[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]




 
                      PROMOTING ECONOMIC RECOVERY:

                       EXAMINING CAPITAL MARKETS

                         AND WORKER PROTECTIONS

                          IN THE COVID-19 ERA

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

                            VIRTUAL HEARING

                               BEFORE THE

                  SUBCOMMITTEE ON INVESTOR PROTECTION,

                 ENTREPRENEURSHIP, AND CAPITAL MARKETS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 14, 2020

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-103
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 




                           ______                       


              U.S. GOVERNMENT PUBLISHING OFFICE 
 43-196 PDF             WASHINGTON : 2021 
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            STEVE STIVERS, Ohio
ED PERLMUTTER, Colorado              ANDY BARR, Kentucky
JIM A. HIMES, Connecticut            SCOTT TIPTON, Colorado
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
DENNY HECK, Washington               TOM EMMER, Minnesota
JUAN VARGAS, California              LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey          BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TED BUDD, North Carolina
RASHIDA TLAIB, Michigan              DAVID KUSTOFF, Tennessee
KATIE PORTER, California             TREY HOLLINGSWORTH, Indiana
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                JOHN ROSE, Tennessee
AYANNA PRESSLEY, Massachusetts       BRYAN STEIL, Wisconsin
BEN McADAMS, Utah                    LANCE GOODEN, Texas
ALEXANDRIA OCASIO-CORTEZ, New York   DENVER RIGGLEMAN, Virginia
JENNIFER WEXTON, Virginia            WILLIAM TIMMONS, South Carolina
STEPHEN F. LYNCH, Massachusetts      VAN TAYLOR, Texas
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
        Subcommittee on Investor Protection, Entrepreneurship, 
                          and Capital Markets

                   BRAD SHERMAN, California, Chairman

CAROLYN B. MALONEY, New York         BILL HUIZENGA, Michigan, Ranking 
DAVID SCOTT, Georgia                     Member
JIM A. HIMES, Connecticut            STEVE STIVERS, Ohio
BILL FOSTER, Illinois                ANN WAGNER, Missouri
GREGORY W. MEEKS, New York           FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER. New Jersey          ALEXANDER X. MOONEY, West Virginia
VICENTE GONZALEZ, Texas              WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam            TREY HOLLINGSWORTH, Indiana, Vice 
KATIE PORTER, California                 Ranking Member
CINDY AXNE, Iowa                     ANTHONY GONZALEZ, Ohio
SEAN CASTEN, Illinois                BRYAN STEIL, Wisconsin
ALEXANDRIA OCASIO-CORTEZ, New York


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 14, 2020................................................     1
Appendix:
    July 14, 2020................................................    39

                               WITNESSES
                         Tuesday, July 14, 2020

Bradley, Neil L., Executive Vice President and Chief Policy 
  Officer, U.S. Chamber of Commerce..............................    10
Busette, Camille, Senior Fellow and Director of the Race, 
  Prosperity, and Inclusion Initiative, the Brookings Institution     5
Simpson, Anne, Director, Board Governance and Strategy, 
  California Public Employees' Retirement System (CalPERS).......     7
Spriggs, Hon. William E., Chief Economist, AFL-CIO; and Professor 
  of Economics, Howard University................................     8

                                APPENDIX

Prepared statements:
    McHenry, Hon. Patrick:.......................................    40
    Bradley, Neil L..............................................    43
    Busette, Camille.............................................    57
    Simpson, Anne................................................    67
    Spriggs, Hon. William E......................................    73

              Additional Material Submitted for the Record

Axne, Hon. Cindy:
    Letter of support for H.R. 5933, the Disclosure of Tax Havens 
      and Offshoring Act from 102 various groups.................    99
    Letter of support for H.R. 5933, the Disclosure of Tax Havens 
      and Offshoring Act from various undersigned groups.........   105
Huizenga, Hon. Bill:
    Wall Street Journal article entitled, ``Calpers Prepares for 
      the Long Haul,'' dated June 14, 2020.......................   109


                      PROMOTING ECONOMIC RECOVERY:

