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


               EXAMINING THE SMALL BUSINESS LABOR MARKET

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

                                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
                           SEPTEMBER 7, 2017

                               __________

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            Small Business Committee Document Number 115-034
              Available via the GPO Website: www.fdsys.gov
              
              
              
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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
                      RALPH NORMAN, South Carolina
               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, Majority Staff Director
      Jan Oliver, Majority Deputy Staff Director and Chief Counsel
                     Adam Minehardt, Staff Director
                            
                            
                            
                            C O N T E N T S

                           OPENING STATEMENTS

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

                               WITNESSES

Dr. Michael Farren, Research Fellow, Mercatus Center, George 
  Mason University, Arlington, VA................................     4
Mr. Bruce Seilhammer, Electrical Construction Group Manager, 
  SECCO, Inc., Camp Hill, PA, testifying on behalf of the 
  Independent Electrical Contractors, Inc. (IEC).................     6
Mr. Carlos Castro, President, Todos, Inc., Woodbridge, VA, 
  testifying on behalf of the National Grocers Association.......     8
Mr. Gardner Carrick, Vice President of Strategic Initiatives, The 
  Manufacturing Institute, Washington, DC........................     9

                                APPENDIX

Prepared Statements:
    Dr. Michael Farren, Research Fellow, Mercatus Center, George 
      Mason University, Arlington, VA............................    21
    Mr. Bruce Seilhammer, Electrical Construction Group Manager, 
      SECCO, Inc., Camp Hill, PA, testifying on behalf of the 
      Independent Electrical Contractors, Inc. (IEC).............    26
    Mr. Carlos Castro, President, Todos, Inc., Woodbridge, VA, 
      testifying on behalf of the National Grocers Association...    31
    Mr. Gardner Carrick, Vice President of Strategic Initiatives, 
      The Manufacturing Institute, Washington, DC................    36
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Material for the Record:
    None.

 
               EXAMINING THE SMALL BUSINESS LABOR MARKET

                              ----------                              


                      WEDNESDAY, SEPTEMBER 7, 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 10:04 a.m., in 
Room 2360, Rayburn House Office Building, Hon. Dave Brat 
[chairman of the Subcommittee] presiding.
    Present: Representatives Brat, Kelly, Evans, and Murphy.
    Chairman BRAT. Thank you all for showing up and being 
prompt and more on time on than us Members of Congress. Glad to 
have you all with us. I looked at all your backgrounds and 
resumes, and it is going to be a great panel. And so I am 
looking forward to discussing the issue and having a great 
conversation.
    And so with that, I will call this hearing to order and get 
us started. Thank you all for being here.
    Today the labor market is facing significant challenges. 
The labor force participation rate is at 40-year lows not seen 
since the Jimmy Carter era. Many are calling for the Federal 
Government to allow mass immigration of foreign workers. 
However, displacing American workers is counterproductive and 
misses the point.
    The problem is much deeper and more fundamental. Our K-12 
education system fares poorly in some respects compared to 
other industrialized countries. I taught Econ 101 for 20 years 
in Virginia. Kids are coming out of high school not knowing 
what a business is. They don't know what an entrepreneur is. 
They don't know a price from a profit from a cost. And we have 
to change that. That is adding to the skills mismatch that I 
think we are all probably going to be discussing today.
    We also have vast a welfare state that disincentives 
individuals to work. Taxes remain high and complex. I think 
people are currently eligible for about $50,000 in just Federal 
welfare benefits.
    Combine that with State and local, if you have got two kids 
in school, that is 26 grand. If you work under the table, that 
is 25 grand. Add all that together, you are doing $100,000 
worth of benefit to you and your family and it is hard for the 
labor market to compete with that at 10 bucks an hour. So you 
see we have got--it is kind of a triple bank shot.
    And then some people want to use immigration to solve those 
complexities complex, right? And so I always start off that we 
have always been a country of immigrants, we welcome all 
immigrants. Most immigrants that come in south of the border, 
predominantly Catholic, fine people. That is not the debate at 
all. The issue coming in is people make about 20 grand, pay 
some income tax, a little bit of Federal income tax, FICA. If 
you have got two kids in school, it is 26 grand, and you are 
upside down.
    And so we have got labor market problems we have got to 
solve, K to 12 skills mismatch, welfare system issues. It is 
tied to immigration. That is in the news. Many businesses are 
struggling to find and hire qualified employees. That is true I 
think across the country in every district.
    Last month I heard this in person when I traveled around my 
district, met with dozens of business leaders. They told me all 
too often they cannot find a qualified skilled workforce to 
fill job vacancies and this hinders their ability to grow their 
business. And that is why we have been growing at about 1 to 2 
instead of 2 to 3, and if you get tax cuts, maybe shooting for 
4.
    In just the past year, the number of job vacancies grew 
from 5.5 to 6.2 million. Job vacancies, 6 million, which is the 
highest in this century. Although large businesses may have the 
resources to staff recruiting departments and offer better 
wages and benefits, resource-strapped small businesses are left 
at a significant disadvantage. And that is our job in this 
Committee, is to pay attention to small business.
    For example, according to a recent survey by the National 
Federation of Independent Businesses, NFIB, 87 percent of small 
businesses looking to hire workers reported few to no qualified 
applicants.
    Next to tax and regulatory burdens, finding qualified 
workers has become one of the top concerns for small business 
owners, if not the top.
    This morning we will hear from a distinguished panel of 
witnesses who will give their perspective on small business 
labor market issues and hopefully solutions. We will dive 
deeper into how the labor market affects economic growth, how 
we can help Americans acquire in-demand skills, and how to get 
disenfranchised workers participating in the labor market.
    I appreciate the witnesses being here today. I look forward 
to your testimony.
    I now yield to the ranking member and my good friend for 
his opening remarks.
    Mr. EVANS. Thank you, Mr. Chairman.
    America's economy has improved since the economic downturn 
8 years ago and most signs of economic gain are promising. Yet 
significant labor market challenges still exist for small 
business owners. Even though the United States is experiencing 
lower unemployment, small employers widely report difficultly 
finding qualified and skilled workers.
    The gap between the employer needs and worker skills, the 
imperative to close it has been recognized as an important 
challenge by many business leaders, educators, and 
policymakers. However, the solutions are not simple.
    This gap between the employer needs and the worker skills, 
known as the skills gap, is a particular challenge for small 
firms. They face greater barriers to developing a skilled 
workforce than their larger counterparts, including fewer 
financial resources to assist in hiring, retraining, and 
developing advanced skills.
    For businesses, this reality has dire consequences. 
Unfilled positions mean they cannot take on more customers and 
risk losing business to competitors who can fill those 
positions. The manufacturing and the construction sector, in 
particular, is facing challenging obstacles due to this 
deficiency. If we aren't able to meet the demands for trained 
workers, our country will not be able to compete globally.
    This troubling trend lacks the attention it deserves, and 
small businesses deserve a better deal. Part of that plan 
requires targeted postsecondary education, such as skill 
certificate systems which can help small firms secure qualified 
employees to help them grow. Novel partnerships among industry, 
educators, and policymakers are also playing a role by 
preparing the workforce and incentivizing school completion. 
Such direct career paths between students and employers are 
vital.
    Too many American workers in small businesses have been 
left behind. That is why creating incentives for training 
certification and apprenticeship programs lead to a better 
America. We should leverage the tools available to us in order 
to help small businesses' owners thrive with a strong 
workforce.
    Today's hearing offers us the opportunity to discuss the 
challenges and solutions to help our Nation's job creators 
prosper. Prudent investments in training and education will 
also lead to higher consumer confidence and demand.
    I look forward to hearing from our witnesses on how we can 
ensure America's small businesses are prepared to move our 
economy forward. I look forward to hearing and thanking the 
witnesses for being here.
    Thank you, Mr. Chairman, and I yield back the balance of my 
time.
    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 you. You will each have 5 minutes to deliver your 
testimony. The light will start out green. When you have 1 
minute remaining, the light will turn yellow. Finally, at the 
end of your 5 minutes, it will turn red. I ask you try to 
adhere somewhat to that time limit. We are going to probably 
run an informal shop here today and just have a nice 
conversation. But if your opening remarks can stay in that 
ballpark, that would be great.
    Our first witness is Dr. Michael Farren, a research fellow 
at the Mercatus Center at George Mason University. Dr. Farren's 
research focuses include labor and economic development issues. 
He received his bachelor's, master's, and doctorate from the 
Ohio State University. I am from Michigan, footnote.
    Thank you for being here this morning, and you are 
recognized for 5 minutes. Thank you.

  STATEMENTS OF DR. MICHAEL FARREN, RESEARCH FELLOW, MERCATUS 
   CENTER, GEORGE MASON UNIVERSITY, ARLINGTON, VA; MR. BRUCE 
SEILHAMMER, ELECTRICAL CONSTRUCTION GROUP MANAGER, SECCO, INC.; 
    CAMP HILL, PA, TESTIFYING ON BEHALF OF THE INDEPENDENT 
    ELECTRICAL CONTRACTORS, INC. (IEC); MR. CARLOS CASTRO, 
PRESIDENT, TODOS, INC., WOODBRIDGE, VA, TESTIFYING ON BEHALF OF 
  THE NATIONAL GROCERS ASSOCIATION; MR. GARDNER CARRICK, VICE 
     PRESIDENT OF STRATEGIC INITIATIVES, THE MANUFACTURING 
                   INSTITUTE, WASHINGTON, DC

