center dur-
ing their regular K–12 school time, and they are learning a trade
and earning college credit at the same time through the community
55
college. And these young men and women, they can either decide
to continue on and transfer credits into a university, go on to the
community college, or some of them are even being presented with
job opportunities from local employers coming directly out of high
school, debt-free, great paying jobs.
So you know, I always hesitate to say, ‘‘We are from the Federal
Government. We are here to help’’ because sometimes we just need
to get out of the way and let those local decisionmakers, those local
thought providers get in there and discover what is necessary and
right for their own community and drive forward with it, and that
is what the John V. Hanson Center has done.
So I appreciate it. This is a really good discussion today, so
thank you all very much for being here. Thank you.
Chairman CARDIN. Senator Rosen.
Senator ROSEN. Well, thank you, Chairman Cardin, Ranking
Member Paul. This is a really good hearing.
Workforce challenges, it is what we—we heard this before the
pandemic. We are hearing it during. And now, hopefully, as we are
moving through it, we are going to find some resolve.
I want to say that I agree 110 percent with everyone here who
says we have to get down through K–12. We have to excite young
kids, show them that there is more than three jobs that they might
see on TV or the internet, how they get there and what the path
is for them and really empower those career counselors and all of
those things in each one of our communities.
And so we have spoken about training and mentoring for young
folks, but we also have to talk about upskilling or reskilling our re-
turning workforce, our midlife, perhaps, workers. And so ‘‘help
wanted’’ is a sign we have seen in every window on the doors of
small business over the past year. We hear from companies of
every size and who are just facing unprecedented challenges filling
the workforce.
So in Nevada, even though the unemployment rate has continued
to go down, only three in five adults are working or currently ac-
tively seeking work. And so the rest have grown discouraged. They
have dropped out of the labor market, and quite a few have stayed
at home to take care of their families, maybe children, maybe an
aging parent as a caregiver.
And so I felt that we had to create an on-ramp for those who
want to join the workforce at that time, so I introduced what is
called the STEM RESTART Act. It is bipartisan legislation to help
Americans come back through what I am calling—what we are call-
ing ‘‘returnships.’’
So, Dr. Goger and then Dr. Arensmeyer, how do you think we
can create on-ramps for these mid-career workers so we can get
them upskilled or reskilled and return to the workforce and help
them in that way? A little different than our young kids K–12.
Dr. GOGER. Sure. I think that most training that happens, hap-
pens by employers, and we should be incentivizing especially mid-
size employers to train and onboard workers more. When we did
a study in California, we found that 18 to 100 was the sweet spot,
where when you reimburse employers to train, that increased their
revenue and increased their size.
56
For smaller, though—for smaller employers, though, I think we
need to think about how you can pool training costs, like commu-
nity training centers, incubators, places where people know where
to go when they are looking for that new job and they do not know
where to start. Thank you.
Mr. ARENSMEYER. Well, I thank you for your—you know, there
is a whole panoply of things that are in effect here. For women en-
tering the workforce, child care continues to—maybe they have
stayed home with the kids, the kids are off in school, but they still
are going to need child care. And we hear constantly from employ-
ers that they struggle to keep and recruit women particularly, care-
givers, because of the inability to access affordable child care. So
the provisions in the Build Back Better Act to really reduce the
cost of child care are absolutely essential.
You know, we have talked about expanding opportunities for for-
eign-born workers in the system, justice-impacted returning citi-
zens in the system. And, quite frankly, if you are bringing—if you
are recruiting someone back into your small business, you have got
to be able to pay the same level of benefits that a big business will,
the competition.
And so it is—you know, sort of the big four areas that we think
are important: health care, pay level, child care, I have already
talked about, and retirement savings. Really facilitating small busi-
nesses being able to offer commensurate benefits has been just a
huge disparity across our system. So it is really—it is not one
thing. It is really putting all of these together.