                       EXAMINING CAPITAL MARKETS

                         AND WORKER PROTECTIONS

                          IN THE COVID-19 ERA

                              ----------                              


                         Tuesday, July 14, 2020

             U.S. House of Representatives,
               Subcommittee on Investor Protection,
             Entrepreneurship, and Capital Markets,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 12:01 p.m., 
via Webex, Hon. Brad Sherman [chairman of the subcommittee] 
presiding.
    Members present: Representatives Sherman, Maloney, Scott, 
Himes, Foster, Meeks, Vargas, Gottheimer, Porter, Axne, Casten, 
Ocasio-Cortez; Huizenga, Stivers, Wagner, Hill, Emmer, Mooney, 
and Steil.
    Ex officio present: Representative Waters.
    Chairman Sherman. The Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets will come to order. 
Without objection, the Chair is authorized to declare a recess 
of the subcommittee at any time. Also, without objection, 
members of the full Financial Services Committee who are not 
members of this subcommittee are authorized to participate in 
today's hearing.
    Before we begin today's hearing, I want to remind Members 
of a few matters, including some required by the regulations 
accompanying H.Res. 965, which established the framework for 
remote committee proceedings.
    Members are reminded to keep their video function on at all 
times, even when they are not being recognized by the Chair. 
Members are also reminded that they are responsible for muting 
and unmuting themselves, and to mute themselves after they have 
finished speaking. The staff has been instructed to only mute 
Members and witnesses as appropriate, when not being recognized 
by the Chair, to avoid inadvertent background noise. If a 
Member is having technical difficulties with the video 
function, they can participate with audio only. In that case, 
the Member will not be counted towards a quorum or vote. 
Members are reminded that all House rules relating to decorum 
and order apply to this remote hearing.
    Without objection, at the request of Representative Axne, I 
would like to submit three letters in support of H.R. 5933 for 
the record: one from a group of investors managing over $800 
billion; one from a group of NGOs; and one from small business 
organizations.
    Without objection, it is so ordered.
    Today's hearing is entitled, ``Promoting Economic Recovery: 
Examining Capital Markets and Worker Protections in the COVID-
19 Era.''
    I will now recognize myself for 4 minutes for an opening 
statement.
    Since the start of COVID-19, millions of Americans have 
suffered severe economic hardship. As the Federal Reserve has 
reported, more than 20 million Americans have lost jobs due to 
COVID-19. And as Fed Chair Jerome Powell recently testified 
before this committee, the rise in joblessness has been 
especially severe for lower-wage workers, for women, for 
African Americans, and for Hispanics.
    While we can be thankful that recently there has been a 
decline in unemployment claims, and that the national 
unemployment rate is, ``down to 11.1 percent,'' we are going to 
have a long road to recovery.
    During today's hearing, we will examine the business 
practices and corporate-governance decisions that have been 
adopted in light of the COVID-19 epidemic, and their impact on 
American workers.
    In the past 3 years, we have seen publicly traded 
corporations spend over $2 trillion on stock buybacks. If this 
capital was in the hands of corporations, they would be better-
positioned to deal with the current downturn. Now, many of 
these companies are announcing layoffs of employees.
    Of the 20 million who are unemployed, 19.8 million are 
unemployed in the private sector, many of them with publicly 
traded corporations.
    The crisis has also highlighted a number of ways in which 
employers don't adequately provide for their employees. In a 
global pandemic, 8.4 million Americans remain uninsured, and 
36.6 million do not have paid sick leave. Paid sick leave is 
particularly important because it is not only critical for that 
worker; it is critical for the entire society. If you are sick, 
stay home. If there is somebody in your household who may have 
COVID, stay home until you can get a test and get the results 
of that test.
    But our economic incentives don't buttress the public 
health concerns, because many Americans do not have sick leave, 
or used up their sick leave before the pandemic. The Families 
First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, 
Relief, and Economic Security (CARES) Act dealt with employers 
with between 50 and 500 employees. But that leaves virtually 
all of the publicly traded corporations, that are the subject 
of this hearing, without any Federal mandate to provide sick 
leave, so many do not, and as a result, people have to choose 
between a paycheck and staying home because they may have 
COVID. This is obviously terrible public health.
    We are also going to discuss a number of important pieces 
of legislation. Today, I am particularly focused on the 
limitations that we imposed on those companies getting direct 
Federal loans. At a minimum, these companies are supposed to 
abstain from stock buybacks and dividends. The idea that we 
would give money to a company as a loan, and instead of 
supporting the business, that money goes out to shareholders in 
stock buybacks, is simply outrageous. And yet, we are told that 
the Fed is planning to, in effect, make direct loans, but 
package them as being the single purchaser of an issuance of 
publicly tradeable bonds. That is nothing more than a ruse.
    The CARES Act provided some incentive and direction to the 
Fed to deal with a number of issues, including supporting 
minimum wage and supporting unions, but it was very clear that 
Federal money lent directly to a company should not be used for 
stock buybacks.
    With that, I look forward to hearing from our witnesses. I 
now yield 5 minutes to the ranking member of the subcommittee, 
Mr. Huizenga, for his opening statement.
    Mr. Huizenga. Thank you, Mr. Chairman. There is no doubt 
that the last several months have upended the livelihood and 
well-being of millions of American families throughout the 
United States. With almost every State under stay-at-home 
orders, everyone has been affected by this pandemic. Not only 
has this affected our daily lives, but it has certainly 
impacted our capital markets as well.
    Undoubtedly, these have been uncertain times for American 
investors and market participants. During the first quarter of 
2020, the pandemic sent shock waves through our economy, as 