                  STATEMENT OF MICHAEL FARREN

    Mr. FARREN. Thank you very much, Chairman Brat, Ranking 
Member Evans. And thank you for allowing a Buckeye to address 
you today.
    I appreciate the opportunity to discuss the skills gap with 
you. And what I would like, if possible, for you to take away 
from this, my presentation today, is the economic perspective 
in addressing social problems in that the best way to address 
social problems from an economic perspective is to either 
reduce the cost of the social problem--or the social value--or 
to increase the cost of the social problem.
    So in the case of training, if we have a skills gap and job 
applicants applying to businesses, then what we should do is 
reduce the cost or find ways to reduce the cost of acquiring 
new skills.
    What this does is it allows for a bottom-up approach for 
individual people to figure out the exact way to solve the 
individual problems facing them and the individual problems 
facing businesses rather than a targeted mandated approach that 
says, okay, I think we need specifically more science and math, 
so we are going to fund more science and math in particular. 
But businesses know what they need better than we here in 
Washington. So we should give them the ability to figure out 
what that is particularly.
    So along these lines, I have two policy proposals that 
might help address the skills gap problem. The first is to 
reform the Tax Code, and that is to allow for tax deductions in 
training investments to be counted exactly the same way that 
tax deductions for factory investments or machinery investments 
are done. So I am saying that to treat human capital 
investments the same way that we treat physical capital 
investments.
    Currently, businesses can take a tax deduction on 
improvements in machinery or tools or additional training for 
workers in their current job. However, they can't take tax 
deductions specifically for to train workers into a brand-new 
job. And so removing that will lower the cost of training 
someone exactly into the exact job the company needs and, as a 
result, should go a long way to actually addressing the skills 
gap, because companies won't have to wait for the exact right 
worker to come along. They can find a high quality applicant 
and then train then directly into position.
    It also makes training investments less risky for workers, 
because you are never quite certain if you are going to get a 
job when you engage in training prior to the fact. But if you 
already have a job and the workplace, the company is training 
you exactly in the way that you need to be trained for the job, 
you are pretty certain that your training is going to be 
valuable to the company.
    Secondly, something that I think is a good idea is to take 
a new look at disability aid programs and potentially redesign 
them. The important thing that we should do is to keep their 
valuable safety net for people who are unable to work, but look 
at whether they may be causing unintended consequences and 
inspiring people to stay out of the labor market longer than 
they otherwise would.
    So recent research by Scott Winship with the Mercatus 
Center and my own research going forward looks at this and 
finds that the level of inactivity in the labor market has 
increased over time. So that is the number of people not 
working and who are not even looking for work.
    In particular, over the last 50 years, the rate of 
inactivity in prime-age men, men between the age of 25 and 54, 
people who you would expect to be working, has more than 
tripled. Today we have over 7 million men who are not working 
and not even looking for work. And the major part of this 
increase has come because of men saying that they are disabled 
and physically unable to work, which is surprising given that 
the health of the general society and the number of workplace 
injuries has declined over time.
    So to the extent that programs are not giving people an 
incentive to rejoin the labor force after they have healed and 
they could potentially is a problem, might be part of the 
skills gap problem. And importantly, a lot of these workers are 
in the later half of their career and so they have built up 
skills and experience that they could be teaching to younger 
workers. So if we address the problem this way, we might be 
able to address the future skills gap problem at the same time.
    So in conclusion, I would advise hopefully an economic 
approach to solving problems, looking at the costs of a 
problem, but also addressing the potential mismatch of allowing 
for training programs to be treated the same way as physical 
capital investments in factory machinery and redesigning 
disability aid programs.
    Thank you very much.
    Chairman BRAT. All right. Thank you very much, Dr. Farren. 
I appreciate the testimony.
    I remember after the financial crisis the inactivity piece. 
Greenspan and Bernanke were asked: What do you think the 
greatest harm from the financial crisis was? And they didn't 
say the trillions lost in equity. They said loss of skills.
    Mr. FARREN. Yes.
    Chairman BRAT. Right? Folks being out of the labor market 
for a while, and then reentry is going to be a problem. And so 
your testimony is right on the mark.
    Our next witness is Bruce Seilhammer, Electrical 
Construction Group manager at SECCO, Inc., in Camp Hill, 
Pennsylvania. This morning, Mr. Seilhammer will be testifying 
on behalf of the Independent Electrical Contractors. At SECCO, 
Mr. Seilhammer oversees electrical construction projects for 
the company. He is also a preparation instructor for the Master 
Electrician's Exam.
    Thank you for being here this morning to share your 
perspective on skills, workforce training. And you may begin 
your testimony. Thank you.

                 STATEMENT OF BRUCE SEILHAMMER

    Mr. SEILHAMMER. Thank you, Chairman Brat and Ranking Member 
Evans and the members of the Subcommittee. I am honored for the 
opportunity to testify before you today at this important 
hearing. And as you said, my name is Bruce Seilhammer. I am the 
Electrical Construction Group manager for SECCO in Camp Hill, 
Pennsylvania. And I am here in behalf of the IEC, the 
Independent Electrical Contractors, which I am currently 
serving as the national president, and I am also here on behalf 
of our chapter in Pennsylvania.
    Based in Alexandria, our IEC association has over 50 
affiliates, training centers, representing over 2,300 
electrical and systems contractors nationwide. And our 
membership consists primarily of small businesses, with the 
average contractors having around 30 employees, 20 of which are 
typically the electricians in the field.
    And our purpose really is to establish a competitive 
environment for the merit shop, a philosophy that promotes free 
enterprise, open competition, and economic opportunity.
    Before getting into the workforce challenges faced by the 
industry, I thought I would give you a little bit of my 
background. I am currently a licensed master electrician, and I 
am also a veteran of the United States Air Force. And I give 
credit to the Air Force's electrical apprentice program for the 
skills that have contributed to my successful career that I 
have today.
    I have been with my current company, SECCO, for 24 years, 
and I have risen up through the ranks and become part of the 
senior team where I oversee about 40 of our 90 employees in the 
construction management position.
    And for decades, IEC has been on the forefront of providing 
highly trained electricians in the industry, and we are known 
for our registered apprentice program. And it is an earn-while-
they-learn, and they incur little to no debt and then enter 
into a job at a median salary of almost $53,000.
    And, again, the IEC's apprentice program is certified by 
the Department of Labor, the Office the Apprenticeship and 
State Apprenticeship Councils. And in addition, the American 
Council on Education has recommended our students that graduate 
from IEC are eligible for 40 semester hours, 40 credit hours 
for college credits. And so collectively, IEC will train over 
10,000 electrical apprentices in 2017.
    As you are probably aware, electrical contractors, like the 
rest of the construction industry, continue to struggle to find 
qualified candidates to fill openings. According to recent 
research from the Associated General Contractors, among the 
trades, electrician was the second hardest position for their 
members to fill. And this challenge is expected to continue for 
the coming years, estimating there will be about a 14 percent 
increased demand for electricians through 2024.
    Construction employers as a whole are experiencing trouble 
hiring new workers, with an estimated 500,000 skilled 
construction jobs currently vacant. A number of those different 
factors have contributed to the workforce shortages.
    One of those is what we talked about, is a lot of the folks 
have, in fact, left during the recession. In addition, much of 
the skilled workforce is planning to retire in about the next 
10 years. Three million of the current 14.5 million 
construction workers are looking to retire and leave the 
industry. And I think the average age right now of the 
construction worker is 54. That is a high average, right?
    So, unfortunately, our industry can't keep up with the 
demand. The cultural shift in our country over the past few 
decades has definitely had an impact on this. A significant 
emphasis has been placed on young people to attend a 
traditional 4-year university, and a career in the trades is 
rarely discussed as an option. And parents have grown to 
believe that the primary pathway to a successful career and the 
American Dream is through a traditional college education.
    Not helping matters is that many jurisdictions judge the 
success of their high schools on the number of students that 
attend college. So these guidance counselors and school 
officials have less incentive to suggest students consider 
entering an apprentice program like the IEC has to offer.
    This, along with enormous subsidies by the government in 
the form of student loans, has made it easier for students to 
pay for college without fully understanding the massive debt 
they are incurring and no guarantee of a job that is going to 
pay off.
    Another factor contributing to the construction industry 
worker shortage is the lack of exposure of young people to 
skilled trades early as a viable career path. Across the 
country, we are seeing less investment in vocational or career 
technical education, CTE programs in high schools. These 
programs offer students the opportunity to work with their 
hands early on.
    And every day, the IEC chapters and contractor members 
aggressively search for people interested in entering our 
apprentice program. I can tell you at my company we work with 
local high school Vo-Tech programs and promote the 
opportunities that come with being an electrician. I personally 
sit on both of the occupational advisory committees for both of 
our Vo-Techs locally, and we are able to hire those folks and 
bring them on board.
    I know I am running out of time. But, you know, to really 
address some of the labor shortages in the short term, some of 
the things that we will do as IEC members is we will share 
labor back and forth with our competitors and those kind of 
things and bring on temporary help. And there is a lot to do. 
And since all of the trades work together typically have some 
impact on each other.
    So I can give you a prime example. We are on a project 
currently that is 2 months behind because the concrete guys 
didn't have enough help. And you can't put the rest of the 
building up without the foundation. And those are the things 
that we are constantly running into.
    So I won't drone on too long. But in closing, I just want 
to express our willingness to work with this Subcommittee and 
Congress and the ability to find practical solutions to address 
the workforce shortage. So I thank you for the opportunity 
today.
    Chairman BRAT. Thank you very much, Mr. Seilhammer. We 
appreciate your testimony. And I have a couple of questions 
that you provoked some interesting issues for us.
    Our third witness is Carlos Castro, president of Todos, 
Inc., in Woodbridge, Virginia.
    Thank you for being with us.
    This morning, Mr. Castro will be testifying on behalf of 
the National Grocers Association. Founded in 1990, Todos 
Supermarkets now has two locations in Virginia which employ 
roughly 170 people.
    Thank you for being here this morning, and you may begin 
your testimony. Thank you.

