[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


                  STATE OF THE SMALL BUSINESS ECONOMY

=======================================================================

                                 HEARING

                               BEFORE THE

        SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS

                                 OF THE

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                           FEBRUARY 16, 2017

                               __________


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              Small Business Committee Document Number 115-004
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                   HOUSE COMMITTEE ON SMALL BUSINESS

                      STEVE CHABOT, Ohio, Chairman
                            STEVE KING, Iowa
                      BLAINE LUETKEMEYER, Missouri
                          DAVE BRAT, Virginia
             AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
                        STEVE KNIGHT, California
                        TRENT KELLY, Mississippi
                             ROD BLUM, Iowa
                         JAMES COMER, Kentucky
                 JENNIFFER GONZALEZ-COLON, Puerto Rico
                          DON BACON, Nebraska
                    BRIAN FITZPATRICK, Pennsylvania
                         ROGER MARSHALL, Kansas
                                 VACANT
               NYDIA VELAZQUEZ, New York, Ranking Member
                       DWIGHT EVANS, Pennsylvania
                       STEPHANIE MURPHY, Florida
                        AL LAWSON, JR., Florida
                         YVETTE CLARK, New York
                          JUDY CHU, California
                       ALMA ADAMS, North Carolina
                      ADRIANO ESPAILLAT, New York
                        BRAD SCHNEIDER, Illinois
                                 VACANT

                   Kevin Fitzpatrick, Staff Director
                       Jan Oliver, Chief Counsel
                Adam Minehardt, Minority Staff Director
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

                                                                   Page
Hon. Dave Brat...................................................     1
Hon. Dwight Evans................................................     2

                               WITNESSES

Stan Veuger, Ph.D., Resident Scholar, American Enterprise 
  Institute, Washington, DC......................................     4
Mr. Victor Hwang, Vice President, Entrepreneurship, Ewing Marion 
  Kauffman Foundation, Kansas City, MO...........................     5
Ms. Holly Wade, Director, Research and Policy Analysis, NFIB 
  Research Foundation, Washington, DC............................     7
Ms. Bob Bland, CEO & Founder, Manufacture NY, Brooklyn, NY.......     9

                                APPENDIX

Prepared Statements:
    Stan Veuger, Ph.D., Resident Scholar, American Enterprise 
      Institute, Washington, DC..................................    19
    Mr. Victor Hwang, Vice President, Entrepreneurship, Ewing 
      Marion Kauffman Foundation, Kansas City, MO................    28
    Ms. Holly Wade, Director, Research and Policy Analysis, NFIB 
      Research Foundation, Washington, DC........................    32
    Ms. Bob Bland, CEO & Founder, Manufacture NY, Brooklyn, NY...    37
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
                  STATE OF THE SMALL BUSINESS ECONOMY

                              ----------                              


                      THURSDAY, FEBRUARY 16, 2017

                  House of Representatives,
               Committee on Small Business,
                   Subcommittee on Economic Growth,
                                   Tax, and Capital Access,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 11:00 a.m., in 
Room 2360, Rayburn House Office Building. Hon. Dave Brat 
[chairman of the Subcommittee] presiding.
    Present: Representatives Brat, Chabot, Kelly, Gonzales-
Colon, Fitzpatrick, Velazquez, Evans, and Clarke.
    Chairman BRAT. Welcome to the Committee on Economic Growth, 
Tax, and Capital Access in the 115th Congress. I call this 
hearing to order. Thank you all very much for coming today.
    This is my first hearing as Chairman of this Subcommittee. 
I could not be more excited as we begin a new Congress, a new 
presidential administration, and, with the right policies, a 
new chapter for the American economy. And thank you all for 
coming to share with us today.
    As a former economics professor, I am particularly pleased 
that we have such a distinguished panel here today to help us 
explain what the economic indicators are telling us and how 
they reflect what we hear back home from our constituents every 
day.
    It has been said time and again, both at this Subcommittee 
and in the Full Committee, but I believe it cannot be stressed 
enough, small businesses are the backbone of the American 
economy. They represent 48 percent of workers in the private 
sector and 99.9 percent of all firms. You do not have to be an 
economist to understand the equation: When small businesses 
succeed, our country succeeds. And it is just that simple.
    The economy grew at an anemic rate of 1.6 percent in 2016, 
and 1.5 percent over the last decade or so. This rate is half 
of the historical average.
    During this period of slow growth, 155 million Americans 
faced higher costs due to the Affordable Care Act. Americans 
also spend $1.89 trillion a year just to comply with Federal 
regulations.
    Finally, for most small businesses, the effective tax rate 
is more than 47 percent. All of these issues have converged to 
affect the economy at large.
    Although it is important to label the problem, Congress is 
actively working to implement solutions. We are starting the 
process to repeal and replace the Affordable Care Act. We are 
passing regulatory reform bills such as the Regulatory 
Accountability Act of 2017, and utilizing the Congressional 
Review Act to repeal burdensome Obama-era rules. The 
administration is also taking actions, such as their ``two out, 
one in'' regulatory approach to help cut some of the red tape 
faced by small businesses.
    The unified Republican government is committed to helping 
the Nation's economy escape this slow growth, and we are 
backing up our words with action.
    American small businesses are not in business to comply 
with Washington, though it can sometimes feel that way. Rather, 
they are in business to earn a profit so they can make a living 
for themselves and for their families. In turn, they create 
jobs for their fellow Americans and help strengthen the 
economy.
    As I am certain we will hear this morning, healthcare 
reform, regulatory relief, simplifying and lowering taxes, and 
getting Washington out of the way would unleash the power of 
our small businesses so they can do what they do best: to grow 
and create jobs.
    We look forward to hearing from our witnesses and thank 
them all for being here today. We will certainly benefit from 
their perspectives on the state of the small business economy.
    I now yield to the ranking member for his opening 
statement.
    Mr. EVANS. Thank you, Mr. Chairman.
    Small businesses are the backbone of the American economy. 
There are 29.6 million small businesses in the United States 
who employ about 58 million people, nearly 50 percent of all 
private sector employees in the U.S. When our small businesses 
succeed, America succeeds. Today here will give us a great 
opportunity to hear from successful small business owners about 
what works and what does not, and discuss policies that will 
help this sector grow.
    The American economy, as strong as it has been in years, 
while we are seeing steady and sustainable growth, certain 
sections, such as manufacturing and construction, continue to 
struggle. It is imperative that we do more in these areas. 
However, we should also remember the dire straits of our 
economy after the 2008 fiscal crisis.
    The Great Recession was the largest economic disaster our 
Nation faced since 1929. Housing prices plummeted more than 30 
percent. Businesses of all sizes shed jobs. In 2009, 
unemployment reached 10 percent nationally. That staggering 
number does not even include discouraged workers who left the 
workforce or the unemployed who took jobs where they were 
overqualified.
    Small businesses felt these challenges acutely. In the 
first three quarters of 2009, small firms accounted for almost 
60 percent of the net job loss. As the recession caused lending 
to tighten, entrepreneurs increasingly struggled to access the 
capital. In late 2009, one survey found that 78 percent of 
small business owners reported being negatively affected by the 
access to capital.
    Eight years later, economic indicators tell a completely 
different story. Real gross domestic product continues to 
increase year after year. In 2016, the GDP increased due in 
part to increase in consumer spending and residential 
investment. Unemployment has remained below 5 percent for well 
over a year. In fact, last November, unemployment dipped to 4.6 
percent, the lowest it has been since 2007.
    We have also seen considerable job growth. Over the course 
of the Obama administration, America gained 11 million new 
jobs. His presidency saw 75 percent straight months of job 
creation, the lowest continuing that is stretched in job growth 
since 1939. This period of growth continues with January adding 
approximately 246,000 new jobs, including 62,000 small business 
jobs. Median household income surged in 2015 for the first time 
since 2007. The 5 percent increase we saw in 2015 showed the 
economy is improving, yet income remains 2.7 below its 1999 
peak.
    Moreover, these gains have been uneven with recovering 
progressing much slowly in certain industries and regions, 
showing that there is still a great deal of work to be done.
    Small businesses also have to see improvement over the last 
8 years. Commercial credit conditions have eased. Demand for 
loans have increased as the economy has recovered. However, 
there remains wide differences in credit demand between small 
and large revenue firms. Lack of capital is one of the primary 
reasons businesses flounder.
    I hope today's hearing will help us better understand small 
companies' lending needs so that we can improve their options. 
The improvement in the economy has led small business owners to 
enter 2017 with more optimism about the economic future than 
they have in decades. However, they remain concerned about 
health care, taxes, and other regulations. That is why it is 
imperative that we ensure small businesses have a seat at the 
table when we discuss major policy reforms.
    I look forward to working with the chairman and all members 
and colleagues on this Committee to craft bipartisan 
legislation policy that will help sustain and shift in small 
business growth.
    I yield back my time, Mr. Chairman.
    Chairman BRAT. Thank you.
    If Committee members have an opening statement prepared, I 
ask they be submitted for the record.
    I would like to take a moment to explain the timing lights 
for everyone with us today. Speakers will have 5 minutes each 
to deliver your testimony. The light starts out green. When you 
have 1 minute remaining, the light will turn yellow. And 
finally, at the end of your 5 minutes, it will turn red. I ask 
that you all try to adhere to that time limit as best as 
possible. And so let us begin.
    Our first witness this morning is Dr. Stan Veuger, resident 
scholar at the American Enterprise Institute. His research 
interests include political economics and public finance. Dr. 
Veuger is a board member of the Netherland American Foundation 
in Washington, and a senior editor at the Bulwark, a quarterly 
public policy journal.
    Dr. Veuger, you have 5 minutes, and you may begin. Thank 
you.