Senator ROSEN. Thank you. I know I have a few seconds left, so
I just really want to reiterate what we have been talking about,
about apprenticeships also because in Nevada we have over 90 reg-
istered apprenticeships where you earn while you learn, you grad-
uate debt-free, average salary there about $70,000. We are trying
to bring more apprenticeships. We have large swaths of openings
in cybersecurity and technical computing, forensics, a lot of those
things, trying to bring more of that registered apprenticeship ca-
pacity because we know that that works.
And I just wanted to, like I said, in the few seconds left to say
how much I agree with that, and I know that you are supportive
of that, and I think it is important that we put our efforts into this
to create a robust workforce.
Thank you, Mr. Chairman.
Chairman CARDIN. Senator Paul.
Senator PAUL. You know, we have discussed a little bit of labor
force shortages, and you know, I am a Republican who is for more
lawful immigration, so I think that can be part of the answer.
I do think there are certain aspects of the labor force shortage,
though, that are perplexing. The argument has been made that the
artificial stimulus of government spending and creation of new
money by the Federal Reserve is part of it. It has created this enor-
mous amount of demand, and that is part of the labor force short-
age. The only problem with that argument is we still have not got
back to the actual physical number of where we were before the
pandemic.
Now the government did really disrupt. We have never had a $20
trillion economy just closed and then reopened, so there are enor-
57
mous dislocations. It is not only ours. Most of the world closed
down and then reopened.
But the other argument is that maybe it is an underuse or that
maybe we have deterred people from work and quantifying those
and making arguments for which is the case, that we have so much
artificial demand that we cannot keep up with the workers because
of the artificial demand versus a labor force that is not working.
So we have labor force participation that is about 62 percent or
so, and people say it is going down. The remaining 38 percent I am
interested in. Does that include people that are disabled or cannot
work? Or, when you do labor force participation—we will start with
Ms. Greszler—are those people able to work, the 38 percent that
are not in the labor force? 62 percent are participating; 38 are not.
Who are the 38 percent?
Ms. GRESZLER. Yes, so it can include those people that are not
in the labor force. Part of that could be disability. Most of them are
able to work.
I have been digging into the numbers and trying to figure out
who is it that is not coming back to the labor force. A particularly
troubling part is that it seems to be the 20- to 24-year-old age
group. The drop in employment is actually bigger than the net drop
in employment for all workers. That is when people should be at
their greatest opportunity, like they have all the potential in the
world there. And they are not attending college in greater degree
either. The college enrollment rates have declined. So that is a par-
ticularly troubling part of it.
A narrative that is out there is that it is mostly women, espe-
cially women with younger children, who have been disproportion-
ately impacted, and absolutely, child care is a struggle. I have six
young kids and went through COVID, and it was not easy to work
with them, all at home many times.
But there have been some studies, multiple ones, including by
Jason Furman, President Obama’s former CEA chair, Claudia
Goldin, and they basically found, yes, it was a struggle, but women
pushed through, and it actually did not cause their employment to
decline. I have been looking at this, and only 16 percent of the cur-
rent gap in employment is parents with children. That includes
men and women.
And so I do not think that that is the big part there and we do
not need to be enacting a big new entitlement that would drive up
those costs of child care, but there are ways that we can help child
care become more accessible and affordable and also have the types
of jobs that work for women, that work for caregivers, that work
for people at the older end of the age spectrum, that are particu-
larly appealing to younger workers, and that is the independent
contracting, the freelancing. We should not be shutting those op-
portunities out.
Senator PAUL. Did you say you have six young children?
Ms. GRESZLER. Well, 4 to 14, so I consider them all young.
Senator PAUL. Six. Yes, my sister has six. She is an OB/GYN. So
I know what it is like to have a working sister with six also, so
that is a big deal.
You know, when you look at this also, one of the things we
talked about was we were quite concerned, at least on our side, of
58
adding the $600 extra in unemployment. And that expired back in
September, and we thought, well, people will go back to work. And
the worrisome thing is: Did we change behavior so much that some
of them did not go back to work or some of them are working for
cash on the side? Are they taking government money and working
on the side? And you do hear stories of that, the people who are
taking a little bit less from the government, then they are driving
somewhere for cash, you know, in another city or something and
not being reported.