                   STATEMENT OF CARLOS CASTRO

    Mr. CASTRO. Good morning, Chairman Brat, Ranking Member 
Evans, and members of the Subcommittee. My name is Carlos 
Castro, and I am the owner of Todos Supermarkets, located in 
Woodbridge, Virginia. I have been asked to testify by the 
National Grocers Association on behalf of the independent 
supermarket community. The National Grocer Association is the 
national association representing the retailers and wholesalers 
that comprise the independent sector of the supermarket 
industry, including full service supermarkets, such as Todos, 
and multistate regional chains.
    Todos Supermarkets was created in 1990 and aims to fulfill 
the needs of an increasingly diverse community. To help better 
serve our customers, we have expanded our offerings beyond 
groceries and offer money transfer services, notary, insurance, 
and tax preparation services. We even have a U.S. post office 
in house.
    As the saying goes, good help is hard to find. But at 
Todos, we have a placed an added emphasis on youth hiring 
practices that allow us to train workers and create an 
inclusive culture that allows us to retain our employees for 
the long run. Our various offerings have also allowed us to 
attract a diverse array of talent and keep our employees on 
their toes as our business continues to expand and change.
    But costly regulations often take up too much of our time 
and resources and have served as a serious barrier to hiring. 
According to National Grocers Association survey data, the 
average grocer can expect to spend between $40,000 and $50,000 
a year in regulatory compliance per store per year. In an 
industry with 1 to 2 percent profit margin, that is a 
significant amount of resources to be taken away from store 
improvements, additional staff, or expanded offerings.
    The Affordable Care Act mandate on small business serves as 
a perfect example of regulations with good intentions that have 
created an additional burden for our businesses. Todos 
Supermarkets was committed to offering healthcare to employees 
before the healthcare law was implemented. We were not only 
proud that we could cover our employees with affordable 
healthcare, but it was a hiring incentive that improved both 
recruitment and efforts to retain hardworking employees.
    Now that all businesses of our size must offer healthcare 
plans under the ACA, we can no longer use our healthcare 
program to differentiate our company, and our expenses have 
gone through the roof. If Todos had not diversified our 
offerings, we would certainly have been forced to close our 
doors due to the increasing financial strains regulations have 
caused.
    Congress and the regulatory agencies have taken steps 
recently to lighten the burden on small businesses like mine. 
The recent Federal District Court order overturning the 
Department of Labor overtime rule, as well as the decision by 
OMB not to implement the EEO-1 pay reporting regulation, have 
been a step in the right direction. While there is no one 
single regulation dragging the heaviest on small businesses, 
the sheer volume of regulation that require compliance is what 
is holding us back.
    Finally, with a workforce and customer base that is heavily 
comprised of the Latino population, I feel compelled to address 
President Trump's decision to end the Deferred Action for 
Childhood Arrival, DACA, program. Immigrants who come here 
children as part of families seeking a better life should not 
be punished for the decision of their parents. Some members of 
our team utilize the DACA program, and they are some of our 
hardest workers.
    While I understand there is a good argument on both sides 
as to whether DACA passes constitutional muster, it is clear 
that the fate of 800,000 young Latinos is now in the hands of 
the legislature. I urge Congress to act swiftly to find a 
solution to this issue and to consider the potential harm that 
could come from failure to act, not only to our businesses but 
communities and families as well.
    At Todos, we often say, if you have a positive attitude and 
work hard there is no limit to how high you can rise. With 
business, it should be the same.
    I would ask our representatives to continue to look for 
opportunities to unshackle businesses from their heavy 
regulatory burden and let businesses like mine see how high we 
can go.
    Thank you.
    Chairman BRAT. Thank you, Mr. Castro. And your testimony 
shows how all these issues are interlinked, especially with the 
regulatory examples you gave. We appreciate your testimony.
    And now I will yield to our ranking member for introduction 
of our final witness.
    Mr. EVANS. Thank you, Mr. Chairman.
    I am pleased to introduce Mr. Gardner Carrick. Mr. Carrick 
is the vice president of strategic initiatives at the 
Manufacturing Institute, a research and policy institute in 
Washington. He leads the institute's research activities and 
the development of a national education data center to deliver 
outcome information on education programs.
    He previously worked at the U.S. Department of Labor, where 
he worked to integrate the workforce development, economic 
development, and education strategies of a region to create a 
talent base for economic growth. He attended Carnegie Mellon 
University, which is in the great city of Pittsburgh. He 
received a degree in policy and management.
    Welcome.