 STATEMENTS OF STAN VEUGER, PH.D., RESIDENT SCHOLAR, AMERICAN 
      ENTERPRISE INSTITUTE; VICTOR HWANG, VICE PRESIDENT, 
ENTREPRENEURSHIP, EWING MARION KAUFFMAN FOUNDATION; HOLLY WADE, 
     DIRECTOR, RESEARCH AND POLICY ANALYSIS, NFIB RESEARCH 
     FOUNDATION; BOB BLAND, CEO AND FOUNDER, MANUFACTURE NY

                    STATEMENT OF STAN VEUGER

    Mr. VEUGER. Thank you, Chairman Brat, Ranking Member Evans, 
members of the Committee. Thank you for inviting me to testify 
here today on the state of the small business economy.
    The U.S. economy is still on the long way back to recovery 
from the 2007-2008 financial crisis. And while conventional 
measures such as real GDP per capita have surpassed their pre-
crisis peak, a number of severe weaknesses remain. Some of 
these are plausibly the result of the long and deep recession 
the country went through, while others are symptoms of more 
long-run trends. As an example of the former, the number of 
long-term unemployed workers is still significantly above the 
pre-crisis level. Weaknesses of the latter variety are arguably 
more worrisome, as there is no reason to believe that they 
will, with enough time, heal and disappear.
    Two examples of this type of long-run weaknesses are trends 
and levels of concentration within industries, and trends in 
the entry of new firms. Levels of concentration have been 
trending up. Entry of new firms has been trending down. And 
that I think should be of particular concern to the Committee.
    During the same period something else has happened and that 
is what I will focus my testimony on today. Uncertainty 
surrounding economic policy has been elevated for quite some 
time now. Now, this type of policy uncertainty was widely 
discussed in the popular press during the crisis, after the 
crisis, and it has also received significant attention from 
academic researchers.
    Now, theoretical research has taught us that policy 
uncertainty can affect consumption, investment, as well as 
broader activity. And while those theoretical insights have 
been around for a while, going back to Milton Friedman and work 
even before that, recent research has also shown that these 
effects do, indeed, exist. And in the real world it can be 
shown to do so empirically.
    For example, hire policy uncertainty from 2008 on has been 
found to be associated with a deeper and longer recession. The 
political stalemates in the U.S. contributed to the length of 
the recession as did shocks from Europe. In work with Daniel 
Shoag of Harvard, I, myself, found that increases in local, 
State-level uncertainty over the period was strongly correlated 
with the effects of the recession unemployment, and that 
correlation is very robust to arrange other potential 
explanations for bad labor market outcomes.
    And while there is certainly a feedback loop between 
outcomes and policy uncertainty, there are fiscal institutions 
and preparations that stayed and most of the Federal Government 
can take to limit those increases in uncertainty.
    This type of policy uncertainty is of particular concern to 
small businesses which are in a sense more risk averse by sheer 
size, typically less diversified than multinational firms. And 
I think that this is why this is an area that should be a 
concern of interest to this Committee as it starts to legislate 
in this new Congress.
    Some of the things the Committee has already contributed to 
I think have been very positive on this front. For example, the 
Small Business Regulatory Flexibility Improvements Act which 
passed as part of H.R. 5 requires more careful consideration 
before new rules and regulations are implemented, demands that 
their impacts on small businesses be considered more 
specifically, and I think that those are good initiatives.
    Similarly, the HALOS Act, which passed the House last month 
is helpful in limiting the reliance that small business owners 
and managers have on their own private capital and allow for 
them to raise more outside capital, reducing potentially their 
levels of risk aversion and the trouble they run into when 
dealing with inevitable levels of policy uncertainty.
    And so as I conclude, I would like to ask the Committee as 
it proceeds to consider more legislature, to consider these 
potential sources of policy and regulatory uncertainty. For 
example, while I think that fundamental corporate tax reform is 
way overdue, it is, I think, important to proceed in a way that 
does not disrupt firm operations in unnecessary matters. But 
there are always going to be winners and losers from this kind 
of fundamental policy change, but I would ask for well-
considered transition measures and certainly well thought-out 
measures as they may have unintended consequences.
    And with that I would like to thank you again for giving me 
the chance to speak.
    Chairman BRAT. Thank you, Dr. Veuger. We appreciate your 
testimony.
    Our next witness is Victor Hwang, Vice President of 
Entrepreneurship at the Ewing Marion Kauffman Foundation in 
Kansas City, Missouri. Mr. Hwang is co-author of The 
Rainforest: The Secret to Building the Next Silicon Valley, and 
the follow-up, The Rain Forest Blueprint: How to Design Your 
own Silicon Valley, which examine how the innovation ecosystem 
in the Bay Area can be replicated in other parts of the 
country. Prior to joining the Kauffman Foundation, Mr. Hwang 
co-founded Liquidity, a nanotech firm that makes filters for 
safe drinking water.
    Thank you for being here with us today, Mr. Hwang. You may 
begin. Thank you.

                   STATEMENT OF VICTOR HWANG

    Mr. HWANG. Chairman Brat, Ranking Member Evans, and members 
of the Committee, thank you for the invitation to testify.
    I am pleased to share insights and recommendations from the 
Kauffman Foundation about the state of entrepreneurship in 
America. I will describe the bad news, share some good news, 
and talk about how to address these challenges.
    First the bad news. America is suffering from an 
entrepreneurship deficit. It is slowly but surely eroding our 
quality of life and our national competitiveness. I personally 
experienced the challenges of starting and growing new 
businesses. My parents were entrepreneurs. For most of the past 
decade I have been an entrepreneur and investor in Silicon 
Valley, and over the past year I have gotten a big-picture 
perspective as the head of Entrepreneurship at the Kauffman 
Foundation.
    Based on our work at Kauffman, we believe this 
entrepreneurship deficit comes from a long-term decline in 
business dynamism, or the pace at which firms start and grow. 
As a case in point, Americans are starting new businesses at 
roughly half the rate they were a generation ago. The 
implications of the steps are profound. Recent research is 
starting to show how the entrepreneurship deficit is connected 
to some of America's biggest challenges: slower productivity, 
lower wages, stagnant job growth, and rising inequality.
    A recent report expands on the connection between the long-
term decline in entrepreneurship and the effect on productivity 
and growth. That lackluster productivity drags wages and living 
standards down. Put simply, fewer startups mean a lower quality 
of life for all Americans.
    Now, some good news. After a long hangover from the Great 
Recession, entrepreneurship is finally rebounding in America. 
According to the Kauffman Index of Entrepreneurship Series, 
entrepreneurship is up across all three measures: new business 
creation, growth, and local small business activity. Kauffman's 
Main Street Entrepreneurship Index is nearing a two decade 
high, driven by a jump in small business survival rates. Today, 
almost half of all new businesses are making it to their fifth 
year of operation.
    Both the long-term decline and the recent uptick in 
entrepreneurship have been shaped by three megatrends. These 
trends are affecting entrepreneurship today and we believe will 
for decades to come. We call these trends the new demographics, 
the new map, and the new nature of entrepreneurship.
    Demographically, the U.S. population is increasingly 
becoming more racially diverse, yet the American 
entrepreneurial population does not reflect these changes. 
Today, 80 percent of American entrepreneurs are white, and 65 
percent are male. That is a big gap for racial minorities and 
women. That gap costs the country about 10 million jobs.
    The map of entrepreneurship, the second face of 
entrepreneurship, is increasingly urban. While entrepreneurial 
activity is growing in midsize cities outside of major metro 
areas like Silicon Valley, it is still lagging in rural 
communities. And technology is changing the nature of 
entrepreneurship. In the past, as companies scaled their 
revenue, jobs could scale at a similar pace. Today, companies 
can rapidly grow revenue and value while job growth lags 
behind.
    In response to the entrepreneurship deficit and these 
trends, the Kauffman Foundation today launched the Zero 
Barriers to Startup Challenge. We believe that entrepreneurship 
is a fundamental human right. You should not need a formal 
degree. It should not matter your race, your gender, or where 
you live. You should be able to do it quickly, inexpensively, 
without confusion, and without barriers imposed by others.
    Unfortunately, there is a big gap today between that vision 
and the reality. You can help people--current entrepreneurs and 
those with an idea--afraid to make the leap by taking that Zero 
Barriers to Startup Challenge with us. The Kauffman Foundation 
encourages members of Congress to host entrepreneur town halls, 
to tour entrepreneur support organizations, and to invite 
entrepreneurs to testify before this Committee and others about 
the barriers they face. Listen to the grassroots and act on the 
solutions.
    When barriers hinder Americans from pursuing their 
entrepreneurial dreams our whole nation suffers. That is no 
longer conjecture. There is accumulating research evidence for 
it. Together, let's commit to zero barriers to entrepreneurship 
so that all Americans, regardless of who they are or where they 
are from, can turn their ideas into reality. Thank you very 
much.
    Chairman BRAT. Thank you, Mr. Hwang. We appreciate your 
testimony very much.
    Our third witness this morning is Holly Wade, Director of 
Research and Policy Analysis at the National Federation of 
Independent Business, NFIB, in Washington, D.C. At NFIB, Ms. 
Wade provides analysis on public policy issues and economic 
trends affecting small business. She also produces the monthly 
small business economic trends survey with NFIB's chief 
economist, which surveys their members' plans for expansion, 
sentiment on the United States economy, and top priorities.
    Ms. Wade, thank you very much for being here, and you may 
begin.