well as our capital markets, which led to unprecedented 
volatility.
    This turmoil was highlighted by sharp price declines, yet 
spikes in volume across equity markets, resulting in markets 
having the worst performance since the financial crisis as the 
first quarter came to a close.
    In April, the virus and efforts to contain it contributed 
to a record 14.7 percent unemployment rate. April's 
unemployment rate was 10.3 percentage points higher than the 
previous month, which resulted in the largest month-to-month 
increase to date.
    The passage of the CARES Act helped mitigate the crisis. 
The CARES Act included major programs, such as the Paycheck 
Protection Program (PPP), which, as of the end of June, allowed 
nearly 4.8 million small business loans to be approved, 
resulting in saving an estimated 50 million jobs, and at least 
72 percent of the small business payroll in all 50 States.
    The Paycheck Protection Program played a critical role in 
my west Michigan district by supporting more than 236,000 jobs. 
Because of the PPP, more small businesses were able to make 
payroll, and more employees were able to receive paychecks, 
instead of battling the broken unemployment system in my home 
State of Michigan.
    Although we saw significant market volatility early in the 
crisis, markets recovered significantly, having undergone the 
toughest test to date. While there is certainly more ground to 
be gained, I believe our capital markets have responded 
accordingly.
    Since the outbreak of the COVID-19 pandemic, the SEC has 
[inaudible] ability accordingly.
    Additionally, they established an internal cross division 
of COVID-19 [inaudible], the central point for managing and 
coordinating the Commission's efforts to better monitor and 
respond to the effects of the pandemic on markets, issuers, and 
investors, as well as assisting other regulators and public 
sector officials.
    Although our capital markets have stabilized and 
unemployment rates are thankfully dropping, we need to focus on 
policies and reforms to lift our economy, enhance growth, and 
get people back to work. Congress needs to create and foster an 
environment that encourages entrepreneurship and innovation, 
while removing regulatory hurdles and slowing growth for our 
public companies.
    We must work to improve and expand access to the capital 
markets, help grow our small businesses, and increase 
investment opportunities as well as choices for Main Street 
investors in the hopes of growing their savings and creating a 
brighter and more prosperous retirement.
    In today's challenging global economy, the strength of our 
capital markets is vital to long-term economic growth. However, 
the current regulatory burdens and bureaucracy only stifles our 
small business growth and hinders the U.S. ability to compete 
on a global stage, predominantly with China.
    I look forward to discussing more of the ways to reignite 
our economy, and to help get our small businesses back up and 
running, as well as to get Americans back to work.
    And with that, Mr. Chairman, I would like to submit a 
written statement from the ranking member of the full Financial 
Services Committee, Ranking Member McHenry, for the record. And 
with that, I yield back.
    Chairman Sherman. Without objection, it is so ordered.
    I now recognize the Chair of the Full Committee, the 
gentlewoman from California, Chairwoman Waters, for 1 minute.
    Chairwoman Waters. I want to thank you, Chairman Sherman. 
The coronavirus pandemic has had an unprecedented impact on our 
nation's workers, capital markets, and economy. As more than 20 
million Americans have lost their jobs, people of color have 
disproportionately been affected. Fully half of Black adults 
are now unemployed. And now, many of the critical relief 
measures Congress provided in March are expiring, including 
unemployment insurance and the eviction and foreclosure 
moratorium.
    But this economic pain is not shared equally. The stock 
market and Wall Street have largely recovered their early 
losses. And despite receiving unprecedented support from the 
government, more companies are not providing PPE or hazard pay 
for front-line workers, and others are laying off workers by 
the thousands, as they pay their executives and shareholders 
handsomely.
    So, I look forward to discussing legislative proposals to 
force companies to do what they should have done from the 
beginning: truly protect American workers. And I yield back the 
balance of my time.
    Chairman Sherman. Thank you. Today, we welcome the 
testimony of four witnesses: Dr. Camille Busette; Ms. Anne 
Simpson; Dr. William Spriggs; and Mr. Neil Bradley. I will 
provide the introduction for each of these witnesses, and then 
recognize them in turn.
    Dr. Busette is director of the Brookings Race, Prosperity 
and Inclusion Initiative, and is a senior fellow in governance 
studies with affiliated appointments in economic studies and 
metropolitan policy. Among her prior roles, she was the 
inaugural head of the Office of Financial Education at the 
Consumer Financial Protection Bureau (CFPB).
    Ms. Simpson serves as director of the Board of Governance 
and Strategy for the California Public Employees Retirement 
System, CalPERS, which I believe is the largest pool of 
investment capital in the United States.
    She is also a member of the SEC's Investor Advisory 
Committee, a public company accounting board oversight investor 
advisory group, and the Leadership Council of the Robert F. 
Kennedy Center for Justice and Human Rights.
    Dr. Spriggs serves as the chief economist at the AFL-CIO, 
and as a professor and former Chair of the Department of 
Economics at Howard University. In his role with the AFL-CIO, 
he chairs the Economic Policy Working Group and the Trade Union 
Advisory Committee to the Organization for Economic Cooperation 
and Development, and serves on the board of the National Bureau 
of Economic Research.
    Finally, Mr. Bradley serves as executive vice president and 
chief policy officer of the U.S. Chamber of Commerce. Before 
joining the U.S. Chamber of Commerce, Mr. Bradley was president 
of Chartwell Policy Solutions, a research analysis and advisory 
firm on public policy issues.
    The witnesses are reminded that your oral testimony will be 
limited to 5 minutes. A chime will go off at the end of your 
time, and I would ask you to respect the members' and other 
witnesses' time by wrapping up your oral testimony. And without 
objection, your entire written statements will be made a part 
of the record.
    Dr. Busette, you are now recognized for 5 minutes to give 
your oral presentation.