                  STATEMENT OF GARDNER CARRICK

    Mr. CARRICK. Thank you. Chairman Brat, Ranking Member 
Evans, and members of the Subcommittee, thank you for the 
opportunity to testify today about the workforce challenges 
facing our small manufacturers.
    As you said, my name is Gardner Carrick, and I am the vice 
president of strategic initiatives at the Manufacturing 
Institute. We are affiliated with the National Association of 
Manufacturers, which is the largest industrial trade 
association and voice for over 12 million men and women that 
make things in America.
    It is mission of the institute to attract, train, and 
develop the world class talent that manufacturers need to 
compete in a global economy. There are over 250,000 
manufacturing companies in the U.S. today, and over 90 percent 
of them have fewer than 100 employees. They provide good jobs 
in every city, town, and community in the country. And today, 
manufacturing is enjoying a renaissance in the U.S.
    Since the end of the last recession, manufacturing 
companies have added over 1 million jobs. And this year alone, 
companies have added nearly 140,000 new jobs. Those are really 
good numbers for manufacturing in the last 25 years.
    While times are good for manufacturing in the U.S., there 
is a present and growing challenge for manufacturing companies: 
They are unable to find people with the skills for their open 
positions. According to the U.S. Department of Labor, there are 
nearly 400,000 open jobs in manufacturing. And a study done by 
Deloitte and the Manufacturing Institute estimated that there 
could be as many as 2 million unfilled positions by 2025.
    So I thought I would use the reminder of my time today to 
talk a little bit about what manufacturers are doing to try to 
address this problem.
    In Tucson, Arizona, a group of 20 small manufacturers 
formed an organization called the Southern Arizona 
Manufacturing Partners. Working with the local high school 
district, Pima Community College, and the workforce system, 
they created a 20-month apprenticeship-style program. This 
innovative program has enabled small companies to aggregate 
their skill demands and hiring requirements, and several dozen 
students are now participating in the program.
    In another example, across 9 states and 20 community 
colleges there is a manufacturing-led program called the 
Federation for Advanced Manufacturing Education. Originally 
started by Toyota in Kentucky, hundreds of small companies now 
participate in a five-semester apprenticeship-style program 
where students spend 3 days a week at work and 2 days a week in 
school learning the skills to be an advanced manufacturing 
technician. This is an excellent example of how larger 
companies support and partner with smaller companies to create 
the benefits for the entire industry.
    And, Congressman Kelly, Itawamba Community College is one 
of those participants.
    There is also a long-term concern, though, and that is the 
number of young people willing to consider and pursue a career 
in manufacturing. This has been a multi-decade challenge for 
manufacturers, and the Manufacturing Institute is supporting 
programs that help students experience today's manufacturing in 
hopes that they will pursue careers in the industry.
    Five years ago, the institute and NAM helped create a new 
nationwide showcase for our industry called Manufacturing Day. 
Companies would open their doors on the first Friday of October 
and invite the community in to see what manufacturing is really 
all about today. That showcase has now grown to nearly 3,000 
events and over half a million participants last year.
    In southern California, a small aerospace part supplier 
called ACE Clearwater has made Manufacturing Day a really big 
deal for them. Last year, ACE had over 500 parents, teachers, 
and students participate. They brought out exhibits in 3-D 
printing, virtual reality headsets, and welding simulations and 
let the students really experience what state-of-the-art 
manufacturing is about.
    And finally, in Pennsylvania there is a competition that 
pairs a team of eighth-grade students with a local manufacturer 
where they interview employees and executives and film the 
operations of the plant. The students then create and narrate a 
video about what is so cool about manufacturing.
    The results in Lehigh Valley have really been stunning. 
This is where the program started. Last year, over 800 people 
attended an awards banquet where they gave awards to the best 
videos created. But most importantly, the manufacturing 
programs at the local technical high school have seen a 60 
percent increase in enrollment since this program started 5 
years ago.
    The video competition has now gone Commonwealth-wide, with 
200 middle schools partnering with 200 manufacturing companies 
to create videos in eight different competitions. A very, very 
interesting program to gain experience and interest in 
manufacturing for people just as they are starting to decide 
what career to pursue.
    So, Mr. Chairman, the manufacturing sector has struggled to 
find the right workers, and it is really impacting our ability 
to grow. But companies large and small are creating and 
participating in programs that will solve this challenge.
    Manufacturing Day is on October 6 this year. That is less 
than a month away. And I encourage all of you to try to attend 
an event that day and see what manufacturing is like in your 
district.
    So thank you for the opportunity to testify this morning on 
behalf of U.S. manufacturers.
    Chairman BRAT. Thank you very much, Mr. Carrick. We 
appreciate your testimony.
    And so I will just lead off with a general question. This 
issue can get a little contentious, because there are always 
two sides, right? On the one hand, you are giving me just 
example, example, after example of $50,000 jobs which can't be 
filled, right, in great career vocations, whatever. You 
mentioned there is a cultural shift. And on the other hand, 
there are plenty of examples. People say, ``Hey, here is this 
job offer,'' and people are lined up around the block, right? 
People can't find jobs, right?
    And so I taught college for a while, and I don't know 
right, about the culture shift piece, or whatever. I am still 
kind of a free market guy at heart. There is something going 
wrong when you have got $50,000 jobs that aren't getting 
filled.
    I just want you to all kind of--what would you do if you 
are in our spot? Is it a cultural piece? Is it a skills piece. 
The schools--the programs you mentioned are great. I applaud 
all the folks who are doing it. And in our K-12 system we all 
do these little programs, but they are kind of Band-Aids, 
instead of just a whole systemic change in K-12.
    Back when I went to K-12, the teachers, no matter what 
class you were in, if you are in English class, they would tell 
you about writing a business memo. But now everyone is just--
the only metric that you are measured on is the SOL test score. 
And like you said, the measurement is getting kids to college. 
I think Mr. Seilhammer mentioned that.
    And so if you were us or if you could wave a wand and 
change the cultural component, I mean, what is the big solution 
that has to happen? And think big. I mean, President Trump, he 
has got a bully pulpit, right? He ran a show called ``The 
Apprentice,'' right? I have I told his people, get out at that 
bully pulpit, right, and do the apprenticeship thing, right? I 
mean, this is huge.
    But what would you do if you had carte blanche? Where is 
the biggest issue you see? If you all just want to kind of go 
quickly, starting with Dr. Farren and then just go right down 
the queue.
    Mr. FARREN. Thank you, Chairman Brat.
    I guess the way that I would look at is kind of what you 
have already framed. Steering culture--and I think culture is a 
part of this, because 50, 75 years ago going out and getting a 
manufacturing job was the ideal--and so steering culture in new 
directions and updating people's information takes time. The 
ship doesn't turn on a dime.
    And so I think initiatives like what has been described 
here today, to let people know that new manufacturing isn't 
simply working with grease and grime and dirt, but it is 
working with computers and it is doing a lot of really skill-
intensive work and that it is highly lucrative and you don't 
have to spend 4 years in a university or other--even longer--to 
get that kind of job is something that we should really 
emphasize to young people and to raise the--Mike Rowe has done 
a lot of work kind of raising the cultural consciousness of 
manufacturing jobs and dirty--quote, unquote--dirty jobs. So I 
think that it is probably a cultural issue.
    Chairman BRAT. Mr. Seilhammer.
    Mr. SEILHAMMER. Yes. Thank you.
    So a couple of things there. First of all, it is getting 
involved with your schools. As I mentioned, I am involved with 
both of our Vo-Techs.
    And I guess one of the fortunate things for me is I get to 
share my story. When I was done with high school, I graduated 
with honors. I did okay in school. I had no problems. I was 
tired of the formal classroom, and I went in the military, and 
I became an electrician there. And that set me up the rest of 
my life.
    And I can tell you, I get to stand up in front of these 
kids, and I have gone to graduations as the national president 
and done commencement speeches all over the country this year, 
and it is pretty awesome to see how proud they are to be 
graduating from a program like this.
    And what is really kind of neat for them to see me is I 
started in those same seats, right? Look where I am today. I am 
standing here on--or sitting here on this panel in front of 
Congress and giving this testimony. Anything is possible if you 
get involved.
    And they need to know that you don't have to go to that 4-
year college to do something great. It is a matter of being 
involved and paying attention and doing your best and all those 
things. And those programs that Mr. Carrick talked about, 
things like that matter. Getting involved with the high schools 
matters.
    And the other side of it, as Mr. Castro talked about, is 
getting rid of some of the regulatory stuff. I can tell you, in 
Pennsylvania, just locally, we are hamstrung by the ratios. We 
have to have three journeymen for one apprentice on a job site. 
That is three supervisors for one guy.
    Well, let's face it, the bottom is, when you have three 
people in charge, nobody is in charge, right? When everybody is 
responsible, nobody is responsible. So get rid of some of those 
regulatory things that are making us hamstrung.
    Think about it. If it was a 1-1 ratio--or in Colorado, it 
is the other way, it is 3-1. One supervisor, three apprentices. 
Holy cow. We could put a whole bunch more people to work, 
couldn't we?
    Chairman BRAT. Right. Very good. My time has expired. I 
will now yield to the ranking member, Mr. Evans, for 5 minutes.
    Mr. EVANS. Thank you, Mr. Chairman.
    Mr. Carrick, are you familiar with a book called ``Other 
Ways to Win''?
    Mr. CARRICK. I am not.
    Mr. EVANS. Okay. It was written by a gentleman by the name 
of Dr. Gray in Pennsylvania. I am going to piggyback a little 
bit on what the chairman raised on this larger issue. When he 
talked about other ways to win, he talked about we have sort of 
like a tradition thinking the way we approach.
    And I am a strong advocate in the area of manufacturing, 
because in Pennsylvania, as you know, tool and die makers, and 
we are at that critical age of transition in population and how 
we make that particular transition.
    So you point out an example. And I am familiar with Lehigh 
Valley and what has taken place there. The Delaware Valley 
Industrial Resource Center, is that a model that you think that 
could be used?
    Mr. CARRICK. I do. I think they have done a lot of good 
work. The Pennsylvania MEP programs, including the 
Manufacturers Resource Center in Lehigh Valley and DVIRC in the 
Philadelphia region, both do a very good job.
    Mr. EVANS. Right. Right. Right.
    But do you see--because what I see is sometime taking 
examples and building on those type of examples. So can you 
speak to a little bit about the examples? Because we talk about 
looking at it from a national perspective.
    Mr. CARRICK. Sure.
    Mr. EVANS. And obviously the culture is different State by 
State, location by location. Can you speak little bit to that?
    Mr. CARRICK. Sure.
    So, unfortunately, the examples that I gave are the 
exception, not the norm. There are not enough of these across 
the country. I mean, that includes the apprenticeship approach, 
whether it is a formal register apprenticeship or a more 
informal system, or the ability to aggregate that demand in a 
region for small manufacturers so that instead of needing 2 
jobs, the 10 companies combined need 20 or 25, and that gets a 
lot more attention.
    So groups like DVIRC and Manufacturers Resource Center are 
there to actually play that sort of coordinator or hub role 
where they can speak for and aggregate the voice of 
manufacturers in a region.
    Unfortunately, there are too few organizations like that 
across the country that are able to successfully aggregate 
those voices or help to navigate the education system. And, 
frankly, the manufacturers sometimes are unwilling or unable to 
navigate the educational bureaucracy to successfully set up 
apprenticeship programs. So groups like DVIRC are important for 
that.
    Mr. EVANS. But my understanding, in Japan and in Germany 
they used teaching factories. Are you familiar with that?
    Mr. CARRICK. I am. Unfortunately, those systems are 
different from the bottom up. And Chairman Brat mentioned 
waving a magic wand, right? So you would have to really change 
everything from the bottom up to recreate a German or a 
Japanese style program.
    I think there is an opportunity for us to take what is 
great about America in terms of individual choice and the 
ability to pursue your dreams but still set up the right system 
such that individuals can actually achieve a skill set that 
enables them to live those dreams.
    Mr. EVANS. But would you not agree, if we are going to--you 
know, the President talks about economic growth in the ballpark 
of 3, 4 percent. And, obviously, we haven't been able to get 
there.
    Mr. CARRICK. Yes.
    Mr. EVANS. So if we are going to get there, we are at a 
point where we do have to do something radical. Would you not 
agree?
    Mr. CARRICK. I do.
    Mr. EVANS. Okay. So that is kind of why I talk about 
Germany, I talk about Japan, and what they have done. I mean, 
clearly, some rethinking, redesigning in our thinking. Because 
if we don't, you know, we can kind of hodgepodge or we can kind 
of--do we kind of go for the gusto is the issue I am really 
trying to push and raise with you.
    Mr. CARRICK. I would love to go for the gusto in terms of 
the intersection or the integration of companies with the 
education system. But we need to properly incentivize the 
companies to do so. And how that happens is up to you all. But 
companies take on a great deal of risk when they are training 
individuals, oftentimes only to see those individuals leave for 
other jobs.
    Mr. EVANS. But that sort of fits back to what Dr. Farren 
talked about, is using the Tax Code as an example to make that 
structure change. I assume that is what you are referring to, 
right?
    Mr. FARREN. Yes, Ranking Member Evans, that is exactly what 
I was referring to, allowing companies to do their own training 
and treating training as if it were investments in factory 
machines.
    Mr. EVANS. Right. I mean, if we are going to change, and 
using the Tax Code, what I am understanding, using the Tax 
Code. I talked about Germany and Japan. But if you want to make 
that kind of change, you are going to have to do something if 
you are going to get the growth numbers that we talk about as a 
country.
    Mr. CARRICK. Yes, sir.
    Mr. EVANS. I thank you and yield back the balance of my 
time. Thank you, Mr. Chairman.
    Chairman BRAT. Thank you very much.
    I would like to recognize the gentleman from Mississippi, 
my good friend, Mr. Trent Kelly.
    Mr. KELLY. And hopefully we won't need an interpreter for 
these guys, Chairman. Thank you, Mr. Chairman, and our ranking 
member.
    This is a very important issue to me. And I come from an 
area that is booming right now. But we have still got a long 
way to go as far as creating workforce. And Itawamba Community 
College is a huge part of that, as are Northeast and Northwest 