                    STATEMENT OF HOLLY WADE

    Ms. WADE. Good morning, Chairman Brat, Ranking Member 
Evans, and members of the Subcommittee on Economic Growth, Tax, 
and Capital Access. Thank you for the opportunity to testify 
today on the state of the small business economy.
    Over the past 10 years, small business owners have 
struggled to bounce back from the Great Recession. The economic 
recovery has been painfully slow for many, at first due to poor 
sales, but quickly overtaken by issues related to taxes, 
regulations, and the cost of health insurance.
    NFIB's Small Business Economic Trend Survey found small 
business owners stuck in a below average rut with the survey's 
optimism index exceeding its 43-year average reading only five 
times since July 2007. Three of those above average ratings 
were recorded in the last 3 months.
    Owners' optimism failed to materialize as average GDP 
growth remained relatively flat at 2 percent over the last 8 
years, and government policies continue to increase the cost of 
doing business.
    In response to the combination of policy constraints and 
anemic GDP growth, few small business owners found economic 
conditions supportive of investing in or growing their 
business. The poor business climate is further exacerbated by 
heightened level of economic and government uncertainty.
    NFIB's 2016 Small Business Problems and Priorities Survey 
found that two of the top 10 most severe problems affecting 
small business owners are uncertainty related. Uncertainty 
about economic conditions and government actions are ranked 
fourth and sixth out of 75 business problems, respectively, and 
about one-quarter of small business owners find each a critical 
problem in operating their businesses, all creating significant 
barriers to economic growth in the small business sector.
    Post-election, small business owner sentiment improved 
dramatically with more owners optimistic about the outlook for 
business conditions and business expansion. The rosier outlook 
has translated into more favorable expectations for sales 
growth and hiring to support expected gains in sales and 
revenue.
    As owners' confidence in the economy and economic policies 
rise, owners will be more likely to invest in and grow their 
business. Owners hold high expectations that Congress will now 
create a friendlier business climate for them to succeed.
    The three main concerns of small business owners for 
operating their businesses are taxes, compliance and disruption 
cost of regulations, and the rising cost of health insurance. 
All three of these issues consume valuable resources from small 
business owners, including their time, time diverted away from 
operating their business, and profits, which is the main source 
of financing for capital investment and business operations.
    For example, NFIB's newly released survey on regulations 
find that half of small employers report that regulations are a 
problem in operating their business, with 25 percent of them 
finding it a serious problem. When asked what specifically 
impacts them the most, 28 percent of small employers cite 
compliance costs as their biggest problem. However, 18 percent 
are most burdened by understanding how to comply with the 
regulations, and 17 percent most burdened by the extra 
paperwork requirements. And for over half of small employers, 
the volume of regulations is their biggest challenge compared 
to 37 percent who are most troubled by a few specific ones.
    The volume of regulations is particularly important in that 
most small employers take on the responsibility of learning 
about new government requirements themselves instead of 
delegating the task to an employee. The more time they spend 
learning about and complying with government regulations, the 
less time they have in operating their business.
    NFIB hears from small business owners year-round about the 
various challenges they face operating their business, and 
their stories are reflected in the survey results published by 
the Foundation. But given the right set of policies, policies 
that lower government cost hurdles for small business owners, 
they are in a great position to invest in and grow their 
business.
    I appreciate this opportunity to discuss the current state 
of the small business economy and the challenges it faces going 
forward, and I look forward to working with the Committee to 
support small businesses and the U.S. economy. Thank you.
    Chairman BRAT. Thank you, Ms. Wade. We appreciate your 
testimony. Thank you for coming in today.
    I now yield to the ranking member for the introduction of 
our next witness.
    Ms. VELAZQUEZ. Thank you, Mr. Chairman. It is my great 
pleasure to welcome Bob Bland, who is a Brooklyn-based fashion 
designer, entrepreneur, community organizer, and working 
mother, and my constituent. She is the CEO and founder of 
Manufacture NY, a fashion incubator and factory hybrid 
dedicated to providing independent designers with the resources 
and skill to streamline their production process and transform 
local manufacturing into the most affordable, innovative option 
for all. An international speaker and advocate for domestic 
manufacturing, ethical supply chains, and design 
entrepreneurship education, Ms. Bland has presented Manufacture 
NY as a case study in Copenhagen, Seoul, Los Angeles, Las 
Vegas, Washington, D.C., and New York City.
    Welcome, Ms. Bland.