Mr. Faulkender or Dr. Faulkender, your response sort of to the
previous question? Labor shortage in general, getting rid of the un-
employment add-on, and why we still have a shortage.
Dr. FAULKENDER. Right. So the other significant segment of
missing workers are those in their 60s. So there is an early retire-
ment that is going on, and this is why potentially some of the pen-
alties of Social Security should perhaps be revisited because that
is also a significant portion of the missing segment of the labor
force.
The technical answer to your question is we can look at different
segments of the adult population, and prime labor force participa-
tion has mostly come back. It is still only about a half a percentage
point below where it was prior to the pandemic. It is the older
workers. So prime is 25 to 54. It is above that where we are seeing
not a recovery. And so how much of that is extra concern about
COVID versus how much of it is the savings that they accumu-
lated, the run-up in their retirement portfolio facilitated them leav-
ing but also some of the penalties associated with Social Security,
associated with doing—taking Social Security and working at the
same time?
Unfortunately, the high levels of inflation we are seeing may
push some of those people back into the labor force, but I do not
think that is what we—I do not think that is why we want them
back in.
Ms. GRESZLER. If I could just add that eliminating the retirement
earnings test would not cost anything, it is actually just kind of
misperceived tax. You get the money back later on. So it would ac-
tually be pro-growth and improve Social Security’s finances.
Chairman CARDIN. Senator Coons.
Senator COONS. Thank you, Chairman Cardin and Ranking
Member Paul. Thank you to our witnesses today.
I have heard from a number of businesses up and down my home
state, the small State of Delaware, that they are indeed in the mid-
dle of a significant labor shortage but also a skill shortage in that
hiring and retaining and motivating folks who have the appro-
priate skills for the jobs for which there are opportunities is a real
challenge. So, thank you.
If I could, Dr. Goger, you said in your testimony that apprentice-
ships should be easier and cheaper for small businesses to sponsor.
The apprenticeship model is well known in the building trades and
other well-established industries, but my former governor, Jack
Markell, launched and ran a statewide program to help create reg-
istered apprenticeships in high-growth, high-potential sectors, real-
ly driven by employers in partnership with our community college.
59
What barriers do small businesses face in managing a registered
apprenticeship program, and do you think government investment
in apprenticeships can actually help alleviate this issue?
Dr. GOGER. That is a great question. The challenge for a lot of
small businesses—because, as I said earlier, we have a program
approach that essentially requires an employer to create a bespoke
program customized for their business themselves. And instead of
creating a system whereby—for example, in technology, I have
done a lot of work on apprenticeship in tech. If you could partner
with community training providers and community colleges to pro-
vide some of the actual structured education, that takes some of
the cost burden off; if you have some subsidy also up front for the
design and training your managers on what is your role here, what
is expected of you, and how long this is.
I think one of the challenges that we hear from small businesses
is that they tend to think about the cost in a short term way. You
know. And I had an intern. Right? I had her for three months. I
spent two months trying to train her, and then she had two weeks
of actually helping me. If I could have kept her longer, then I
would have seen that real return on investment coming out.
And I think a lot of times there is a mindset issue, where em-
ployers are seeing these talent investments as a short-term cost
and not keeping it long enough to actually see the recoup of that
cost. So I think structuring it longer is better for the employer, ac-
tually.
Senator COONS. I do think that government has a role to play as
an aggregator of demand. Most of the small manufacturers, small
and medium manufacturers I meet with in Delaware need four peo-
ple with these skills or six people with these skills or ten people
with these, but not enough to have them pay the money up front
to design and register and run an apprenticeship program long-
term.
I do have a bill, surprise, with Senators Young and Moran and
Brown, the Apprenticeship Hubs Across America, that would ex-
pand the registered apprenticeship model, specifically the high-
growth job market, and increase the availability of apprenticeships
in a diversity of businesses like high tech, like hospitality, like
home health care, that do not currently have any registered ap-
prenticeship programs.