Community Colleges in different areas of my district. But we 
have a great community college system in Mississippi, which I 
am a product of and a graduate from the educational side. But 
there are two sides to it, and both of them are very, very 
valuable.
    I grew up in a world where I often heard, ``I am the first 
member of my family to graduate from college.'' I grew up in a 
world where men were ashamed not to have calluses on their 
hands to a world now where men are ashamed to have calluses on 
their hands. That shows that they have to work hard for a 
living. But in the world that I grew up in, men were 
embarrassed not to have calluses on their hands.
    So it is a traditional shift in what we think is important, 
and it should always be about a ways to an end. Whether you get 
a college degree or a trade and skill or an apprenticeship, it 
should be about what do I want to do, and it should be about 
earning power. And we have lost that and turned that where 
people just think they need a college education and that 
college are now just the end. It is like, if I get a college 
education, I am successful. No, you are not. That is a ways to 
an end.
    And so how do we shift that--and I want each of you--to 
shift that where we as Americans now put the earning power and 
the skills that that person brings to the table and we put that 
on a higher plain than we have a college education where 
everyone thinks they need one and deserve one today?
    And we will start with Mr. Carrick and come back the other 
way, since we have left out other folks going the other way.
    Mr. CARRICK. Sure. I think that that is based on some 50-
years-ago thinking, which was that--and it was only a very 
small, single-digit percentage of the population that earned a 
college degree. So that really was the ticket to a good job and 
steady wages and a successful life.
    These days there are many different pathways, and it does 
not specifically include a bachelor's degree. I mean, it 
includes an associate's degree, it includes industry-based 
credentials, it includes an apprenticeship.
    So understanding that the educational credential or the 
path does not--there is no single educational path that leads 
to success is the best way, I believe, to ensure respect for 
all educational pathways that can lead to good jobs.
    Mr. KELLY. Mr. Castro.
    Mr. CASTRO. Thank you, Mr. Kelly.
    We have a gentleman that came to us 7 years ago through a 
program where I was reimbursed for the wages that I paid the 
gentleman that came along with another three workers that I 
acquired at that time through that program. He is the only one 
that stayed. Immediately we noticed he started to succeed in 
his ability to think and to thrive. So we pay a lot of 
attention to him like we do with anybody else.
    But I am happy to tell you that he is making over $100,000 
in our company. He doesn't have not even half of an associate 
degree. And I parade him--not just him, but the rest of the 
people that work with me that are in management, that I brought 
them from the ground up--because we are in an industry that 
people doesn't look up to when they are looking for a career or 
a job. People my age, they will say, ``Oh, I used to bag 
groceries here and there.'' You don't hear that anymore on 
younger people, you know, we have made it so easy.
    But my point, when I go to talk to, whether they are 
elementary school students or high school students or grown up, 
it is all about your attitude and how to work that will get you 
wherever you are. And, of course, not to toot my own horn, I 
just tell them, this is what we have achieved as a family, and 
you can do so, too.
    So we need to change that, and it has been said here all 
along, we need to change that culture. It is hard work that 
gets you wherever you want to succeed.
    Mr. KELLY. I agree.
    And that is my whole point, Chairman, is my dad had a high 
school education. He was plant manager and very regional in the 
furniture industry because he learned how to work every machine 
in that factory and he got the best at his job and he was a 
visionary. And he understood the engineering parts of it. He 
had an engineering mind better than some of the other people 
who had engineering degrees, even master's and further degrees.
    We need to get back where it is not what kind of education, 
it is where you want to go and what best gets me that, and it 
is being a visionary and a leader and being the best at your 
job, whatever that trade or skill is, whether it is a college 
education or welding.
    And I thank you, Mr. Chairman. I yield back.
    Chairman BRAT. Thank you very much.
    At this time, I would like to recognize the gentlewoman 
from Florida and my good friend, Stephanie Murphy.
    Mrs. MURPHY. Thank you, Mr. Chairman.
    And thank you all for your testimony.
    You know, when I go out in my district and I talk to the 
employers in a wide cross section of businesses, whether it is 
construction, manufacturing, tech, healthcare, even call 
centers, the number one challenge that they tell me they have 
is recruitment and retention of qualified employees. And so I 
am particularly grateful for your perspectives.
    I find it interesting that I am hearing that from employers 
in my district, because I have a district that has probably one 
of the most diverse and robust postsecondary education systems. 
We have the Nation's largest university, the University of 
Central Florida, with over 65,000 students. We have a couple of 
community college institutions, Seminole State and Valencia 
College, and we have a great liberal arts, Rollins College, and 
then a handful of career and technical education and private 
institutions. So a really diverse and robust education system. 
And yet still, when it comes to our labor force in the area, 
the number one issue is recruitment and retention of qualified 
workers.
    So in Dr. Farren's testimony, you identified the two 
possible causes of this skills gap that could be related to our 
education system. And the first is the idea that the schools 
might not be teaching students the exact skills necessary for 
the work that the employers need. And the second is the 
guessing game that students have to play when choosing to 
invest in higher education, because they are unable to forecast 
what skills that will be needed by their employers in the 
future.
    And in a 2012 McKinsey report, it found that 72 percent of 
higher education institutions believe that graduates are fully 
prepared for the workforce while only 42 percent of the 
employers agree. So that seems to indicate that there is a 
communications gap between higher education institutions and 
the industries for which the schools are ostensibly preparing 
the students.
    I am working on a piece of legislation now to implement an 
employer needs survey in which we would collect voluntary 
feedback from employers across industries on workforce needs. 
And then this publicly available feedback would be provided to 
colleges and universities so that they can make adjustments to 
their curricula to ensure that the graduating students are 
ready to join the workforce on day one.
    Could you all provide your thoughts on whether you think 
such a feedback loop would be valuable in closing that skills 
gap? And then do you think that higher education institutions 
would be willing to incorporate that kind of feedback into 
their curricula? And then, more generally, have you all had any 
experience working with institutions of higher education to 
help convey skills needs suggestions?
    Thank you.
    Mr. FARREN. Thank you, Representative Murphy.
    So, yes, your idea dovetails very closely with my idea that 
we need to address the costs of acquiring new training. And I 
think that the survey that you propose could be very valuable. 
But perhaps, going back to my initial suggestion of simply 
allowing employers to take a tax deduction for training, it 
wouldn't have to be in-house training. It might be outsourced 
training. Essentially what you would be doing is creating 
markets for training new workers in the same way that has kind 
of already been discussed here, but more official markets for 
it.
    And what that would do is create a price signal for the 
local secondary institutions to say, ``Oh, we really need to 
respond to this new demand because there is profit in it for us 
to respond to that demand rather,'' than them saying, ``Okay, 
well, we think that our employers in our district need more 
math and science or welding,'' or what have you, and trying to 
create programs for that, which is kind of a roundabout way of 
solving the skills gap rather than the direct way of say what 
you need and then go out and purchase what you need.
    Mrs. MURPHY. Great. Thank you.
    Any of the others witnesses have comments on that?
    Mr. SEILHAMMER. Sure. I will comment about it a little bit.
    You know, one of the things you asked about is, you know, 
you mentioned that the universities and so on, and then the 
career fields they go into, do they have the skills that they 
need. And what was that, 42 percent said no.
    Well, I can give you a personal experience on that. My son, 
who, sorry to say, graduated from Penn State--actually, I am 
not sorry to say--but he graduated with an electrical 
engineering degree. At the same time he was going to school, he 
worked for our company for 9-1/2 years in the electrical field. 
And so he has now got a great opportunity. He has moved down to 
Nashville. He is working with a $30 billion global company. But 
he is in a group with 24 new engineers.
    And I have asked him. I said, ``So, you know, in the time 
that you are down there and you are going through this 3-months 
training program with the new engineers,'' I said, ``how many 
times did you reference the work that you did in college?''
    ``Zero.''
    I said, ``How many times did you reference the work that 
you have done in the field for the last 9-1/2 years?''
    He said, ``Daily.''
    So there is a huge gap in what they think they need and 
what they really do need. And that is one of the great things 
about going to the Vo-Tech programs, is some of these folks 
that are already in the electrical program or the mechanics 
program, whatever they are doing, and getting in there and 
getting them--you know, we have got a--we had a young man that 
co-op'd with us. So while he is going through his senior year 
in high school last year, half a day he is coming to our shop 
and working in our prefabrication shop. He is getting 
experience with tools, terminology, the understanding of how 
things go to together.
    So we are doing our best. I mean, we are a small company. 
And kind of like Mr. Carrick said, you know, jeez, it would be 
nice if everybody was doing this. And then if you want to talk 
a little bit about where could the help be, well, we are a 
small company, we are footing the bill for this. And we pay for 
all of our apprentice classes and everything they go to, and 
their books. Holy cow, it would be nice to have a little help 
to do that for sure. I mean, fortunately, our company owner is 
huge on education, and he believes in growing people. And so 
there is a lot to be said for that.
    Mrs. MURPHY. Great. Thank you. Thank you for sharing your 
personal story.
    And I am out of time, so I will yield back.
    Chairman BRAT. I think we can run an informal shop. If you 
want to--did you have any----
    Mrs. MURPHY. Just if anybody else had any other comments, 
but other than that, yeah.
    Chairman BRAT. Sure. Mr. Castro.
    Mr. CASTRO. I have a comment. I was majoring in industrial 
engineering when I had to leave El Salvador due to a civil war. 
So I found myself here in D.C., actually in Georgetown, doing 
dishes and toilet cleaning and other kind of stuff. But it was 
fun, you know, make a buck.
    But after I learned English and was able to enter Northern 
Virginia Community College, which I proudly serve on the 
foundation board nowadays, I didn't know what to do. So I took 
some classes. One of the classes was called Career Awareness, 
if I remember it well, it was like a century ago.
    But at the end of the class, I was so pleased that, you 
know, anything that I thought, it was completely wrong. The 
teacher told me, ``You have a background in construction, you 
have a background in engineering. Construction is good here in 
the Washington area. I think your easiest way to progress is 
construction.''
    And I did follow their advice, and I worked in construction 
for about 15 years, made my money there, and then we went into 
the supermarket business.
    So I thought that. And everything I always, you know, 
trying to do whatever I can to help Northern Virginia Community 
College because they played a big role in finding my direction. 
So maybe we can do the same for other young adult people to 
help them find the right direction.
    Mrs. MURPHY. Thank you.
    Mr. CASTRO. Thank you.
    Mr. CARRICK. So, Congresswoman, we have thought about what 
you are describing, and we think of it as a signaling problem.
    Essentially, the way the market is set up is that employers 
indicate the skill set that they need through what amount to 
want ads, right? So I need a welder. Well, you need to unpack 
what it is that you need in that welder in order to actually 
tell the education system what skill set to train.
    And then you need to aggregate those signals within a given 
regional economy so that it isn't just 1 company or 2 
companies, but it is 40 or 50 or 100 companies whose skill 
requirements and job demands are aggregated, such that they can 
then properly signal both the high schools and the community 
colleges and the universities and other private training 
providers that collectively we have a demand for 200 welders, 
50 percent of whom require this skill set, 40 percent of whom 
require this skill set.
    So I would say there is a need for better clarity in 
signaling. How we actually get there, I think, is the big 
question. So I am happy to discuss further as your bill 
proceeds.
    Mrs. MURPHY. Great. Thank you.
    Thank you, Mr. Chairman.
    Chairman BRAT. Thank you, Stephanie.
    Thank you, Dwight.
    I want to thank the witnesses for your participation today. 
Up here it is kind of you have got to make some noise. And so I 
think it is valuable to schedule these hearings to remind us of 
the most important issues and just to keep it on our radar. And 
so don't go away and be quiet. Keep making noise, spreading the 
new culture that we have got to gets to the kids.
    That is the mystery, right? I mean, there is a $50,000 
signal being sent out in economics land, right? And young 
people aren't hearing that one.
    And I will just close on a joke. When I taught the kids, I 
would always say, ``What are your plans there, Ms. Johnson or 
Mr. Smith, whoever, and what are you going to do when you are 
done with college?''
    ``Well, I am going to go skiing in Colorado for a year or 
something.''
    I am like, ``Okay,'' right? I get done lecturing on the 
debt and all these issues and they are going to go off.
    So there is a signal, right, the $50,000 signal is not 
hitting this generation for some reason. So I applaud you for 
all the good ideas. You all gave us very good ideas and input.
    Mr. Seilhammer, quick question.
    Mr. SEILHAMMER. If I could speak to that real quick. I had 
the fortunate ability a couple of years ago, I listened to Bill 
Bennett, who wrote ``The Book of Virtues,'' and I got to listen 
to him at Messiah College in Pennsylvania.
    Chairman BRAT. Yeah.
    Mr. SEILHAMMER. And, you know, one of the comments he 
made--you talk about going back to fundamentals, and I share 
this at my commencement speeches that I have done this year--
but one of the issues is, he says, you know, a lot of people 
are saying, jeez, we need better kids. And the truth and the 
fact is, no, we need better parents is what we need. So that is 
as fundamental as it gets.
    Chairman BRAT. Yeah. That might be the signal strengthener 
that we need to put forward.
    So on that note, I mean, help spread the word. Keep us all 
working together as a team.
    I ask unanimous consent that members have 5 legislative 
days to submit statements and supporting materials for the 
record. Without objection, so ordered.
    Chairman BRAT. This hearing is now adjourned, and thank you 
all very much. And thank you to the staff who always makes this 
possible.
    [Whereupon, at 11:05 a.m., the Subcommittee was adjourned.]
                            A P P E N D I X