                     STATEMENT OF BOB BLAND

    Ms. BLAND. Thank you, Chairman Brat, Ranking Member Evans, 
and thank you so much to Ranking Member Velazquez for your kind 
invitation to speak today.
    Since the Great Recession, virtually all small, creative, 
and manufacturing businesses in the Nation have had the same 
challenges: access to affordable industrial space with long-
term leases, relocation grants for those who are displaced, 
affordable housing with a reasonable commuting distance of 
their workplace, low-interest working capital and lines of 
credit to grow their small businesses, and competitive 
equipment procurement and training programs so that we, as 
entrepreneurs, can adapt to a rapidly changing global 
landscape.
    Design and manufacturing jobs specifically are more than 
just jobs. They are an inclusive pathway to meaningful careers 
and the potential for business ownership, regardless of 
previous educational background or socioeconomic status. With 
an average salary of $59,000 per year, they are more likely to 
include benefits and have a clear path for growth, both in 
terms of skills training and the opportunity to advance.
    The New York City fashion ecosystem is a great template for 
a unique and creative dynamic ecosystem that could be used in 
innovation economies in other cities, and that is some of the 
work that Manufacture NY specifically has done, is going to 
other cities, most recently North Las Vegas, for instance, and 
seeing how can we create that same sort of innovative 
manufacturing ecosystem around the country. And we need to have 
programs in place where we can do this, not just independently 
as we have been doing, but actually have Federal support to 
create these innovation economies around the country.
    Small businesses and entrepreneurs are the engine of our 
Nation's economy and drivers of innovation, and we cannot 
compete without having better workplace benefits, and we 
definitely cannot compete with larger companies that are able 
to afford those benefits because of the economies of scale. 
Freelancers and microbusinesses, and when we are talking about 
microbusinesses, saying that 25 people and under is a 
microbusiness, is actually quite funny to a lot of small 
business owners because that is most of our small businesses 
are much smaller than what the SBA currently defines as a small 
business or microbusiness. So we also need to look at how we 
define what a microbusiness is and how we are offering support 
for even smaller businesses than 25 employees and under.
    And we do not have the infrastructure to support workers 
with caregiving responsibilities. I am here with my daughter 
today who is 2-1/2 months old because I cannot afford to get 
care for her as an entrepreneur and as a business owner myself, 
so I have simply had to bring her with me everywhere for the 
last 2-1/2 months because there is no option for me as a 
business owner to take maternity leave. And so this is an 
example of something where the Federal Government could offer 
benefits across the board in terms of paid family leave. And I 
have been informed of the Family Act, which would create self-
sustaining family insurance for all workers modeled after 
successful State programs.
    And then also I would just say a national family leave 
policy would really reduce the burden on businesses, 
particularly businesses owned by women where we are really 
stopped from moving forward by our duties of care both for our 
children and then also elder care as well that 
disproportionately affects women.
    In terms of the SBA and what they offer, I have personally 
participated in programs around the SBIR, which is essentially 
an equity-free venture capital fund, and I highly recommend 
that we continue on with those programs. With the SBA's 
innovateHER program that they did in partnership with 
Microsoft, we participated in that and we need to advance those 
sort of programs.
    And then also, the Growth Accelerator Fund was a program 
through the SBA that actually supported the creation of 
incubators and accelerators around the country, and it really 
was a driver for new businesses. So I highly recommend those 
programs.
    And then also, the Manufacturing Innovation Institutes 
under the Obama administration were an incredible driver for 
manufacturing, and particularly advanced manufacturing, and I 
would recommend that those continue forward, as well as 
manufacturing communities. And I know there is bipartisan 
legislation available around a manufacturing communities bill 
in both the House and the Senate. Thank you.
    Chairman BRAT. Thank you, Ms. Bland. We appreciate your 
testimony.
    Now we will begin the first round of questioning. I now 
recognize myself for 5 minutes.
    I was going to defer, but as an economist and professor for 
the last 20 years in economics, I do want to just add some 
preliminary remarks. Everyone is referring back to the Great 
Recession, and there has been a grand misdiagnosis that the 
economy has been anemic because of that, and then what caused 
that. We usually call it a financial crisis. But I think it is 
important to go back to the history of what happened, and in 
what order it happened, and I do not think there is any debate 
the last financial crisis started in the housing market. Right? 
That, I think, is unquestionable.
    And so then we get to the crux of the good policy, and why 
in the world would bankers make mortgages, to folks with no 
incomes? Right? And the answer throughout the history of 
American economic history is they would not. Right? Something 
would be very strange. In the old days, the banker would go 
meet the neighbors and say, hey, does this person have a good 
job and a good credit history and a good ethical reputation? 
Oh, good. Okay, I will give you $100,000 for a mortgage.
    So what changed to the housing market, which Greenspan and 
Bernanke argued and they are not overly political. It is not a 
political argument. They said that was the asset class that had 
never--it was the gold standard, right? The housing sector was 
the gold standard. And so how in the world did the gold 
standard--the asset class that had never had any issues, right, 
every other asset class has--fall into such ruin? That did go 
over and fall into the financial crisis, and there--I am not 
condoning Wall Street or anything, just so we are clear on the 
politics. When you get to the financial crisis, there was 
ethical, you know, misconduct all across the board.
    But I think it is important to go back and look at what 
caused the housing crisis because that is what got us into this 
low-growth environment, and in my view, a lot of it was caused 
by bad Federal policy. Fannie and Freddie, bankers no longer 
had to take the risk, right? That is their main job is risk 
assessment. Instead of assessing risk, they would get their fee 
for making a mortgage and hand off the risk immediately to 
Fannie and Freddie. And when Fannie and Freddie take on that 
risk, who owns the risk? You do because you backstopped. The 
American people do, right? You backstopped through the 
government, Fannie and Freddie.
    So I just think it is important to get that backstop in 
mind. That was wrong Federal Government policy, and policies 
which wrongly incentivize the housing market which caused the 
financial crisis. And so with that in mind, I will just start 
with Dr. Veuger and work our way down.
    We are kind of working on three big buckets right now: 
healthcare efficiencies, tax reform going forward, a corporate 
rate and individual rate, and then immediate expensing. And 
then the third is just the basket of regulatory reforms.
    In your view, where is the biggest bang for the buck? Where 
should we be spending most of our time up here? Or do you got 
to do all three? I mean, just in your experience, if you could 
share a little, and then Mr. Hwang next.
    Mr. VEUGER. I think focusing on all three is complicated. 
There is only so much output that the legislative branch can 
produce. So of those three I would probably focus on tax 
reform. I think that is a good--you know, it clarifies matters 
because it is a broad issue or touches upon a lot of the 
problems we discussed.
    I think regulatory reform is important, but because so much 
of it is driven by--it is not clear to me what beyond what the 
House has already done, what it can do there to really make 
significant progress in one specific bill or one specific 
initiative that does not--maybe it is because there are so many 
subparts. I would say tax reform should be the top priority.
    Chairman BRAT. Mr. Hwang?
    Mr. HWANG. We launched today the Zero Barriers movement 
specifically to deal with this issue of: ``What are all the 
things that get in the way?'' If you look at the burdens of 
real entrepreneurs, there are so many, and there are so many 
headwinds that they face. And so with the Zero Barriers 
movement, what we are trying to launch is a realization, an 
acceptance of the fact that this stuff starts at the grass 
roots. It is city by city. It is county by county, district by 
district, state by state. When we think about these problems, 
we tend to ask, ``Well, what is the one thing we can do?'' But 
ultimately, it has got to be something where we empower the 
community of entrepreneurs and people that fight for 
entrepreneurs to come up with the answer. So what we are doing 
is harvesting the answers, gathering them, empowering people 
back in their communities, and supporting experiments around 
the country at the local level, even hyperlocal, to try to 
figure out what works and overcome these barriers.
    Chairman BRAT. Great.
    Ms. Wade, NFIB?
    Ms. WADE. Unfortunately, all three are incredibly important 
for small business owners, our members. When we surveyed for 
the 2016 Problems and Priorities Survey, health insurance cost 
is the number one problem. Fifty-two percent say it is a 
critical issue in operating their business. Burdensome 
regulations is the second most critical issue facing small 
business owners, and then under that is Federal taxes on 
business income. So all three are the top three important 
issues that they face.
    When it comes to tax reform, which is incredibly important, 
you know, tax reform should start with small businesses because 
they need parodies. Small businesses should not be paying more 
than larger corporations in the Federal Tax Code. And so 
tackling tax reform is incredibly important, and all the 
variety of ways that it is important for small businesses, but 
regulations and health insurance costs are equally as 
important.
    Chairman BRAT. Thank you. Thank you very much. Sorry, as 
the chair I went over my own time limit. I see my time has 
expired, and I would like to now yield to the ranking member, 
Mr. Evans, for 5 minutes.
    Mr. EVANS. Thank you, Mr. Chair.
    Ms. BLAND. Oh, do I not get to----
    Mr. EVANS. Ms. Bland, would you like to answer the 
question?
    Ms. BLAND. Okay. Yeah. As an entrepreneur and a small 
business owner myself and a woman, I just want to say that we 
work with--we have launched over 150 small businesses in the 
last 4 years and they are primarily women and person-of-color-
owned businesses. And what we see as the two big things are the 
healthcare situation, and really just social safety net in 
general, giving people the support they need to start launching 
their business by ensuring that they have their own personal 
health insurance and then also a place to live, a place to 
work. You know, that sort of support is needed throughout the 
first 2 years of a small business' launch.
    And then additionally, with the taxes, yes, I would totally 
agree that my tax rate as a small business owner is way too 
high, and it just seems impossible for me to continue, 
particularly when I am trying to create job growth. When I am 
trying to hire more employees, it is especially onerous and 
impossible for me to continue creating more jobs and still even 
break even.
    Mr. EVANS. Let me follow up a little bit. As you know, many 
economists have talked about employer-based health insurance 
can lead to job lock where employees stay in their job solely 
for the benefits.
    The Affordable Care Act effectively eliminates job lock. As 
an entrepreneur, how important was the availability of health 
insurance coverage in your decision in starting up your 
business?
    Ms. BLAND. Well, originally when I started my business is 
was prior to the Affordable Healthcare Act, and it has actually 
really helped me to have flexibility as a business owner to be 
able to say to my employees--beucause my business has less than 
50 employees, so I am not required to have health insurance. 
And so being able to direct them to the New York market to be 
able to get their health insurance, and then knowing that they 
have that security has been incredibly beneficial, both in 
making sure that they have care even when I cannot afford to 
subsidize it for them, but then, also, from an ethical 
perspective, knowing that I do not have employees on the job 
that are going to get sick and have nowhere to go. So I would 
say it has been very beneficial.
    Mr. EVANS. I would like to piggyback to Mr. Stan--last name 
again?
    Mr. VEUGER. Veuger.
    Mr. EVANS. Veuger. Sorry about that. About this issue of 
policy uncertainty and the drag on the economy. I am fascinated 
with what you have talked a little bit about. Can you, you 
know--I heard what the chairman said as he laid out the three 
particular issues, but I sense that the issue of policy 
uncertainty is probably the common denominator in the decisions 
that are made. Can you speak a little bit to that in terms of 
the impact of the issue around policy, particularly if you talk 
about the Affordable Care Act? Can you talk a little bit about 
that?
    Mr. VEUGER. Yes. I think one priority for this Congress 
should be to be careful as, you know, it works toward the 
stated goal of repealing and replacing the Affordable Care Act. 
I think we need to be careful not to unnecessarily disrupt, 
especially the individual market, which is pretty vulnerable to 
even announcements of future policy. There are significant 
weaknesses in the individual market as it stands, and I would 
worry that if Congress goes ahead with repeal of the Affordable 
Care Act or significant parts of it without having a clear 
direction of where policy is going afterwards in mind, I would 
worry what the individual market would be. And that is sort of 
true for the small group market, too, that that would unravel 
in a way that would be detrimental.
    Mr. EVANS. Mr. Hwang, real quick, I have not much time, but 
there is a real gap for racial minorities and women. What 
impact do you think a lack of diversity has on the small 
business community?
    Mr. HWANG. We have done research on this. As I mentioned in 
my earlier testimony, there would be about 10 million jobs more 
if women and minorities were creating companies at the same 
rate as others. So it is a profound gap. It is also not just in 
terms of the gross economy. It is also in terms of the level of 
innovative products. There is research that shows that diverse 
teams tend to make more innovative solutions together. And I 
think that goes a lot to the core of the American fabric. What 
makes us competitive is the ability to bring in a diversity of 
ideas and talents to bear on problem solving.
    Mr. EVANS. Thank you, Mr. Chair. I yield back the remainder 
of my time.
    Chairman BRAT. Thank you very much.
    The gentlelady from Puerto Rico is now recognized for 5 
minutes.