STATEMENT OF CAMILLE BUSETTE, SENIOR FELLOW AND DIRECTOR OF THE 
   RACE, PROSPERITY, AND INCLUSION INITIATIVE, THE BROOKINGS 
                          INSTITUTION

    Ms. Busette. Thank you, Chairman Sherman. Good afternoon, 
Chairwoman Waters, Ranking Member McHenry, Subcommittee 
Chairman Sherman, Subcommittee Ranking Member Huizenga, and 
members of the subcommittee. It is an honor to participate in 
today's hearing on capital markets and emergency lending in the 
COVID-19 era.
    The 2020 COVID-19 pandemic has triggered the deepest 
downturn in output and employment since World War II. Americans 
have experienced the downturn broadly across sectors, yet 
unequally across racial groups and categories of workers. 
Blacks, Latinos, and Native Americans, along with low-wage 
workers, have borne the health and financial costs of this 
pandemic.
    With the CBO now projecting real gross domestic product to 
recover its pre-pandemic level only by the middle of 2022, 
policymakers should be thinking now about how not only to 
address urgent economic issues, but also how to position the 
U.S. economy for a broad-based and equitable rebound that 
harnesses the potential of the tens of millions of Americans 
who are currently unemployed or underemployed.
    To position the economy for a robust recovery from this 
particular downturn, Congress and other policymakers must craft 
policy and fiscal responses that address the particular 
characteristics of this COVID-19 economic recession. Briefly, 
what we think of as a public health crisis has also deepened an 
existing equity crisis for Blacks, Latinos, and Native 
Americans.
    In addition, the pandemic recession specifically threatens 
the financial and general well-being of tens of millions of 
Americans workers. Those characteristics of this recession 
demand policy solutions that actively reduce racism and the 
growing inequality that has been the most recent hallmark of 
the pre-pandemic economy. Those solutions should focus on three 
broad efforts.
    First, closing the racial wealth gap. This includes 
charging the Federal Reserve with taking its policies to 
lowering the Black unemployment rate until it matches the White 
unemployment rate, further supporting Black and minority-owned 
businesses by providing short-term liquidity, and by 
incentivizing lending and addressing banks' concerns about the 
risk of lending to underserved small businesses. And finally, 
by thinking about how to craft payment to Black families, that 
are designed to remunerate them for the effect of public 
policies intended to exclude them from participating in the 
economy.
    The second solution for generating a broad-based recovery 
is including wages and opportunities for upward mobility for 
Americans who earn low wages. This includes authorizing an 
automatic stabilizer that kicks in when the economy is in 
recession, and a continuation of the additional $600-per-week 
unemployment insurance that was part of the CARES Act.
    When drawing from the Families First Coronavirus Response 
Act, Congress should mandate that all employers of low-wage 
workers provide paid leave. Finally, Congress should consider 
raising the Federal minimum wage by $5 per hour.
    The third solution for generating a broad-based recovery is 
eliminating the existing health disparities that are prevalent 
in low-income communities of color. Congress can provide 
incentives to States and local governments to prioritize 
easily-accessed healthcare centers, and to require that their 
medical professionals are certified in the provision of care in 
a culturally sensitive manner.
    So, while there is a pervasive rhetoric about returning to 
normal, that is, to the immediate pre-pandemic past, what I 
want to impress upon you today is that a robust American 
economy will require that we do not return to status quo ante, 
because the status quo ante has meant the perpetuation of 
racism in our economy, as well as the continuation of financial 
and health insecurity for almost half of the American 
workforce.
    We, therefore, should work to establish a set of goals that 
simultaneously speak to the breadth and the quality of 
recovery. A high-quality recovery is one that puts the U.S. in 
a position to accelerate economic growth by generating jobs 
that provide economic security across a wide range of sectors, 
and by addressing the disparate economic consequences of the 
pandemic on communities of color and on low-wage workers. Thank 
you.
    [The prepared statement of Dr. Busette can be found on page 
57 of the appendix.]
    Chairman Sherman. Ms. Simpson, you are now recognized for 5 
minutes.

   STATEMENT OF ANNE SIMPSON, DIRECTOR, BOARD GOVERNANCE AND 
   STRATEGY, CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM 
                           (CalPERS)

    Ms. Simpson. Thank you. Chairman Sherman, Ranking Member 
Huizenga, and members of the subcommittee, thank you for the 
opportunity to testify at today's hearing on behalf of CalPERS. 
We applaud and support the subcommittee's focus on building a 
sustainable, inclusive, and competitive economy in repairing 
the damage done by the COVID crisis.
    In this testimony, I will provide a brief overview of 
CalPERS' investment principles, highlight our approach to human 
capital management, and offer some suggestions on how we move 
forward.
    As Chair Sherman said, CalPERS is the largest public 
defined benefit pension fund in the United States, with 
fiduciaries managing nearly $400 billion in global assets on 
behalf of almost 2 million public employees, retirees, and 
beneficiaries, to support their retirement and their health 
needs. Nothing could be more important.
    Our responsibility to pay benefits decades into the future 
requires that we take a long-term, multigenerational view when 
assessing performance. And we are not only long-term investors; 
CalPERS pays around $25 billion in benefits, cash, each year to 
our retired members. And nearly 60 cents of every dollar paid 
in those benefits comes from investment returns. This means 
that our members depend upon safety and soundness in the 
capital markets for their retirement security.
    To meet our investment goals, CalPERS needs to earn 7 
percent, risk-adjusted returns across the portfolio for the 
long-term. And to achieve those returns, CalPERS is guided by 
its fiduciary duties of prudence, care, and loyalty, whilst 
minimizing costs to the employers.
    To help us with this goal, our board has adopted investment 
beliefs which recognize the importance of today's topics in 
this hearing in regard to long-term fiduciaries. One example: 
CalPERS investment belief number 4 states that long-term value 
creation requires effective management of three forms of 
capital: financial; physical; and, most important, human.
    This is reflected in our strategic plan for sustainable 
investment, which focuses on improving corporate reporting, and 
within that, we have worked in partnership with the Human 
Capital Management Coalition. Their work has led to a petition 
to the SEC on disclosure around these topics, recognizing that 
the research demonstrates that disclosure is an essential 
condition for sound investment, for effective and consistent 
corporate accountability, and sustainable economic growth.
    The SEC's Investor Advisory Committee, of which I am a 
member, subsequently made recommendations on human capital 
management disclosure. These include issues of tremendous 
relevance to today's hearing: the stability of the workforce, 
including voluntary and involuntary turnover, and internal hire 
and promotion rates; the safety of the workforce, including 
frequency, severity, and lost time due to injuries, illness, 
and fatalities; and the percentage of first-tier suppliers that 
were audited for health and safety compliance; furthermore, 
average hours of training per employee per year; also race, 
ethnicity and gender, diversity data, and standardized measures 
of employee satisfaction.
    All of these recommendations are based on outstanding 
research that has been done in the field to demonstrate the 
relevance to investors. This has been echoed by a joint public 
statement by SEC Chair Clayton, and the Director of the 
Division of Corporation Finance, Bill Hinman, who said that 
company disclosures should respond to investor interest in: 
one, where the company stands today operationally and 
financially; two, how the companies COVID-19 response, 
including its efforts to protect the health and well-being of 
its workforce and its customers is progressing; and three, how 
its operations and financial condition may change as our 
efforts to fight COVID-19 progress. And they ruefully 
acknowledge that historical information may be relatively less 
significant.
    However, the current corporate disclosure regime does not 
provide investors with the information we need to assess 
drivers of value and sources of risk. In part, this is because 
reporting has not kept pace with changes to the economy. We 
believe the current reporting regime requires improvement in 
terms of the scope of regulatory disclosure, and should apply 
to all listed companies, so that investors can assess risk and 
return across their portfolio.
    We ask you and the SEC to consider proposals to expand and 
improve disclosure, whilst protecting investor rights. We 
appreciate the language included in the FSGG appropriations 
legislation that would prevent the SEC from moving to finalize 
proposals that we consider would impair the ability of 
investors like CalPERS to fulfill our fiduciary 
responsibilities.
    These are vitally important issues in light of the current 
pandemic. We appreciate being included in this discussion, and 
stand ready to work with you to modernize corporate reporting 
so that it better serves the needs of investors and contributes 
to the strengthening of the capital markets on which so many 
rely. Thank you, Chair Sherman and Ranking Member Huizenga, for 
inviting CalPERS to contribute to this hearing. We look forward 
to your questions.
    [The prepared statement of Ms. Simpson can be found on page 
67 of the appendix.]
    Chairman Sherman. Thank you.
    Dr. Spriggs, you are now recognized for 5 minutes.