Mr. Arensmeyer, in your testimony, you spoke about the need to
equip small businesses with workforce training resources. And I
think workers ought to have the ability to advance their own skill
and small business employers benefit when workers get the oppor-
tunity to improve their skills. Why should government make any
investments in skills?
I have a bill that would create essentially a tax-preferred savings
account with a match up to a modest amount for those who are
low- and moderate-income. Why should government make invest-
ments rather than employers in skills training?
Mr. ARENSMEYER. I presume you are referring to the Lifelong
Learning and Training Account Act? Yes, I was going to mention
that actually because it does allow for government to match sav-
ings that employees can put into a fund and use it for when they
need to for training.
60
I think it is essential that we—you know, there is a public policy
behind making sure we have got a skilled workforce out there
and—you know, this is a matching. This is a way the government
can leverage its money. It is not 100 percent. It is not covering 100
percent of the need. It is matching.
And, look, we do this across our entire economy with tax bene-
fited health care, with tax benefits for retirement savings. So this
is really no different. This is the government, you know, strategi-
cally using its resources to step in and, you know, in a targeted
way have a positive impact.
Senator COONS. How do you think providing a training oppor-
tunity like that would help with retention and morale in the work-
force more broadly?
Mr. ARENSMEYER. The training, specifically, the training that is
in your bill?
Senator COONS. Yep.
Mr. ARENSMEYER. Well, it would be—it enables us to have a
more stable, skilled workforce that—then it enables the people who
get this training to put themselves into position to do that job and
then do other jobs and increase their responsibilities in the econ-
omy, and you know, you end up with a much more robust work-
force by doing that.
Senator COONS. Great. Thank you.
Thank you, Mr. Chairman.
Chairman CARDIN. Senator Hirono.
Senator HIRONO. Just in time, it seems. I apologize if any of
these questions have been asked, but here we go.
So, Dr. Goger, am I pronouncing your name correctly?
Dr. GOGER. Yes. Thank you.
Senator HIRONO. So you mentioned the need for child care be-
cause I think that just as we are having a really hard time finding
workers, if we are not providing accessible, affordable child care
that means that there are a lot of women, especially those who be-
cause of the pandemic left their work—but they need child care
provisions to get back to work. So can you just tell us a little bit
more about any stories about women who because of lack of child
care they are not able to get back to the workforce?
Dr. GOGER. Yes, so what we saw is not only were women more
likely to be laid off in the pandemic because they are concentrated
in frontline jobs but also, you know, because of school disruptions.
Even today, my friend last week—she has two girls. Her daughters’
school was shutdown because there was a COVID exposure.
So this impacts parents generally but predominantly women, and
I think that it is really challenging for women employed in small
businesses, like hospitality, because they cannot really juggle these
uncertainties and keep their job.
So that is why one of the things that I was talking about is how
could you pool funds from small businesses, through trade associa-
tions and so on so, that you can do things like share some of the
costs for child care or get small businesses together to reduce
health insurance costs or to be able to offer paid sick leave. I think
that, structurally, small businesses cannot afford a lot of these ben-
efits, and that is what is leading them to lose talent to larger com-
panies. And so I see that as really essential to being able to help
61
women stay and be able to show up in the workplace more regu-
larly even in the face of ongoing disruptions.
Senator HIRONO. I agree with you that in spite of the testimony
that says that government should not be involved—in fact, some of
our panelists apparently take the position that the less government
does to try to be of help the worse things are, and I do not agree
with that position.
So to the extent that a lot of the women in our workforce are
more in the frontline positions, we lost a number of them to
COVID, and so I do think that as a developed country we are very
much behind in terms of child care support and also paid family
leave, that those things would help a lot.
So with regard to the supply chain, the COVID-related supply
chain disruptions have been driving price increases in the U.S.,
which have disproportionately impacted working and middle-class
families, and we know these families are paying more for everyday
household goods like groceries, food, rent, utilities, gas. And the
Build Back Better included investments to address supply chain
vulnerabilities, but it has stalled in the Senate. What kinds of in-
vestments should we consider to improve supply chain resiliency in
the United States?