    Ms. GONZALEZ-COLON. Thank you, Mr. Chairman.
    This is going to be for the full panel. Even though the 
interest rate has been low for quite some time, many small 
business owners say that they have issues obtaining credit. Why 
is this the case and maybe are some solutions for that?
    Ms. BLAND. As a small business owner who has had issues 
obtaining credit, I can definitely tell you that even for my 
business that fosters so many other businesses and is seen as a 
case study for what this entrepreneurial incubator ecosystem 
should look like, the simple matter is if you do not have--you 
know, let's say I want to get a $200,000 loan. If I do not have 
$200,000 in security, I am not getting a loan. It is as simple 
as that. You have to be able to back your own loan. And why 
would I need a $200,000 loan if I already had $200,000. You 
know?
    So it is something where even with all the great programs 
out there, it is kind of a feel-good thing where most of my 
businesses, when they go after all of these low-interest loans, 
at this point they still do not end up qualifying for them 
because what they need is really a mix of a loan and then 
something that allows for more risk, like a venture capital 
type solution. But again, with most of these businesses, 
particularly in the manufacturing sector where the growth 
pattern is a little slower and the overhead is a little higher, 
it is hard for them to get venture capital as well. So there 
are a lot of businesses that are caught in the middle of this 
and they simply cannot just bootstrap or crowdsource, and we 
are really missing out, particularly in the manufacturing 
sector.
    Ms. GONZALEZ-COLON. Mr. Hwang?
    Mr. HWANG. Mr. Kauffman, the founder of our foundation, 
started his business with $5,000. And one of the questions to 
ask is: could someone obtain $5,000 as a bank loan today? And 
it is very, very hard. There has been a tremendous decline in 
community-scale banking. Yet there has been a tremendous 
aggregation in capital for risk. 80 percent of the venture 
capital in the United States is concentrated in three States: 
California, New York, and Massachusetts. So there is an unlevel 
playing field for capital right now, and there are several 
reasons that we can hypothesize around this.
    One is around the lack of community connection. The 
chairman had talked earlier about how you could go to your 
neighbors and people you had relationships with, and they 
trusted each other to pay back these loans. The disconnection 
of capital--the community--and the people that are in these 
local environments--has caused a problem because it has made 
people more risk-averse in lending capital.
    There is also, I think, a scale in difference between how 
we think of capital, both at the macro level and the micro 
level. Battleships can handle storms better than dinghies, and 
startups are dinghies. And it is hard for dinghies to get 
people to throw them these lifelines when they need them. And 
so I think an attention to the effect and the impact of 
policies on small-scale lending, not just big-scale lending, is 
very, very important.
    Ms. GONZALEZ-COLON. I will piggyback on that. How, in your 
experience working in Silicon Valley and all your research you 
have done for your books, can rural American territories 
replicate that in terms of entrepreneurship?
    Mr. HWANG. That is a complex answer and there are many 
different aspects to that. But I think primarily one of the 
things that we know innovation derives from, and we know 
startup companies are born out of, are highly interconnected 
environments. If we can build more opportunities for flows of 
information, people, and connections in communities, that is 
where capital comes from. It is from the flow of people with 
resources. It is from the trust that is built in these 
communities.
    So we can use new technological tools. We can build 
communities. We can make significant efforts to try to increase 
the interactions between people who have resources and those 
who do not. That is a very core way of getting a level playing 
field.
    Ms. GONZALEZ-COLON. I yield back my time, Mr. Chairman.
    Chairman BRAT. Thank you.
    The gentlelady from New York, Ms. Clarke, is now recognized 
for 5 minutes.
    Ms. CLARKE. Thank you, Mr. Chairman Brat, and I thank our 
ranking member, Mr. Evans. I thank our panelists of experts for 
their testimony here this morning.
    Today we have heard testimony of the state of small 
businesses in our economy. As we all know, and it is not just 
cliche, small businesses are the lifeblood of our economy. 
There are millions of Americans that are allowed to provide for 
their families and help our economy grow. In recent years we 
have seen the effects of the Great Recession slowly recede into 
the distance. Wages have increased slightly, median household 
income is on the rise, and capital is being lent with greater 
ease. However, these trends are not true for all Americans. 
Minority communities remain disproportionately affected by the 
Great Recession and face difficulty obtaining jobs, receiving 
raises, and accessing capital. The Small Business 
Administration has programs in place that take into account the 
unique challenges that minorities and women face in accessing 
capital and entering the entrepreneurial realm. Yet, these 
programs are not all of the cure.
    So Mr. Hwang, in your testimony, you stated that one of the 
megatrends affecting the spread of entrepreneurship is the 
increase in American diversity. As you stated, the 
entrepreneurship gap between white males and everyone else is 
wide and costs our company greatly, to the tune of 10 million 
jobs. Aside from cutting taxes and regulations, what can 
Congress do to ensure that all Americans are able to contribute 
and utilize their entrepreneurial acumen to inure to our 
economic growth. Give us a little bit more about your concept 
about zero barriers.
    Mr. HWANG. Sure. So what you are talking about is the 
biggest challenge facing our field today and the biggest 
mission of our foundation: how do we overcome these gaps? And I 
wish I had all the answers for you. This is obviously a very 
complex question, but I think one of the very key pieces of 
this is that there are hard and soft barriers. There are the 
hard ones, which are regulatory and legal, and the challenges--
local, county, State, Federal--that get in the way of 
entrepreneurs, but there are also invisible ones, which are the 
social barriers, the disconnected parts of communities where 
people do not interact, where you do not get the flow of talent 
and ideas between different parts of communities. We see that 
all over the country. You have certain places where 
entrepreneurship has, unfortunately, become almost a privileged 
activity and it feels like it is something that is accessible 
and obtainable only by people who are lucky enough to 
understand how to do it. And it should not be that way. It 
should be democratized where everyone has access to it.
    We are going to be working on this and finding new ways to 
do this. And ultimately, it is not about us at a foundation or 
people in Washington solving this; it has got to come from the 
grassroots. But can we find better ways to empower the 
grassroots to come up with these types of solutions, which can 
then turn into policies and actions that we can implement?
    Ms. CLARKE. Do you see closing that gap as something that 
is doable perhaps through the interconnectedness of social 
media, the Internet, and deployment of broadband to remote 
areas where perhaps it does not currently exist?
    Mr. HWANG. I think it is part of it. I think new 
technologies are able to connect people who have not been 
connected before, but we have also seen increasing silos happen 
because of new technology. You see groups that tend to be more 
isolated than ever because they chat and tweet to each other 
rather than to others.
    Ms. CLARKE. Double-edged sword.
    Mr. HWANG. It is a double-edged sword. And I think one of 
those fundamental challenges is: how do we use technology in a 
way to nurture the very fabric that makes innovation happen and 
small businesses grow? I think that is an open question. And we 
are going to be looking at this issue closely and launching 
experiments. Last year we launched experiments in 12 
organizations, totaling $4.3 million, through what we called 
the Kauffman Inclusion Challenge, into organizations across the 
U.S. trying to solve this issue of gender and racial barriers. 
We are going to be doing more of these and we are going to 
learn from that process.
    Ms. CLARKE. Very well.
    Quickly, just one question to Ms. Bland. Small employers 
must fight harder to attract and retain talented employees than 
their larger counterparts. Can you explain how the ability to 
offer healthcare benefits can help your business stay 
competitive?
    Ms. BLAND. Yes. It is the single difference for me 
oftentimes when I am hiring between whether I get the first 
tier, very best in class employee, for instance, a pattern 
maker that I really wanted that I knew had the best skills in 
the industry. Her one caveat was she must have health 
insurance, and that was the difference. So at that time I 
actually put together a healthcare plan for my employees 
specifically so I could hire her and then extended it to them.
    But again, there is so much in terms of overhead and 
regulations and everything that goes on in administering that 
plan. Sometimes it would be easier if there was an independent 
plan like the Affordable Healthcare Act where people can just 
go on a market and pick their own plan, especially if I do not 
have enough bandwidth as an employer to do the administration 
on that. You know?
    Ms. CLARKE. Chairman, I yield back.
    Chairman BRAT. Thank you very much.
    The gentleman from Mississippi, Mr. Kelly, is recognized 
for 5 minutes.
    Mr. KELLY. Thank you, Mr. Chairman. And thank you for such 
a distinguished panel.
    My oldest son is a senior in college this year, and the 
share of entrepreneurs age 20 to 34 has declined from 35 
percent in 1996 to 23 percent in 2013. I am hearing a lot of 
things. I had a small business. I ran my own law office. The 
question was not how much money I made that first year; it was 
how much I lost that first year and whether I could sustain to 
go into a second year, and that is truly. And I had a brand new 
baby about the age of yours, Ms. Bland, that my wife was also 
working, but she was putting more money into my business than I 
was, than we could afford. And so we had the same struggles and 
the same daycare that we could not afford, but she had to work. 
And so I understand those things.
    But I say all that to say, being an entrepreneur and owning 
a small business is hard, and there is risk associated with 
that. And it is that great pioneer spirit of Americans who are 
willing to take a loss, to take a risk, to not be able to 
afford things that you want to do. Those are the things that 
made America great, will keep America great, and all those 
things.
    So what can we do to spread the risk? Okay, make a level 
playing field so that all people, regardless of where they live 
or where they come from, so that all have an equal opportunity; 
not necessarily buy their risk, but at least make a level 
playing field so everyone else has, and especially in rural 
areas, which are much different.
    And I think, Mr. Hwang, if you can start.
    Mr. HWANG. Yeah, I appreciate your comments, especially on 
the pioneer spirit. Kansas City happens to be at the very edge 
of the frontier. That is where people gathered as they made the 
westward journey for 6 months into what was essentially no 
man's land at the time. And so the ability of people to 
organize resources in the pioneer spirit as they moved west is 
a great metaphor for the entrepreneurial spirit, which is how 
do you create something out of nothing?
    As I think about how we level the playing field and spread 
the risk--as you were talking about your son in college--one 
issue is that the way we educate people today is on how to fill 
jobs, how to find jobs, as opposed to how to make jobs and make 
a living and survive. And I think to talk about that shift and 
how we teach people the skills for getting jobs, versus how you 
create something that did not exist before, is a big shift that 
cuts across so many aspects of society, including education.
    So my personal feeling on this, and I think many in the 
Foundation share this, is this really cuts across many issues. 
It includes education policy. It is also the way we deal with 
capital allocation and capital resources, and policies and 
burdens that fall on entrepreneurs. I think the ability to 
honor the individuals, the pioneers, and to understand rules 
and laws that affect them, to understand the access issues they 
face is sort of flipping things upside down. We tend to focus 
on the top instead of the bottom. But when we think about 
entrepreneurs, we have got to focus on the bottom and what is 
it like to be in the situation when you started.
    Mr. KELLY. Do any of the other panel wish to comment?
    Ms. BLAND. At Manufacture NY, we have worked on a variety 
of innovative internships, apprenticeships, and workforce 
training programs specifically around blending, STEM training, 
and wearable technology with traditional manufacturing. And so 
I am a manufacturing wonk. But I think it can extend to other 
types of entrepreneurship, that we need to create training 
programs that work around people's schedules, work around their 
lives, that start a little earlier on. So while folks are still 
in high school, that they can start doing workforce training 
programs so that there is not a gap. Not everyone, you know, of 
course, we would love if everyone could go to college, but for 
some folks, particularly in the design and manufacturing 
industries, there might be a more hybrid program that is needed 
so that it is training them specifically for the career that 
they want to go into. And I think there is a lot to be explored 
in that area.
    Mr. KELLY. Thank you.
    And I think, Dr. Veuger, and I apologize, us southerners do 
poorly with names, you know, all the bright minds in 
Mississippi and in a lot of rural areas, they all want to go to 
law school. How do we encourage them to understand that maybe 
that is not the best way to use your talents to do that? How do 
we encourage that entrepreneur spirit at a young age so that 
they understand to have a 2-year degree but to be able to 
create something or build something is being much more 
successful than having a law degree, which I have, which I hope 
I never use again. But how do we create that as a Congress? How 
do we create that entrepreneur spirit, or can we?
    Mr. VEUGER. Well, I think one specific remedy here is to 
make it less profitable to be a lawyer. I think limiting the 
disruptions caused by the Federal Government, of course, 
reduces the demand for lawyers to some extent. So I think that 
is a good place to start.
    Mr. KELLY. Mr. Chairman, I yield back. Thank you.
    Chairman BRAT. Mr. Kelly, that was outstanding. Thank you.
    I do want to thank all the panelists, all the members here 
today. I think this really was great and the diversity of ideas 
across everyone who testified today, we really appreciate you 
all being here with us and sharing your perspectives.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record.
    Without objection, so ordered.
    This hearing is now adjourned, and thank you all very much.
    [Whereupon, at 11:57 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