STATEMENT OF THE HONORABLE WILLIAM E. SPRIGGS, CHIEF ECONOMIST, 
     AFL-CIO; AND PROFESSOR OF ECONOMICS, HOWARD UNIVERSITY

    Mr. Spriggs. Thank you. I want to thank Full Committee 
Chairwoman Maxine Waters, Subcommittee Chairman Brad Sherman, 
and Subcommittee Ranking Member Huizenga for the invitation to 
give testimony before you today on the issue of our nation's 
unemployment crisis, and on worker safety and the capital 
markets.
    I am happy to offer this testimony on behalf of the AFL-
CIO, America's house of labor, representing the working people 
of the United States, and based on my expertise as a professor 
in Howard University's Department of Economics.
    My written testimony focuses heavily on the needs of 
workers in today's economy. The extra $600 that has been added 
to unemployment insurance is contributing importantly to the 
stability of our economy. We see from the indications in March 
and April, when people were unable to have the $600, how they 
were falling behind and not paying their rent on time, and that 
in May and June, they did improve their payment of rent on 
time. But now that we are into July, with the threat that the 
$600 will go away, consumers are already starting to hoard 
their money and savings, and have fallen behind in July, out of 
fear that the money will run out at the end of July.
    That money is necessary because a disproportionate share of 
the unemployed are Black and Latinx workers. They have no 
wealth, they have no liquidity, and studies have consistently 
shown that a $1 loss in income on their part leads to much more 
than a $1 drop in consumption. And that is because they have no 
savings, and they look to a long recovery that will make it 
difficult for them to be able to get jobs. And so, this extra 
money actually is an equity issue in the face of this, and it 
is necessary for the economy in terms of stability.
    And we see that in that we have achieved the restoration of 
consumption on the part of people in the bottom 40 percent of 
the income distribution. We still face a crisis because of a 
drop in demand brought about because of the disease.
    I detail, in my written testimony, the threats that workers 
get when they complain about safety at work. These threats 
disproportionately have fallen on Black workers. One in six 
Black workers feel that they will face retaliation from their 
employer if they complain about a safety violation.
    Workers do not have the sense that they have sick leave or 
the assurance that their employers will support them if they 
are sick. We see a very frightening share of women who show up 
to work and report that they have symptoms because they fear 
losing their job. And this is especially true for Latinx women, 
who are among the lowest-wage workers.
    In order for us to win this fight against COVID, we must 
appreciate that this is a disease that people catch at work. 
This is not a matter of a lack of proper healthcare by Latinx 
and African-American communities.
    The look that the Center for Disease Control did on health 
professionals showed that African Americans catch COVID at work 
in the same proportion that they are represented among 
healthcare workers. The problem for the African-American 
community is that Black workers are overrepresented in 
healthcare.
    When you look at who is hospitalized in the Latinx 
community for COVID, you see it as a working-age disease; the 
majority of Latinx who get hospitalized are 18 to 44 years of 
age.
    It is vital for the Congress to monitor money given to 
corporations under COVID to make sure that workers are safe, 
that they will not face retaliation if they complain about 
safety, and that they have sick leave so that they can report 
illness and stay home and not infect other workers. This is 
vital for the economy.
    It is vital to be prudent about the money that we are 
sending to these companies. We are not going to win this 
economic war until we win the war against the disease. We 
cannot have the money from Congress wasted on financial 
activities. It needs to go to the real economic activities. 
Stock buybacks, dividends, and excessive pay to CEOs are 
leakages from the money that must go to keep companies 
profitable and producing, and to keep their workers safe. I 
encourage you to look at the legislation before you on those 
matters. Thank you for this opportunity to testify.
    [The prepared statement of Dr. Spriggs can be found on page 
73 of the appendix.]
    Chairman Sherman. Thank you, Dr. Spriggs. Thanks for 
focusing our attention on the need for sick leave.
    And Mr. Bradley, you are recognized for 5 minutes.