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

    Chairman Brat, Ranking Member Evans and Members of the 
Subcommittee, I'm honored for the opportunity to testify before 
you today at this important hearing, ``Examining the Small 
Business Labor Market.'' My name is Bruce Seilhammer. I am the 
Electrical Construction Group Manager for SECCO Electrical 
Construction & Service, based in Camp Hill, Pennsylvania. I'm 
here today on behalf of the Independent Electrical Contractors 
(IEC), of which I'm currently serving as president, as well as 
my chapter, Central Pennsylvania IEC, which is located in 
Mechanicsburg, Pennsylvania.

    Based in Alexandria, Virginia, the Independent Electrical 
Contractors is an association of over 50 affiliates and 
training centers, representing over 2,300 electrical and 
systems contractors nationwide. IEC's membership consists of 
primarily of small businesses, with the average contractor 
member having around 30 employees, 20 of which are 
electricians. IEC's purpose is to establish a competitive 
environment for the merit shop--a philosophy that promotes free 
enterprise, open competition and economic opportunity for all. 
IEC and its training centers conduct apprenticeship training 
programs under standards approved by the U.S. Department of 
Labor's (DOL) Office of Apprenticeship. Collectively, in the 
2017 school year, IEC will train more than 10,000 electrical 
apprentices.

    Before getting into the workforce challenges faced by the 
electrical contracting industry, I though I'd give you a little 
bit about my background. I am a licensed master electrician and 
a veteran of the United States Air Force. As a young high 
school graduate, I was like many, unsure of my career path. 
Tired of the traditional classroom setting, I took an interest 
in joining the armed forces and ultimately joined the United 
States Air Force in 1982, entering their apprenticeship program 
for electricians. The on-the-job training (OJT) and related 
classroom instruction provided me the education and skills 
necessary to become a journeyman electrician. Upon my honorary 
discharge from the service in 1986, I then passed the 
Connecticut journeyman's test and received my license.

    I give credit to the Air Force's apprenticeship program for 
the skills that have contributed to the successful career I 
have today in the private sector. I have been with my current 
company, SECCO, Inc., for 24 years and have risen through the 
ranks to become a part of its senior team, where I oversee over 
40 of the company's 90 employees in a construction management 
position.

    For decades, IEC has been on the forefront providing highly 
trained electricians to the industry through its Registered 
Apprenticeship program. An IEC apprentice is able to earn while 
they learn, incurs little to no debt and enters into a well-
paying job upon graduation. According to the Bureau of Labor 
Statistics (BLS), the median salary for an electrician in 2016 
was $52,720. IEC's apprenticeship program is certified by the 
U.S. Department of Labor's (DOL) Office of Apprenticeship and 
State Apprenticeship Councils for use in 38 states and the 
District of Columbia. In addition, the American Council on 
Education (ACE) has recommended that students that graduate IEC 
be eligible for 40 semester hours of college credit. IEC is 
also a member of DOL's Registered Apprenticeship - College 
Consortium (RACC), a national network of postsecondary 
institutions, employers, unions and associations working to 
create opportunities for apprentice graduates who may want to 
further enhance their skills by completing an Associate's or 
Bachelor's Degree. RACC members have their programs evaluated 
by a third party organization to determine the college credit 
value of the apprenticeship completion certificate. Given its 
experience and investment in apprenticeship, IEC continues to 
work with the federal government, as a LEADER (Leaders of 
Excellence in Apprenticeship, Development, Education, and 
Research) in DOL's ApprenticeshipUSA program.

    As you are probably aware, electrical contractors, like the 
rest of the construction industry, continue to struggle to find 
qualified candidates to fill openings all across the country. 
According to recent research from the Associated General 
Contractors, among all the trades, electrician was the second 
hardest position for their members to fill. This challenge is 
expected to continue in the coming years, with BLS estimating 
there to be a 14 percent increase in demand for electricians 
through 2024. Construction employers as a whole are 
experiencing trouble hiring new workers with an estimated 
500,000 skilled construction jobs currently vacant.

    A number of different factors have contributed to the 
current workforce shortages in the electrical contracting 
industry. One of those is the fact that many left during the 
recession and never returned. In addition, much of the skilled 
trades workforce is retiring or is approaching retirement. 
According to former BLS economist Joseph Kane, about three 
million of the current 14.5 million construction workers will 
retire or leave the industry over the next ten years. 
Unfortunately, our industry cannot keep up with the demand. The 
cultural shift in our country over the past few decades has 
definitely had an impact on this. A significant emphasis has 
been placed on young people to attend a traditional four-year 
university, and a career in the trades is rarely discussed as 
an option. Parents have grown to believe that the primary 
pathway to a successful career and the American dream is 
through a traditional college education. Not helping matters is 
that many jurisdictions judge the success of their high schools 
on the number of students that attend college. In areas where 
this is the case, guidance counselors and school officials have 
less incentive to suggest students consider entering an 
apprenticeship program, like IEC. This, along with enormous 
subsidies by the government in the form of student loans, has 
made it easier for students to pay for college without fully 
understanding the massive debt they are incurring and no 
guarantee of a job to pay it off.

    Another factor contributing to the construction industry's 
worker shortage is the lack of exposure of young people to 
skilled trades early as a viable career path. Across the 
country, we are seeing less investment in vocational or career 
and technical education (CTE) programs in high schools. These 
programs offer students the opportunity to work with their 
hands early on. They begin to understand what subjects interest 
them and these hands-on programs could influence their post-
secondary education decisions. IEC views this as a missed 
opportunity to expose students to the skilled trades at an 
influential time in their lives, and is why it's critically 
important that Congress increase funding for CTE programs 
through mechanisms such as the Carl D. Perkins Act, which the 
House passed earlier this year.

    Every day, IEC chapters and contractor members aggressively 
search for people interested in entering our apprenticeship 
program to become the electricians of the future. At my 
company, we work with local high school Vo-Tech programs to 
promote the opportunities that come with being an electrician, 
and I personally sit on the occupational advisory committee at 
both of our local Vo-Tech schools. Just this year, we hired 
four students from these schools and we're looking for more. 
IEC's chapters also recruit students by reaching out to tech 
schools, placing ads online, and contacting high schools to 
promote electrical contracting careers. In the past year, IEC 
National launched myelectricalcareer.com, which promotes 
electrical careers to young people through sites such as 
Facebook and Pandora.

    When recruiting candidates for an electrician 
apprenticeship, IEC members have trouble finding people that 
are qualified to enter the program. Becoming an electrician 
requires a high school diploma or GED. Candidates also must 
possess solid math skills, and members continue to find that 
many interested in our opportunities do not possess the 
requisite mathematical ability to advance as apprentices. It's 
also becoming more common that young people interested in an 
electrical career lack basic ``soft skills'' and don't 
understand what it means to be punctual, communicate 
effectively, or act professionally in a work setting.

    To address labor shortages in the short term, IEC members 
will sometimes take steps that are less than ideal. Some 
members will loan electricians to a competitor or will utilize 
temps, typically as a last resort. Regardless, it is currently 
difficult for IEC members to find qualified journeymen 
electricians. These workforce challenges we face hurt our 
member companies' ability to expand and provide the services 
their respective communities need. Currently, my company has 28 
electricians, but we could easily use five more journeymen. But 
with a limited availability of qualified electricians, we have 
to grow our own through apprenticeship. Unfortunately, we are 
hamstrung by the state of Pennsylvania, which requires we 
maintain a ratio of three journeymen to one apprentice on all 
our projects. Government-mandated ratios vary across the 
country, and serve as artificial restrictions that prevent us 
from training the future electrician and help to close this 
skills gap. On a broader scale, with hundreds of thousands of 
construction jobs going unfilled year after year, this type of 
restriction on the industry will eventually start to impact our 
ability to build, repair and maintain our country's 
infrastructure, schools, businesses, factories and more. This 
inability to hire and train more people will have a detrimental 
effect, not only on the construction industry, but on the 
country as a whole, as repairing the country's infrastructure 
will take longer and increase the cost to the tax payer.

    Since all the trades work together or typically have some 
impact on each other on construction projects, the skilled 
worker shortage faced by other trades can impact us as well, 
leading to missed completion dates and increased costs by 
having to work overtime. One project we are currently working 
on is two months behind schedule because the concrete crews 
were short on labor. One IEC member in Florida reports that 80 
percent of their projects are delayed due to labor shortages. 
Unfortunately, this kind of delay due to a lack of qualified 
workers in the trades has become all too common in the 
industry.

    By virtue of recent hearings, such as the one here today, 
IEC is optimistic that legislators are becoming more interested 
in developing public policy that will further assist the 
skilled trades close the skills gap and increase the number of 
men and women entering construction apprenticeships, like 
IEC's. We are also excited by the Trump administration's 
executive order, which seeks to double federal apprenticeship 
funding to $200 million, with a goal of creating 5 million 
apprentices in the next five years. However, we are concerned 
that language within the executive order will preclude the 
industry from benefitting. IEC believes the EO should cover 
construction, especially considering the significant labor 
shortages in the industry and the opportunity expanding 
construction apprenticeships affords to place people into 
quality, high-paying careers.