[GRAPHICS NOT AVAILABLE TIFF FORMAT] 


                   Testimony of Victor Hwang

               Vice President of Entrepreneurship

                Ewing Marion Kauffman Foundation

                           Before the

    U.S. House Committee on Small Business, Subcommittee on 
            Economic Growth, Tax and Capital Access

                  The Entrepreneurship Deficit

                       February 16, 2017

    Chairman Brat, the Ranking Member and members of the 
Committee, thank you for the invitation to testify at this 
hearing about the small business economy.

    I'm pleased to share some insights and recommendations from 
the Kauffman Foundation about the state of entrepreneurship in 
America. First, I'll describe the bad news. Then I'll share 
some good news. Finally, I'll talk about how we can address 
these challenges.

    First, the bad news. America is suffering from an 
Entrepreneurship Deficit. It's slowly but surely eroding our 
quality of life and our national competitiveness.

    I've personally experienced the challenges of starting and 
growing new businesses. My parents were entrepreneurs. For most 
of the past decade, I've been an entrepreneur and investor in 
Silicon Valley. And over the past year, I've gotten a ``big 
picture'' perspective as the head of entrepreneurship of the 
Kauffman Foundation, an institution that funds research on 
entrepreneurship, educates policymakers, and supports 
entrepreneurial success.

    So what is causing this Entrepreneurship Deficit? Based on 
our work, we believe the deficit comes from a long-term decline 
in what economists call business dynamism, the pace at which 
firms start and grow. As a case in point, Americans are 
starting new businesses at roughly half the rate they were a 
generation ago.\1\
---------------------------------------------------------------------------
    \1\ Haltiwanger, John. ``Top Ten Signs of Declining Business 
Dynamism and Entrepreneurship in the U.S.'' NBER, August 2015.

    The implications of this deficit are profound. Recent 
economic research is starting to show how the Entrepreneurship 
Deficit is connected to some of America's biggest challenges: 
slow productivity growth, lower wages, stagnant job growth, and 
rising inequality. The data indicate that entrepreneurs create 
economic opportunities for others in society, like a circle in 
the water that ripples outward, in a continuing process that 
facilitates upward mobility. And each year, as our research 
suggests, the new and young businesses started by entrepreneurs 
create nearly all of the net new jobs in our country.\2\ 
Another recent report expands on the connection between the 
long-term decline in entrepreneurship and the effect on 
productivity and growth. That lackluster productivity drags 
wages and living standards down.
---------------------------------------------------------------------------
    \2\ Haltiwanger, John, Ron Jarmin, and Javier Miranda. ``Who 
Creates Jobs? Small vs. Large vs. Young.'' NBER Working Paper, August 
2011.

    Put simply--fewer startups mean a lower quality of life for 
---------------------------------------------------------------------------
Americans.

    But there's a gap between what we know and what we do. For 
the most part, entrepreneurs are left out of the policy debate. 
Our national discussions tend to fall along the same political 
fault lines of the past. Meanwhile, entrepreneurship remains 
far below what's needed.

    The Three Megatrends

    To make this case, I'd like to highlight some interesting 
new data. At the Kauffman Foundation, we have identified three 
megatrends that are reshaping entrepreneurship. We call these 
trends the New Demographics of Entrepreneurship, the New Map of 
Entrepreneurship, and the New Nature of Entrepreneurship. These 
trends present both challenges and opportunities to solving the 
long-term decline of entrepreneurship.

    First, the New Demographics.

    The U.S. population is increasingly becoming more racially 
diverse. Yet, the American entrepreneurial population does not 
reflect these changes. Today, 80.2 percent of American 
entrepreneurs are white and 64.5 percent are male.\3\ That's a 
big gap for racial minorities and women. And it costs the 
country.
---------------------------------------------------------------------------
    \3\ Morelix, Arnobio, Victor Hwang, and Inara Tareque. ``Zero 
Barriers: Three Mega Trends Shaping the Future of Entrepreneurship.'' 
Kauffman Foundation, February 2017.

    If minorities started businesses at the same rate as non-
minorities, the United States would have more than one million 
additional employer businesses and as many as 9.5 million more 
jobs.\4\ The persistent gender business gap has cost our 
country an additional 1.7 million businesses.\5\
---------------------------------------------------------------------------
    \4\ Ibid
    \5\ Ibid

---------------------------------------------------------------------------
    The second megatrend is the New Map of Entrepreneurship.

    The New Map is characterized by two things. First, 
entrepreneurship is increasingly an urban phenomenon. And 
second, entrepreneurial activity is growing outside the largest 
metropolitan areas traditionally associated with 
entrepreneurship--like Silicon Valley.\6\
---------------------------------------------------------------------------
    \6\ Ibid

    Over time, America has become a more urban nation. Fewer 
people live in rural areas today than they did in the past. But 
for those Americans living outside our nation's largest cities, 
we need to ensure there is economic opportunity where they 
---------------------------------------------------------------------------
live. Entrepreneurship is part of the answer.

    The final megatrend is the New Nature of Entrepreneurship.

    Technology is changing everything, including 
entrepreneurship. In the past, as companies scaled their 
revenue, jobs could scale in almost the same fashion. That is 
no longer true and will be even less true in the future.

    Take for example two businesses that were leading 
innovators in their day: Kodak and Facebook. In 1962, Kodak's 
sales first surpassed $1 billion dollars. At the time, Kodak 
employed 75,000 workers. When Facebook reached $1 billion in 
revenue in 2013, it employed about 6,300 workers.\7\
---------------------------------------------------------------------------
    \7\ Morelix, Arnobio, Victor Hwang, and Inara Tareque. ``Zero 
Barriers: Three Mega Trends Shaping the Future of Entrepreneurship.'' 
Kauffman Foundation, February 2017.

    This is not exclusive to Facebook. This is only one example 
of what we know from research covering millions of companies 
and almost twenty years of data: the most innovative, high-
productivity companies are not creating as many jobs as they 
did in the past.\8\
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    \8\ Decker, Ryan, John Haltiwanger, Ron Jarmin, and Javier Miranda. 
``Declining Business Dynamism: Implications for Productivity?'' 
Brookings Hutching Center on Fiscal & Monetary Policy, September 2016.

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    The State of Entrepreneurship

    Now, some good news. Earlier this morning, the Kauffman 
Foundation held its eighth annual State of Entrepreneurship 
Address, where we assessed the health of American 
entrepreneurship and launched a new initiative to empower 
bottom-up change.

    There is some positive movement on the short-term 
indicators. After a long hangover from the Great Recession, 
entrepreneurship is finally rebounding in the United States.\9\ 
According to the Kauffman Index of Entrepreneurship Series, 
entrepreneurship is up across all three measures: new business 
creation, growth, and local small business activity.
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    \9\ Morelix, Arnobio, Victor Hwang, and Inara Tareque. ``Zero 
Barriers: Three Mega Trends Shaping the Future of Entrepreneurship.'' 
Kauffman Foundation, February 2017.

    Kauffman's Main Street Entrepreneurship Index, which 
measures local small business activity, is nearing a two-decade 
high, driven by a jump in small business survival rates. Today, 
almost half of all new businesses are making it to their fifth 
year of operation. This marks a major turnaround from the Great 
Recession, when business survival rates dropped to a low of 
42.9 percent.\10\
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    \10\ Fairlie, Robert, Arnobio Morelix, Inara Tareque, Joshua 
Russell, and E.J. Reedy. ``2016 Kauffman Index of Main Street 
Entrepreneurship.'' Kauffman Foundation, November 2016.

    While the recent uptick in entrepreneurship is indeed good 
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news, it exists within the long-term decline I referenced.