  STATEMENT OF NEIL L. BRADLEY, EXECUTIVE VICE PRESIDENT AND 
         CHIEF POLICY OFFICER, U.S. CHAMBER OF COMMERCE

    Mr. Bradley. Chairman Sherman, Chairwoman Waters, Ranking 
Member Huizenga, members of the subcommittee, on behalf of the 
3 million-plus businesses that the U.S. Chamber is privileged 
to represent each day, thank you for the opportunity to appear 
before you today.
    To date, 3.3 million Americans have been infected with the 
COVID virus, and over 134,000 have died. Nearly 18 million 
Americans, more than 1 in 10 workers, find themselves 
unemployed amidst the deepest and swiftest economic contraction 
on record. Over the past several decades, we faced many 
challenges, including asset bubbles, market failures, and 
exogenous events, like terrorist attacks. But this is 
unprecedented.
    The road to full recovery will be longer than any of us 
desire, but the work that you and your colleagues in Congress 
will do can speed us along the way. While the pandemic and the 
economic shock it has caused have touched every corner of this 
land, the health and economic impacts are not evenly borne.
    As of June, some sectors of the economy have essentially 
restored all of the jobs lost since February. Other sectors, 
particularly those most impacted by closures and social-
distancing requirements, where remote work is not possible, 
have faced catastrophic losses. Nearly 30 percent of the 
leisure and hospitality jobs that existed in February are gone 
today.
    Today, the unemployment rate is 50 percent higher for Black 
than for White Americans, and only slightly better for 
Hispanic-Americans.
    While some of these disparities reflect the unique nature 
of the pandemic and the countermeasures taken in response, much 
of the differences, especially for Black Americans, reflect 
structural challenges that existed before any of us had ever 
heard of COVID or social distancing.
    At the U.S. Chamber, we believe we have two important 
challenges immediately before us: to beat the pandemic and 
minimize its economic fallout; and to begin the long work of 
creating a more level playing field that ensures a greater 
equality of opportunity for all Americans.
    We should not conflate these challenges by passing 
permanent policy changes under the guise of responding to the 
immediate challenges of COVID, nor by thinking that our 
response to COVID will change these long-term structural 
challenges.
    At the Chamber, we are simultaneously focused on 
initiatives to address both of these challenges. In response to 
COVID, we have supported the CARES Act, the Paycheck Protection 
Program (PPP), and the Main Street Lending Program. We believe 
a phase 4 bill that is timely, temporary, and targeted, and 
focused on issues like a liability safe harbor, support for 
slower-to-recover employers, the unemployed, and State and 
local governments, is critical.
    We recently launched an initiative on the quality of 
opportunity, focused on closing the opportunity gap that exists 
for Black Americans. Our work includes efforts around 
education, employment, and entrepreneurship. We look forward to 
working with members of this committee around issues, such as 
access to capital for Black and other minority-owned 
businesses.
    Amidst all of this, however, there is some good news. Each 
week, the Census Bureau reports on new business applications, 
and they break out those that, based on their criteria, they 
believe are the most likely to create payrolls, and new jobs 
for our fellow Americans.
    In the most recent week, the number of these types of new 
high-propensity business applications was up over 100 percent 
compared to a year ago. It is actually the highest on record in 
the past 13 years. The same was true for the 2 weeks prior, 
compared to the last 13 years. The week before that was the 
second-best week on record.
    Across this country, our fellow Americans are responding to 
this crisis by creating new opportunities for themselves and 
for others. Who knows what new businesses are being formed 
today that will change the world tomorrow? To fulfill their 
promise, these new businesses will need capital. That is why 
the Chamber is pleased to support proposals that make it easier 
for entrepreneurs to access crowdfunding, micro offerings, and 
angel investors. It is why we support business development 
companies. My written testimony details these and other bills 
the Chamber supports.
    It is also why I must raise a note of caution. Some of the 
bills noticed for this hearing today would set back the 
economic recovery, and impede the restoration of jobs. Some of 
the proposals change the rules around receipt of COVID-related 
aid after businesses have already applied for and received 
assistance. Changing the rules mid-game is the surest way to 
make sure that employers don't apply for aid, which just means 
more unemployed.
    There is not a single unemployed American or struggling 
American business that is responsible for this pandemic, which 
is why I urge you to continue with the bipartisan approach 
Congress has taken heretofore--of focusing on supporting the 
unemployed Americans, and helping their employers weather what 
we hope will be a short downturn.
    And in the same spirit, let's continue to work together to 
improve the structure of our economy by improving access to 
capital for entrepreneurs and employers, especially those of 
color. Thank you.
    [The prepared statement of Mr. Bradley can be found on page 
43 of the appendix.]
    Chairman Sherman. Thank you. And thanks for giving us some 
good news. ``Entrepreneurship'' is the middle name of this 
subcommittee.
    I will now recognize myself for 5 minutes. I do want to 
comment about the importance of sick leave. We should be 
providing sick leave so people can stay home if they are sick, 
or if their kids are sick. That is critical to getting this 
disease under control.
    We cannot limit that requirement only to those employers 
who feel generous. We can't limit it only to those employers 
who are between 50 employees and 500 employees, as present law 
is now. And while we should require it of those who get money 
pursuant to these facilities, it ought to apply to all 
employers, even those that are not borrowing from the Federal 
Government.
    My first question is for Ms. Simpson. For a number of years 