    In closing, I want to express IEC's willingness to work 
with Congress and the Trump administration to find practical 
solutions to address the workforce shortage faced by merit shop 
electrical contractors and the construction industry as a 
whole. Thank you for this opportunity today to explain the 
labor challenges IEC continues to address and I look forward to 
answering any questions you may have.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

    Good morning Chairman Brat, Ranking Member Evans, and 
Members of the Subcommittee. My name is Carlos Castro, and I am 
the owner of Todos Supermarkets, located in Woodbridge, 
Virginia. I have been asked to testify today National Grocers 
Association (NGA) on behalf of the Independent supermarket 
community. The National Grocers Association is the national 
trade association representing the retailers and wholesalers 
that comprise the independent sector of the supermarket 
industry, including single full-service supermarkets such as 
Todos, and multi-state regional chains.

    Todos Supermarkets was created in 1990 and aims to fulfill 
the needs of an increasingly diverse customer base. To help 
better service our customers, we have reshaped our offerings 
beyond groceries and offer money transfer, notary, and tax 
preparation services.

    As the saying goes ``good help is hard to find,'' but at 
Todos, we have placed an added emphasis on youth hiring 
practices that allow us to train workers and create an 
inclusive culture that allows us to retain our employees for 
the long-run. Our numerous new offerings have also allowed us 
to attract a diverse array of talent and keep our employees on 
their toes as our business continues to expand and change. To 
help with difficult hiring and training challenges, NGA plays a 
key role in the supermarket sector by providing resources, 
educational training programs, and sharing industry best 
practices with its members that we need to hire, train and 
retain a highly qualified workforce.

    But costly regulations often take up too much of our time 
and resources, and pose as a serious barrier to hiring new 
talent. According to NGA survey data, the average grocer can 
expect to spend between 40 and 50 thousand dollars a year on 
regulatory compliance per store, per year. In an industry with 
a 1-2 percent profit margin, that is a significant amount of 
resources to be taken away from store improvements, additional 
staff, or expanded offerings. Forty to fifty thousand dollars 
may not sound significant in Washington, but for an independent 
grocer, that can be enough to put a struggling grocer out of 
business, or prevent a competitive grocer from hiring new 
workers or renovating existing operations in order to keep pace 
with the competition.

    The current regulatory environment has stifled innovation 
and small business growth by forcing us to focus resources on 
complying with the tidal wave of regulations, instead of our 
day-to-day operations. For the independent supermarket sector, 
it is often hard to keep up with the sheer volume of 
regulations that have been recently finalized, let alone worry 
about the number of potentially harmful regulations going 
through the rulemaking process. Regulatory agencies should 
focus on evaluating the rules that are currently on the books 
and ensure that they are necessary and effective, instead of 
churning out new regulations whose costs outweigh the potential 
benefits. NGA supports the recent Executive Order requiring 
agencies to cut two existing regulations for every new 
regulation they implement. We believe this directive will 
require regulators to do their due diligence and determine what 
rules are truly in the public interest, and which ones have 
either outlived their usefulness or have become a drag on 
economic growth.

    Obamacare mandates on small business serve as a perfect 
example of a regulations with good intentions that have created 
an additional burden for our business. Todos Supermarkets was 
committed to offering health care to employees before the 
health care law was implemented. We were not only proud that we 
could cover our employees with affordable healthcare, but it 
was a hiring incentive that improved both recruitment and 
efforts to retain hardworking employees. Now that businesses of 
our size must offer health care under the Affordable Care Act, 
we can no longer use our previous health care program to 
differentiate our company from the competition, and our 
expenses have gone through the roof.

    The revised joint employer standard from the National Labor 
Relations Board is another well-intentioned regulation that 
misses the mark. Holding businesses accountable for potential 
labor infractions committed by businesses with which they 
contract is taking enforcement too far and creates a dangerous 
precedent and standard that is impossible for businesses to 
maintain. It is challenging enough for businesses to comply 
with the mountain of regulations that face us, but penalizing 
businesses for the infraction of their potential contractors 
creates a precarious environment and disincentivizes businesses 
from contracting with outside operations.

    Until the federal district court in Texas overturned the 
Department of Labor's overtime rule, the rule presented a 
serious challenge to our business. The potential doubling of 
the salary threshold, and further automatic updates to the 
exemption threshold would have created an untenable situation 
for small supermarkets. At Todos, we believe in a philosophy of 
creating opportunities for our workers and fostering an 
environment that encourages our team members to remain with the 
company for years. However, we believe that the rule would have 
created a disincentive to working efficiently and effectively. 
It had the potential to have a substantial negative effect on 
morale as some workers would need to be reclassified as hourly 
employees, after having worked for years to earn a salaried 
status and getting to enjoy the additional flexibility this 
designation brings. We are thankful that the rule has been 
overturned, and will likely be reevaluated to take into account 
regional differences in average salary before being rewritten.

    Todos was also pleased to see that the Office of Management 
and Budget (OMB) decided not to move forward with a regulation 
put forth by the Equal Employment Opportunity Commission (EEOC) 
regarding pay data. The regulation would have required that 
employers provide pay data for employees based on gender, race, 
ethnicity, etc., with the aim of discouraging pay 
discrimination. While Todos is firmly committed to paying our 
workers a living wage and in accordance with all federal pay 
regulations, the EEOC regulation would have captured data 
without context and could have made it appear as though an 
employer was participating in discriminatory pay practices 
despite variances in candidate experience, education level, or 
other candidate considerations.

    Congress and the regulatory agencies have taken steps 
recently to lighten the burden on small businesses like mine. 
The recent court order to prevent the implementation of the 
overtime rule, and the decision by OMB to not implement the 
EEO-1 pay reporting regulation have been a step in the right 
direction. While there is not one single regulation dragging 
the heaviest on small business, the sheer volume of regulations 
that require our compliance is what holds us back. These 
burdens both increase the barrier to entry for entrepreneurs 
aspiring to enter the market and prevents existing businesses 
from expanding or improving their current operations. We must 
change the overall regulatory attitude to one of reevaluation 
instead of continued expansion.

    Additionally, if Congress hopes to improve the current 
environment for small business, it should continue working 
towards tax reform. Congress took an important step in 2015, 
making a number of tax provisions permanent, such as Section 
179, which provides small businesses with the flexibility they 
need to make large purchases and expense the cost of those 
purchases in the first year. However, Congress kicked the can 
down the road for many other tax provisions that are important 
to independent supermarkets.

    Unfortunately, Congress has a tendency to pass retroactive 
fixes to the tax code, which hinders our ability to invest in 
our future with any degree of certainty.

    As Congress turns its attention to tax reform this fall, we 
ask that Congress listen to the voice of small business. It is 
important to remember the fact that every period of sustained 
economic growth in our nation's history can be attributed to 
the success of small businesses. With this in mind, I believe 
repeal of the estate tax is critically important. As my 
business grows and I approach the current threshold, I worry 
that I am going to have to pay the tax. The planning issues 
that surround this punitive tax draws resources away from 
hiring employees and investing in our business.

    Congress must also ensure parity between pass-through 
entities, like Todos, and business that file as C-corps. In 
order to guarantee robust competition between businesses of all 
sizes, Congress should tax family-owned businesses fairly and 
equally, regardless of how we decide to file our taxes. Many 
NGA members also rely on key tax provisions such as the Last 
In, First Out (LIFO) accounting method and deductibility of 
interest expenses.

    Finally, with a workforce and a customer base that is 
heavily comprised of a Latino population, I feel compelled to 
address President Trump's decision to end the Deferred Action 
for Childhood Arrivals (DACA) program. Immigrants that come 
here as children as part of families seeking a better life 
should not be punished for the decisions of their parents. Some 
members of our team utilize the DACA program, and they are some 
of our hardest workers. While I understand there are good 
arguments on both sides as to whether DACA passes 
constitutional muster, it is clear now that the fate of 800,000 
young Latinos is now in the hands of the legislature. I urge 
Congress to act swiftly in finding a solution to this issue, 
and to consider the potential harm that could come from a 
failure to act--not only to our businesses, but to communities 
and families as well.

    All supermarkets face a challenging landscape. The current 
market is saturated with competitors that already challenge 
each other to gain a foothold and turn a profit. Now, with 
goliaths such as Amazon, Target, and Walmart in the market, 
that challenge has become even more significant for smaller 
operators. However, history has shown that independent 
supermarkets are both resilient and flexible in keeping up with 
competition. I am confident in the ability of our company and 
other independent grocers to adapt and innovate in response to 
changing consumer demands and a fiercely competitive 
marketplace.

    On behalf of Todos, the National Grocers Association, and 
the independent supermarket industry, I would like to reinforce 
our commitment to hiring, training, and retaining the best 
talent possible. We aim to provide our communities with service 
and products that are of the highest quality, and we know that 
this can only be achieved by hiring good people, and treating 
them like family.

    At Todos, we often say ``if you have a good attitude and 
work hard, there is no limit to how high you can rise.'' With 
business, it should be the same. I would ask our elected 
representatives to continue look for opportunities to unshackle 
businesses from their heavy regulatory burden, and let 
businesses like mine see how high we can go.

    Thank you,

    Carlos Castro

    Founder, Todos Supermarkets
    
  TESTIMONY OF GARDNER CARRICK, VICE PRESIDENT, STRATEGIC INITIATIVES

                      THE MANUFACTURING INSTITUTE

                               BEFORE THE

        SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS


                      COMMITTEE ON SMALL BUSINESS

                     U.S. HOUSE OF REPRESENTATIVES


                           SEPTEMBER 7, 2017


    Chairman Brat, Ranking Member Evans, and members of the 
Subcommittee on Economic Growth, Tax, and Capital Access, thank 
you for the opportunity to testify about the workforce 
challenges facing small manufacturing companies in the United 
States.

    My name is Gardner Carrick and I am the Vice President of 
Strategic Initiatives at the Manufacturing Institute. We are 
affiliated with the National Association of Manufacturers, the 
nation's largest industrial trade association and voice for 
more than 12 million men and women who make things in America.