Do you have any thoughts? For you, Dr. Grover.
Dr. GOGER. Doctor—Okay.
Senator HIRONO. Sorry. Goger.
Dr. GOGER. Yes. This is a really long-running challenge because
for 40 years we have actually incentivized lean supply chains that
do not have resilience built in, and so we have disinvested in our
domestic manufacturing capacity——
Senator HIRONO. Yes.
Dr. GOGER.[continuing]. Including small businesses. We do not
have managerial expertise right now in our supply chains to actu-
ally respond quickly to changes. And we really need an agile work-
force that can learn and change and adapt, and that is why I think
employer-provided training is so critical, especially for small- and
medium-size businesses that are the source of a lot of the innova-
tion that we see. In many cases, it was small businesses that
adapted the most quickly to some of these demand shifts.
But I worry that the risks and the costs of all these disruptions
will be with us for a really long time unless we can really start to
use, you know, really concerted efforts to invest back in building
that small business ecosystem and getting some of our diverse tal-
ent, you know, and diverse entrepreneurs, their ideas. Some Har-
vard researchers estimate that if we invested more equally in our
talent we would quadruple innovation in the United States. We do
not have a lack of people or a lack of ideas or a lack of talent, but
we are keeping people on the sidelines, so we need to remove some
of those barriers for innovation.
Senator HIRONO. I think you also mentioned in your testimony
that we are not investing equally in Black communities and His-
panic communities and we are losing out a lot on the talent pro-
vided in these communities. I agree with you.
Thank you, Mr. Chairman.
Chairman CARDIN. Thank you, Senator Hirono.
62
Once again, I want to thank all four of our witnesses. This has
been a very, very helpful panel, different views, but I think we all
recognize the fundamental problem for small business today is ac-
cess to trained workers and a stable workforce.
We have had hearings dealing with the challenges small busi-
nesses have with capital, small businesses have with dealing with
supply chain disruptions, we had a hearing on that, to deal with
the regulatory burdens of small business.
But today, we really are concentrating at this hearing on the
issues concerning labor force, and there is no simple answer to this.
I think you all have really given us some really good suggestions.
We have programs that deal with job training and apprenticeship,
but it is very difficult for a small business to access those programs
in a useful way that could be relevant to their current needs. So
how do we fine-tune these programs to make sure they are acces-
sible to small businesses?
There seems to be a growing consensus, as Senator Paul indi-
cated, on easing the immigration rules, certainly as it relates to
worker visas. I would point out that the general immigration poli-
cies are just as important. The replenishment of our workforce
through normal immigration is important for us to have a supply
of workers in this country, not just those that come under the
worker visas.
And we do need to deal with returning citizens. That is a signifi-
cant number of people who have been disqualified in so many op-
portunities that are really able to work, want to work, and can be
very reliable workers for themselves and for our economy.
And then we get to the issues of affordability to work. We have
mentioned that. Not only child care but health care has been men-
tioned. These are areas that we have to continue to make sure we
have a level playing field for small businesses so that the work-
ers—the businesses are not put at a disadvantage with the workers
that are available and can provide the necessary incentives for
them to work.
One other area that we have not talked about, just put it on the
table, is resource partners. We have invested a lot in our resource
partners, and they should be able to help provide some of the serv-
ices to make it easier to connect the dots between the services that
are available but that small businesses do not have the capacity to
be able to work through how they get to those services.
So I think there is a lot of good suggestions that have come out
of this hearing, and I can assure you we will be following up on
this.
And once again, we thank you for your being here today, but we
are not going to let you off the hook. We expect that we will be con-
tinuing to reach out for your suggestions and your help as we try
to help the small business infrastructure in America.
With that, if there are no further comments, the Committee will
stand adjourned. Thanks.
[Whereupon, at 3:52 p.m., the Committee was adjourned.]
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