now, CalPERS has played a leading role for greater human 
capital management disclosure requirements. As of May 31st, 
CalPERS holds over $200 billion in public equity. Could you 
explain, from the perspective of an institutional investor, why 
human capital management disclosures are important to 
investors?
    Ms. Simpson. Thank you very much, Chairman Sherman, for the 
question. CalPERS, some years ago, reviewed the research on 
long-term value creation. We looked, with the help of 
academics, at close to 2,000 studies, and one of the 
conclusions in this is that financial capital on its own does 
not produce the value we need to pay pensions.
    Every company will tell you, ``Our people are our greatest 
asset.'' Without people, and without communities, customers, 
and supply chains, companies simply can't function. And as an 
investor, as a pension fund like us, we harvest those returns 
in order to benefit other workers, those who are relying on 
this for their retirement security, and for their health 
benefits.
    What we have found difficult in terms of making progress is 
that there is simply so little information about this vital 
part of company performance. I will give you one example. In 
the S&P 500 these days, over 80 percent of the balance sheet is 
called, ``intangibles,'' and this is just a black box which 
essentially mostly has people: ideas; intellectual property; 
and productivity. Thirty years ago, the balance sheet for the 
S&P 500 was more than 80 percent fixed assets, stuff: 
factories; and property ownership.
    So I think what we are saying is, the economy has moved on, 
and corporate reporting has not kept up. And the point of the 
advice of the Investor Advisory Committee, as we were anchored 
in research about what matters for performance and came up with 
those categories, and we do have hope that the SEC will pick 
this up. Thank you.
    Chairman Sherman. Let me squeeze in another question, and 
that is, first, if we are going to get reliable information 
about human capital, what we do for things on the balance sheet 
and the income statement is, we have clearer definitions, 
because different companies can give different rules as to, or 
different definitions as to what it means to have an average 
employee retention of 1 year or 3 years or whatever. And so, I 
think we need to work on defining the terms and having a body 
define those terms just as we define earnings per share, just 
as we define number of outstanding shares, just as we define 
everything on the balance sheet and on the income statement.
    And then second, we are going to need to audit this 
information, because it seems to be that this information, the 
accuracy of it, is just as important to you as an investor, as 
that earnings-per-share number or any other number on the 
balance sheet.
    Mr. Spriggs, we have seen, especially since the 2017 bill, 
a number of companies giving somewhat contradictory information 
as to how much taxes they are paying in different tax havens. 
Would it be helpful if we required companies to disclose what 
tax-haven countries they are operating in, and in which 
countries they have the bulk of their employment?
    Mr. Spriggs. It would be very helpful, particularly because 
we are handing out large amounts of money to help support 
productive activities of firms here in the U.S., as we go 
through this fight with COVID.
    So, it is important for us to know potential leakages of 
that money, and it is important for us to know, from a risk 
factor, because we know the disease is so prevalent in some 
other countries.
    Chairman Sherman. Thank you, and I will surprise my 
colleagues by yielding back my last 11 seconds, and recognize 
Ranking Member Huizenga for 5 minutes.
    Mr. Huizenga. Thank you, Mr. Chairman. I appreciate that, 
not just the 11 seconds, but the recognition as well. I do 
appreciate the opportunity to be having this conversation 
again. We are certainly, clearly, in a challenging time. We 
have seen some positive outcomes as we have seen some of those 
unemployment rates drop to the tune of millions of jobs coming 
back. Yet, at the same time, we know that there are some real 
issues with which we are continuing to deal.
    Mr. Bradley, I guess I would like to hear from you. As we 
are seeing this, many, I think on both sides of the aisle, 
would credit the CARES Act with helping in that recovery. And 
there's lots of discussion about what a new phase should look 
like. Dr. Spriggs had talked about the $600-per-week kicker as 
being a way of sort of leveling the playing field, and as an 
equity issue.
    And, I guess, Dr. Spriggs and others, I would invite you to 
watch Michigan at some point, where my small employers are 
saying, ``We have jobs available; people simply are not taking 
them. They won't come back to work.'' And that, to me, is an 
important part of this long-term recovery, not just short-term, 
but long-term. We cannot lose that culture, that dignity of 
work that we have.
    But, Mr. Bradley, I am wondering if you can maybe talk 
about some of the lessons learned from the CARES Act and what a 
new phase should include or maybe shouldn't include?
    Mr. Bradley. Thank you, Congressman. To your point, it is 
an unprecedented time, and Congress acted with unprecedented 
speed in enacting the CARES Act. One of the things that you 
sacrifice with speed is often accuracy. And by the way, with 
the Chamber, we don't fault the Congress at all for 
prioritizing speed over accuracy. It was exactly the right 
thing to do in the moment that we found ourselves in, as the 
virus was spreading and we were shutting down the economy.
    Now, we are in a different situation. The benefit of time 
and of data is that we can actually be much more targeted in 
our approach to supporting both employers and workers. For 
example, at the Chamber, we don't believe that simply blanket 
extensions of the same policies from the CARES Act, even on the 
employment side, are the best approach.
    We can be much more targeted, focusing on those industries 
that are the slowest to recover because we have to maintain 
social distancing requirements, for example.
    With respect to individuals, the $600 was implemented 
because of the need for speed. We know as a general principle, 
you should not pay more for someone to not work than you pay 