    Also concerning is the fact that new and young businesses 
today employ fewer workers on average than they used to. 
According to the Kauffman Main Street Entrepreneurship Index, 
small businesses have gotten even smaller over the last 20 
years. The smallest of those small businesses--companies with 
one to four employees--make up 53.1 percent of all established 
small businesses.

    Zero Barriers

    As it becomes evident that the Entrepreneurship Deficit is 
one of America's biggest challenges, what can we do about it, 
and what can Congress do about it?

    To start, we cannot afford to linger in the same debates 
and arguments of the past. The Entrepreneurship Deficit is 
causing hardships every day for people in your districts--fewer 
jobs, lower wages, and a lower quality of life.

    As a response, the Kauffman Foundation today launched the 
Zero Barriers to Startup Challenge.

    Our founder, Ewing Kauffman, believed that individuals have 
a fundamental right to take an idea they have and turn that 
into a business reality. To be an entrepreneur, you shouldn't 
need a formal degree. You shouldn't need expensive experts to 
navigate the process. It shouldn't matter your face, your 
gender, or where you live. You should be able to do it quickly, 
inexpensively, without confusion, and without barriers imposed 
by others.

    Unfortunately, there is a big gap between that vision and 
today's reality.

    The Zero Barriers to Startup Challenge is a collaborative, 
nationwide effort to identify barriers, big and small, that get 
in the way of new business creation. The Kauffman Foundation 
will team up with entrepreneurs, policymakers, and others 
nationwide to identify the key barriers to starting a business 
and then work together to identify and design solutions.

    You can help people--current entrepreneurs and those with 
an idea afraid to make the leap--by engaging in this process. 
The Kauffman Foundation encourages members of Congress to host 
an ``Entrepreneurs' Town Hall'' in your district, to tour 
entrepreneur support organizations, and to invite entrepreneurs 
to testify before this committee and others about the barriers 
they face.

    After listening to entrepreneurs, we encourage you to act 
on the solutions, conversation by conversation, city by city, 
district by district.

    We also support continued public investments in data 
collection. The Kauffman Foundation was able to identify the 
three megatrends because data was available from the U.S. 
Census Bureau, the Bureau of Labor Statistics, and other 
federal agencies.

    Access to timely, quality data is so important to 
understanding how we can best help entrepreneurs that Kauffman 
invested in the creation of the Census Bureau's Annual Survey 
of Entrepreneurs. This and other public data collection efforts 
need to continue.

    When barriers hinder Americans from pursuing their 
entrepreneurial dreams, our whole nation suffers. That's no 
longer conjecture; there is accumulating research evidence for 
it. Together, let's commit to lowering barriers to 
entrepreneurship so all Americans, regardless who they are or 
where they're from, can turn their ideas into reality.

    Thank you, and I look forward to answering your questions.
[GRAPHIC NOT AVAILABLE TIFF FORMAT] 

    
    Good morning Chairman Chabot, Ranking Member Velazquez and 
members of the Committee on Small Business Subcommittee on 
Economic Growth, Tax and Capital Access. Thank you for the 
opportunity to testify today on ``State of the Small Business 
Economy''.

    My name is Holly Wade, and I serve as the director of 
research and policy analysis for the NFIB Research Foundation. 
NFIB is the nation's leading small business advocacy 
association, representing members in Washington, D.C. and all 
50 state capitals. Founded in 1943 as a nonprofit, nonpartisan 
organization, NFIB's mission is to promote and protect the 
right of its members to own, operate, and grow their 
businesses.

    Small businesses are the bedrock of the U.S. economy with 
roughly 28 million small firms, of which, 5.8 million are small 
employers.\1\ Small businesses account for about half of U.S. 
gross domestic output and about half of the private sector 
employment. Their contribution to the U.S. economy is vital to 
the creation a strong foundation for the middle class, offering 
job opportunities and contributing to their local communities. 
Small businesses provide goods and services in every market, in 
every geographic region, and throughout every demographic 
across the country.
---------------------------------------------------------------------------
    \1\ Small Business Administration, Office of Advocacy, Frequently 
Asked Questions. https://www.sba.gov/sites/default/files/advocacy/SB-
FAQ-2016--WEB.pdf

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    General Small Business Conditions

    Over the past 10 years, small-business owners have 
struggled to bounce back from the great recession. The economic 
recovery has been painfully slow for many, at first due to poor 
sales but quickly overtaken by issues related to taxes, 
regulations and the cost of health insurance.

    NFIB's Small Business Economic Trends survey found small-
business owners stuck in a below-average rut, with the survey's 
headline optimism index exceeding its 43-year average reading 
on a monthly basis only five times since July 2007, three of 
those recorded in the last three months.\2\ Owners' optimism 
failed to materialize as average GDP growth remained relatively 
flat at 2 percent over the last eight years and government 
policies continued to increase the cost of doing business. In 
response to the combination of policy constraints and anemic 
GDP growth, few small-business owners find economic conditions 
supportive of investing in or growing their business and new 
business formation has languished.
---------------------------------------------------------------------------
    \2\ Dunkelberg, William C. and Holly Wade, NFIB Small Business 
Economic Trends, Series, NFIB Research Foundation.

    The poor business climate is further exacerbated by 
heightened levels of economic and government uncertainty. 
NFIB's 2016 Small Business Problems and Priorities survey found 
that two of the top ten most severe problems affecting small-
business owners are uncertainty related.\3\ Uncertainty about 
economic conditions and government actions are ranked fourth 
and sixth out of 75 business problems, respectively, and about 
one-quarter of small-business owners find each a ``critical'' 
problem in operating their businesses. The Small Business 
Economic Trends Uncertainty Index also reached record high 
levels leading up to the 2016 presidential elections, all 
creating significant barriers to economic growth in the small-
business sector.\4\
---------------------------------------------------------------------------
    \3\ Wade, Holly, Small Business Problems and Priorities, August 
2016. NFIB Research Foundation.
    \4\ Dunkelberg, William C. and Holly Wade, NFIB Small Business 
Economic Trends, Series, NFIB Research Foundation.

    Post-election, small-business owner sentiment improved 
dramatically with more owners optimistic about the outlook for 
business conditions and business expansion. The rosier outlook 
has translated into more favorable expectations for sales 
growth and hiring to support expected gains in sales. As 
owners' confidence in the economy and economic policies rises, 
owners will be more likely to invest in and grow their 
business. Owners hold high expectations that Congress will now 
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create a friendlier business climate for them to succeed.

    Tax Costs and Complexity

    The three main concerns of small business owners fore 
operating their businesses are: taxes, compliance and 
disruption costs of regulations and health insurance costs.

    Small-business owners are inundated with a complex and 
costly tax structure that wastes their time and resources. 
According to NFIB's 2016 Small Business Problems and Priorities 
survey, five of the top ten most severe small business problems 
are tax related.\5\ The adverse impact of federal taxes on 
business income ranks third out of 75 issues and is a 
``critical'' problem for nearly three in ten small-business 
owners, important because profits are the major source of 
capital for growing their firms.
---------------------------------------------------------------------------
    \5\ Wade, Holly, Small Business Problems and Priorities, August 
2016, NFIB Research Foundation.

    Tax complexity also creates major consternation among 
small-business owners. About 27 percent find tax complexity a 
``critical'' problem, the fifth most burdensome issue. Because 
of the tax code's complexity, most small-business owners must 
use a tax preparer to file their business-related taxes to 
ensure compliance, an unnecessary cost to provide tax revenue 
---------------------------------------------------------------------------
to the government that ``simplification'' could eliminate.

    Tax-related costs compete with owners' ability to use 
limited profits for primary business activities. Profits are 
the main funding mechanism for owners purchasing new equipment, 
expanding facilities, hiring and stocking inventory. Tax-
related cost pressures are especially problematic for newer 
firms that almost solely rely on profits for operation and 
expansion costs as they are generally not able to access 
traditional lending sources. But regardless of the firm's age, 
tax burdens take a heavy toll on owners' ability to operate 
their businesses.

    Regulatory Obstacles

    Regulation is another area of angst for many small-business 
owners. One-third of small-business owners find unreasonable 
government regulations a critical problem in operating their 
businesses. Regulation is the second-most severe problem for 
small-business owners after the cost of health insurance. 
NFIB's newly released survey on regulations finds that while 
small-business owners are affected by every level of 
government, the federal government is the largest contributor 
to the problem for half of small employers. Another 30 percent 
are most affected by state-level regulations and 17 percent, 
local regulations.\6\ Twenty-eight percent of small employers 
cite compliance costs as their biggest regulatory problem, 
followed by 18 percent most burdened by understanding how to 
comply with the regulations. Extra paperwork is the biggest 
regulatory problem for 17 percent of small employers. One of 
the many regulatory problems facing small employers is simply 
the volume of regulations they must comply with. The volume of 
regulations is the largest problem for 55 percent of small 
employers compared to 37 percent who are most troubled by a few 
specific regulations coming from one or two sources. The volume 
of regulations is important in that most small employers must 
take on the responsibility of learning about new government 
requirements themselves instead of delegating the task to an 
employee because their staff is too small.
---------------------------------------------------------------------------
    \6\ Wade, Holly, Regulations, NFIB National Small Business Poll 
Series, February 2017, NFIB Research Foundation.

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    Rising Cost of Health Insurance

    Small-business owners rank the cost of health insurance as 
their most severe issue in operating their business out of 75 
potential issues with 52 percent of small-business owners 
finding it a ``critical'' problem. The high cost of health 
insurance is the main reason owners do not offer employer-
sponsored health insurance and the main reason owners 
discontinue providing the benefit. And for those offering 
health insurance, many owners annually confront the arduous 
task of adjusting profit expectations, insurance plans, cost-
sharing and other mechanisms to help absorb often erratic 
changes in premium costs.