    It is the mission of the Institute to attract, train and 
develop the world-class talent that manufacturers need to 
compete in the global economy. In partnership with some of the 
country's leading firms, we identify trends and gaps in 
manufacturing skills and training and, working with partners 
around the country, we develop programs to close those gaps. 
Among our many initiatives, our Dream It. Do It. program has 
partners in 41 states and regions to develop interest in 
manufacturing skills among youth, and programs with educational 
institutions that cultivate their interest in manufacturing and 
ensure that the skills being taught are ones that are in need 
by manufacturers. Additionally, the National Association of 
Manufacturers recently launched a nationwide campaign to 
improve the perception of manufacturing via the recently 
announced ``Creators Wanted'' campaign, to improve the 
perception of manufacturing as a career path. The Manufacturing 
Institute will be engaged in this effort to help educate the 
public about manufacturing careers and to direct those who are 
interested to programs and activities to further their skills 
and toward high skilled jobs.

    Manufacturing is a critical component of our nation's 
economy. Companies in manufacturing produce everything you see 
around you. While everyone has heard of the biggest companies 
in manufacturing, it is small companies that are the backbone 
of the industry. The vast majority of manufacturing firms in 
the United States are quite small. According to the Top 20 
Facts About Manufacturing published by the National Association 
of Manufacturers, in 2014, there were 251,901 firms in the 
manufacturing sector, with all but 3,749 firms considered to be 
small. In fact, three-quarters of these firms have fewer than 
20 employees. They provide good jobs in every city, town, and 
community across the country. And today, manufacturing is 
enjoying a renaissance in the United States.

    Since the end of the last recession, manufacturing 
companies have added over 1 million jobs and in this year 
alone, companies have added nearly 140,00 new jobs. Companies 
are choosing to locate new operations in the U.S. and this is 
having a growth effect down the entire supply chain. And 
companies are optimistic about the future as well. According to 
the most recent Manufacturers' Outlook Survey from the National 
Association of Manufacturers, 90% of companies are optimistic 
about their own company's outlook.

    While times are good for manufacturing in the U.S., there 
is a present and growing challenge for manufacturing 
companies--they are unable to find people with the skills 
required to fill their open jobs.

    According to the United States Department of Labor, there 
are nearly 400,000 open jobs in manufacturing. This is up 13% 
from the end of last year, and 36% from just two years ago. 
Looking at the longer-term picture, a study done by Deloitte in 
partnership with the Manufacturing Institute estimated that, by 
2025, there could be as many as 2 million unfilled positions in 
manufacturing. These jobs offer family supporting pay, generous 
benefits, and strong career growth potential. According to the 
Top 20 Facts About Manufacturing published by the National 
Association of Manufacturers, in 2015, the average 
manufacturing worker in the United States earned $81,289 
annually, including pay and benefits. The average worker in all 
nonfarm industries earned $63,830. Looking specifically at 
wages, the average manufacturing worker earned over $26.00 per 
hour, according to the latest figures, not including benefits. 
These jobs need to be filled if the manufacturing sector and 
the U.S. economy is going to remain strong and globally 
competitive. Fortunately, manufacturing companies are stepping 
up to offer solutions to this challenge, in partnership with 
local high schools, community colleges, and technical schools.

    The activities of manufacturers fall into two broad 
categories: 1) filling the immediate needs for skilled workers; 
and 2) strengthening interest in manufacturing careers to fill 
the long-term need for skilled workers. I would like to 
highlight a few examples of where smaller companies are engaged 
in these activities.

    In the Tucson, AZ region, a group of twenty small 
manufacturers formed an organization called the Southern 
Arizona Manufacturing Partners. Working with the local high 
school district, Pima Community College, and the workforce 
system, the Southern Arizona Manufacturing Partners created a 
20-month apprenticeship-style program. Graduating high school 
seniors interview with and are hired by one of the 
participating companies. They then enroll at Pima Community 
College in machining, eletromechanical systems, or another 
industrial technologies program where they receive concurrent 
instruction in their new field of employment. This innovative 
program has enabled small companies to aggregate their skill 
requirements and hiring demands and receive recognition and 
support from the local educational institutions and workforce 
services agency. The program has grown to where several dozen 
students now participate annually. The Manufacturing Institute 
has a strong partnership with Pima Community College and has 
supported this apprenticeship-style program from its inception.

    In Tulsa, OK, coalition of workforce, education and 
industry partners dedicated to raising awareness of 
manufacturing careers joined the Manufacturing Institute's 
Dream It Do It program. As part of the Dream It Do It 
activities, a small auto parts manufacturer called APSCO 
created an internship program for high school students who are 
interested in a manufacturing career. Students from three area 
high schools tour APSCO's automotive parts fabrication and 
assembly facility in the fall and interested students are 
interviewed and selected for its Certified Production 
Technician internship program. Interns train as a production 
technician for three hours a day from January to May and are 
paid $10 an hour. 45 students participated in this past year's 
program and APSCO has coordinated with other small 
manufacturers in the region so that those students not hired by 
APSCO at the completion of the program have interview and 
employment opportunities at other local manufacturing 
companies.

    Across nine states on the Gulf Coast and in the lower 
Midwest, there has a grown a manufacturing-led program called 
the Federation for Advanced Manufacturing Education. Originally 
started by Toyota Motor Manufacturing in Kentucky, FAME is a 
five semester apprenticeship style degree program where 
students spend three days a week at work and two days a week in 
school learning the technical skills, manufacturing culture, 
and soft skills necessary to be an Advanced Manufacturing 
Technician. Though Toyota was the original sponsor, they opened 
the program to all companies and now hundreds of small 
manufacturers are participating with the twenty partner 
community colleges, hiring hundreds of new employees annually. 
And it is a model that is now expanding to include other in-
demand positions within manufacturing. This is an excellent 
example of how larger companies support and partner with 
smaller companies to create an education, training, and 
employment program that benefits the entire manufacturing 
industry and the communities where they are located.

    While these programs are training students and hiring new 
employees for immediate job openings, there is still a longer-
term concern about the number of young people willing to 
consider and pursue a career in manufacturing. This has been a 
multi-decade challenge for manufacturers that is now a critical 
concern as total jobs in manufacturing have rebounded and 
continue to grow. The Manufacturing Institute has partnered on 
several research studies to inform the best strategies for 
attracting young people to our industry.

    In a nationwide survey of high school students, the 
Manufacturing Institute, in partnership with the Educational 
Research Center of America, found that the overwhelming 
majority of them selected their own experiences and interests 
as the most important factor in determining what career to 
pursue. And in a Public Perception of Manufacturing study, 
conducted by the Manufacturing Institute in partnership with 
Deloitte, Americans that were familiar with manufacturing were 
twice as likely to pursue a career in manufacturing or 
encourage their children to do so. These results suggest that 
they best way to encourage more Americans to consider careers 
in manufacturing is to provide them with experiences that 
increase their familiarity with today's modern manufacturing 
industry.

    Allow me to highlight a few examples of small manufacturing 
companies that have done just that.

    Five years ago, working with the Founding Partner, the 
Fabricators and Manufacturers Association, International, the 
Manufacturing Institute and the National Association of 
Manufacturers helped create a new nationwide showcase of our 
industry called Manufacturing Day. Companies would open their 
doors on the first Friday of October and invite the community 
to see what modern manufacturing looks like in their plant. 
That showcase has now grown to nearly 3,000 events and half a 
million participants.

    In Southern California, a small aerospace parts 
manufacturer called ACE Clearwater has made Manufacturing Day a 
really big deal. Last year, ACE Clearwater had over 500 
parents, teachers, and students witness and participate in 
modern-day manufacturing. Exhibits like 3D printing, laser 
cutting and water jet demonstrations, hands-free computer 
interaction, hydro-forming, virtual reality headsets, and 
welding simulations were provided by ACE and sponsor suppliers 
to give attendees an in-depth understanding of state-of-the-art 
manufacturing. The event features at least 15 work centers 
where students learn all about the manufacturing process and 
new technologies that make manufacturing exciting and creative. 
At the conclusion of last year's event, nearly 50 participating 
community college students immediately applied for open 
positions.

    In Mequon, WI, a small fabrication company called GenMet 
has been extremely active on workforce issues including serving 
on the Manufacturing Institute Board of Advisors. One of its 
most innovative programs is a teacher externship. Over the past 
few years, GenMet has hired three local high school teachers to 
work for the summer in its facility. As a result, these 
teachers have a better understanding of concepts they teach in 
their classroom using what they learned at GenMet. Teachers are 
able to use real-life analogies to explain to their students 
what they learned from their experience. By hiring teachers, 
GenMet can reach an entire classroom of students and help 
change the perception of manufacturing showing teachers what 
modern manufacturing looks like.

    And finally, in Pennsylvania, there is a competition to 
create the best 2-minute video describing What's so Cool about 
Manufacturing. Started by the Manufacturers Resource Center in 
the Lehigh Valley as part of the Manufacturing Institute's 
Dream It Do It program, the competition pairs a team of eighth 
grade students with a local manufacturer where they interview 
employees and executives and film the operations of the plant. 
The students then create and narrate a video about why their 
company best describes What's so Cool about Manufacturing. The 
community then votes on the videos through YouTube and the 
Manufacturers Resource Center hosts an awards banquet at the 
conclusion. The results in Lehigh Valley have been stunning, 
where last year over 100,000 votes were cast on YouTube, over 
800 students, parents, companies, and community leaders 
attended the awards banquet, and most importantly, the local 
technical high school manufacturing programs have seen a 60% 
increase in enrollment since the competition began 5 years ago. 
The video competition idea has now spread across the 
Commonwealth and this year, 200 middle schools will partner 
with 200 hundred manufacturing companies in eight different 
regional competitions. It is an excellent example of how small 
companies can partner with middle schools to make a significant 
impact on a student's perception of manufacturing just as he or 
she is deciding what to study in high school.

    Mr. Chairman, the manufacturing sector has struggled to 
find the right workers and it is impacting our ability to 
successfully compete in the global economy and grow our 
industry. But companies large and small are creating and 
participating in programs that will solve these challenges. I 
am proud of the work of these companies and The Manufacturing 
Institute and the National Association of Manufacturers will 
continue to support these efforts in regions all across the 
country.

    Mr. Chairman, Manufacturing Day is on October 6th, less 
than a month from now. I encourage you, the members of this 
subcommittee, and all the members of Congress to attend one of 
these events. Come see what modern manufacturing looks like and 
speak with some of the 12 million men and women that make 
American manufacturing strong.

    Thank you for the opportunity to testify this morning.

                                 [all]