    The rising cost of health insurance has forced many small 
employers to rethink the viability of offering health insurance 
to their employees. Since 2008, the offer rate for small 
businesses with less than 50 employees has dropped 
precipitously. Small-business owners are less likely to commit 
themselves to offering a long-term, high-cost benefit. The 
offer rate for this group has fallen 14 percentage points from 
43 percent offering in 2008 to 29 percent in 2015.\7\
---------------------------------------------------------------------------
    \7\ U.S. Department of Health and Human Services, Agency for 
Healthcare Research and Quality, Medical Expenditure Panel Survey, 
series.

    The small business health insurance tax credit was a 
targeted approach in the healthcare law to help curb health 
insurance costs for offering small employers and was intended 
to provide an incentive to start offering for those that do 
not. However, the tax credit was largely ineffective on both 
fronts as its design is exceedingly restrictive, complicated, 
and only offers limited and temporary relief to a larger small-
business cost problem. The tax credit serves as a windfall for 
the few who qualify and take the time, or pay an accountant, to 
---------------------------------------------------------------------------
file for it.

    Small Business Financing

    Small business's ability to access financing is a vital 
component of a healthy small-business sector. Small businesses 
rely on financing for general business operations but also 
expansion activities and reinvestment. But since the recession, 
loan demand remains historically weak, even with record low 
interest rates still available. Historically high numbers of 
firms remain on the ``credit sidelines'', seeing no good reason 
to borrow over the past eight years. However, if the positive 
expectations for real sales and business conditions of the last 
three months are translated into actual spending on capital 
equipment, expansion and inventory investment, borrowing 
activity should pick up. NFIB does have concerns about small 
business access to financing as the economy picks up with fewer 
small and regional banks available to them. Small-business 
owners are often more successful accessing credit through 
smaller banks, and it is yet unclear whether bank consolidation 
will have a significant impact on small business lending.

    Conclusion

    NFIB hears from small-business owners year round about the 
various challenges they face operating their business. The 
primary step in developing pro-growth policies is to first, 
``do no harm', especially when it comes to artificially 
increasing the cost of doing business whether in the form of 
higher taxes, health insurance costs or more regulations, to 
name a few. Small-business owners are in great position to 
invest in and grow their business given the right set of 
policies. Most attention must be paid to the benefits of 
regulation that use up valuable human and financial capital.

    I appreciate the opportunity to discuss the current state 
of the small-business economy and the challenges it faces going 
forward. I look forward to working with the Committee to 
support small businesses and strengthen the U.S. economy.
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    State of The Small Business Economy
    Testimony - Bob Bland
    Co-Chair, Women's March on Washington
    CEO + Founder of Manufacture New York

    Members of Congress, thank you for convening this session 
on the State of the Small Business Economy, and to all 
representatives who share a tireless commitment to retaining 
equitable opportunities for working and middle-class small 
business owners and their families.

    My name is Bob Bland, and I am the CEO & Founder of 
Manufacture New York, and the Co-Chair of the Women's March on 
Washington. Five years ago, I founded Manufacture New York as a 
29 year old female designer, entrepreneur & young mother with a 
vision of an inclusive, sustainable 21st century apparel & 
textile industry where collaboration & colocation of local 
talent provided the engine for truly revolutionary leaps 
forward in domestic manufacturing.

    Since the Great Recession, virtually all small creative & 
manufacturing businesses in New York City have had the same 
challenges--access to affordable industrial space with long 
term leases, relocation grants for those who are displaced, 
affordable housing within a reasonable commuting distance, low 
interest working capital & lines of credit to grow our small 
businesses, and competitive equipment procurement and training 
programs so that we can adapt to a rapidly changing global 
landscape.

    Fashion design & manufacturing jobs are more than just 
jobs--they are an inclusive pathway to meaningful careers and 
the potential for business ownership, regardless of previous 
educational background or socioeconomic status. With an average 
salary of $59,000, they are more likely to include benefits and 
have a clear path for growth, both in terms of skills training 
and opportunities to advance. The New York City fashion 
ecosystem is a unique creative and dynamic cultural powerhouse 
that touches lives internationally on a daily basis.

    While in 1931, New York City's iconic Garment District was 
home to the highest concentration of apparel manufacturers' in 
the world, employing 1 million locals at its height, it has 
since contracted to 15,000 total apparel manufacturing jobs in 
the city, which contextually, still accounts for 30% of all New 
York City manufactures. This can look like a bleak picture, but 
we would are sitting on several global opportunities for 
significant job growth in NYC at the intersection of fashion, 
sustainability and technology if we seize the moment.

    Bob Bland / [email protected] / 917-349-9155 /

    www.manufactureny.org
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    New York City is home to 900 fashion company headquarters, 
employs 180,000 people and pays $11B in wages and $2B in tax 
revenue annually. From the smallest emerging design startups to 
the largest department stores and luxury conglomerates, 
Manufacture New York has experienced significant interest in 
the conceptualization, research, development and 
commercialization of a shared set of resources and best 
practices to capture value and provide accountability at all 
stages of our supply chain.

    New York City has a unique proximity to a talented, 
experienced and passionate workforce; headquarters of major 
brands and media outlets in web, print, television and radio; 
and the emergence of Silicon Alley as a hotbed for VC funding 
of related technology companies. From biomaterials (Modern 
Meadow) to wearable technology (Ringly) to the connected 
devices revolution known as the Internet of Things (IoT), major 
21st century manufacturing opportunities for New York City 
exist where fashion (apparel, textiles, footwear, jewelry, home 
goods) collides with previously distant sectors like consumer 
electronics, health care, transportation and defense.

    Since Superstorm Sandy decimated our working waterfront, 
unemployment, under-employment and lack of sector-specific 
skills training remains a major barrier for economic prosperity 
in South Brooklyn, particularly among 18-24 year olds who are 
just entering into their professional lives and older residents 
looking for opportunities in new, growing businesses. We must 
work inclusively with community stakeholders and local partners 
to develop entirely new types of internships, apprenticeships 
and workforce training programs that blend STEM training in 
wearable technology and material science with apparel and 
textile manufacturing so that together, we can create a fresh 
start for urban manufacturing and new generation of leaders in 
entrepreneurship & innovation.

    The Obama Administration worked diligently to establish a 
national network of Manufacturing Innovation Institutes 
(``MII''), and we look forward to participating in future 
institutes, as these sort of public-private partnerships are 
essential to long term innovation and job opportunities in 
advanced manufacturing. The United States lost 40% of our 
middle class jobs nationally during the 30-year exodus of 
domestic manufacturing, and it will take significant, sustained 
public and private investments across administrations, with all 
key stakeholders working together, to restore our prosperity 
and economic security as a nation. We urge Congress to continue 
funding and growing these programs.

    In August 2016, Senator Kirsten Gillibrand announced the 
bipartisan Made in America Manufacturing Communities Act. In 
order to earn the ``Manufacturing Communities'' designation, 
communities would demonstrate the significance of manufacturing 
in their region and develop strategies to utilize their 
``Manufacturing Communities'' designation in making investments 
in six areas:

           Workforce training and retraining;

           Advanced research;

           Infrastructure and site development;

           Supply chain support;

           Promotion of exports and foreign direct 
        investment; and

           Operational improvement and capital access 
        for manufacturers that supports energy or process 
        efficiency, equipment or facility upgrades, or the 
        development of business incubators, among other 
        activities.

    Senator Gillibrand's bipartisan legislation is cosponsored 
by Senators Mark Kirk (R-IL), Jerry Moran (R-KS), Richard 
Blumenthal (D-CT), and Christopher A. Coons (D-DE), and a 
bipartisan House version was introduced by U.S. Representative 
David Cicilline (D-RI), Richard Hanna (R-NY), Tom Reed (R-NY), 
Tim Ryan (D-OH), John Katko (R-NY), Cheri Bustos (D-IL), John 
Garamendi (D-CA), and Lloyd Doggett (D-TX), We urge the House 
of Representatives to move this legislation forward and make 
the Manufacturing Communities program a permanent incentive for 
Made In USA small business growth.

    Manufacture New York also advocates for a healthy domestic 
manufacturing sector at large. Not only do manufacturing jobs 
pay better than comparable service jobs, but they currently 
provide skilled work for roughly 12 million Americans.

    Domestic manufacturers object to NAFTA & TPP-style trade 
agreements that not only outsource American manufacturing jobs 
to low-wage, unregulated countries, but they offer little in 
the way of oversight for overseas labor conditions.

    Our objections to this trade deal include the fact that TPP 
countries like Vietnam are known for ongoing labor and human 
rights abuses. It's questionable whether TPP labor standards 
can actually be verified or enforced in such countries.

    Additionally, free trade agreements like TPP do not include 
enforceable provisions to prohibit currency manipulation. 
Deliberate currency undervaluation by America's trading 
partners has cost the U.S. millions of jobs over the last two 
decades. TPP would have also gut Buy America provisions in U.S. 
law by allowing firms in any TPP country to bid on U.S. 
procurement, including Chinese state-owned firms located in 
Vietnam. Thus, U.S. tax dollars for apparel and textiles could 
go to China instead of to U.S. producers.

    Made In USA manufacturing is the backbone of the innovation 
economy, giving creatives + technologists the tools to 
commercialize their ideas and create new startups that fuel job 
growth in our NY metropolitan region and across the country.

                                 [all]