them to work. That creates distortions in the labor market.
    President Obama's head of the Council of Economic Advisers, 
his former NEC Director, has joined on a bipartisan basis with 
officials from the Bush Administration in suggesting a much 
better approach, one we endorse at the U.S. Chamber, to target 
unemployment benefits much more closely to what an individual 
earned when they were working.
    It shouldn't be true that you earn more, but you also 
shouldn't earn substantially less. I think we have the time to 
get this right; and if we get it right, we will support the 
recovery.
    Mr. Huizenga. Let me light a candle, not just curse the 
darkness on that particular issue. I have a bill that we have 
dubbed the ``Patriot Bonus,'' and I would hope that every 
organization that supports working men and women could be 
supportive of this. It says that if you, as an employer, offer 
a per-hourly bump over what your average wage is to that 
individual, a weekly bonus, or a one-time bonus, then you would 
get a 50 percent tax credit that you could use to offset your 
taxes. It shares the burden with the Federal Government, and 
stimulates that activity with the private sector, and most 
importantly, it benefits the worker. It puts capital back into 
circulation, and would be a great way of incentivizing those 
people to come back. So, I would like you all to take a look at 
my Patriot Bonus proposal.
    I do have a couple of others, a mergers and acquisitions 
bill that is geared towards privately held, small, family-owned 
companies, not publicly traded companies, but it streamlines 
that ability to move that company [inaudible]. I appreciate the 
opportunity to be with you, and I yield back.
    Chairman Sherman. Thank you. The Chair now recognizes the 
distinguished Chair of the Full Committee, Chairwoman Waters.
    Chairwoman Waters. Thank you very much.
    Dr. Spriggs, America owes its success to the hardworking 
ingenuity of its workers. Investors around the world flock to 
the U.S. capital markets for a chance to invest in companies 
that have the strongest human capital in the world, and yet, it 
seems that corporate America has forgotten that. Corporate 
America is doing just fine, it seems, with record-breaking debt 
sales, and a stock market that has largely recovered from its 
earlier losses in the pandemic.
    And yet, corporations that I have supported, like Boeing 
and Amazon, are failing their workers. Boeing has announced 
over 12,000 layoffs as a result of the pandemic, even though it 
has engaged in over $43 billion in stock buybacks since 2013. 
Most concerning, Boeing turned down $17 billion in Federal aid 
in order to avoid implementing worker protection provisions 
that Congress required under the CARES Act, choosing instead to 
find funding in the Federal Reserve-backed private debt market.
    According to a Washington Post report released in March, 
Amazon, which has relied on its workers to meet increased 
demand for online sales, has failed to provide basic protective 
equipment.
    So Dr. Spriggs, Congress imposed a few targeted conditions 
on Federal assistance designed to support workers, but they 
don't seem to be working. Why do you think that is, and what 
changes do you recommend Congress make to ensure that Federal 
support goes to American workers and not to line the pockets of 
the corporate elite? Dr. Spriggs?
    Mr. Spriggs. Thank you, Chairwoman Waters, for that 
question. I think it is a very important question. It was one 
of the issues we felt concerned about at the AFL-CIO, that 
corporations would take advantage of the huge amount of 
liquidity in the system to circumvent the need to retain 
workers, and to provide safe working conditions. And as you 
mentioned, unfortunately, that has occurred.
    I think going forward, it means that we have to watch much 
more closely the kind of behaviors you mentioned, which are 
really about financialization, and not about making the 
necessary investments for long-term profitability.
    We need to have far more disclosure about the way workers 
are treated, far more disclosure as a matter of regular 
recourse about buybacks when they are announced, and we need to 
think about how we structure our tax breaks, when companies 
engage in financialization rather than in real investment.
    I think that in this case, at least for the money that 
Congress has provided, there has to be a far more vigilant 
position taken on worker safety, and on workers having access 
to sick leave, and on making sure that we do retain workers.
    Chairwoman Waters. Thank you very much. Let me just ask our 
CalPERS representative about diversity, and whether or not--
what did you do to replace the Emerging Manager Program that I 
put into CalPERS many years ago, that ensured that we had asset 
managers who were helping to--a part of investing CalPERS giant 
resources? What is happening with that? Who is representing 
CalPERS?
    Ms. Simpson. Good morning. Anne Simpson from CalPERS.
    Chairwoman Waters. Yes.
    Ms. Simpson. Thank you for the question. The CalPERS 
Emerging Manager Program continues. We had a review of our 
active management strategies over the last year in which the 
active managers were judged on performance and also on cost. 
And as we all know from the research, it is very difficult for 
active managers to beat the public markets, where you can 
invest more cheaply through an index. So, we did not have a 
special focus on emerging managers. We were looking at the 
active managers--
    Chairwoman Waters. What are you doing about diversity in 
management of these--
    Ms. Simpson. --and they continue in our private equity and 
our real assets cost, so the program has continued.
    Chairwoman Waters. Can you represent how many and what 
investment managers you have on the CalPERS operation there?
    Ms. Simpson. Yes.
    Chairwoman Waters. How many and what?
    Ms. Simpson. CalPERS has reduced a large number of its 
external managers over the past year, and the reason for that 
is to save money. We have gotten to the position where bringing 
investment internally to CalPERS is going to save us over $100 
million a year in costs, as external managers do cost a lot 
more money than our internal--
    Chairman Waters. My time has expired. I will be following 
up, because I created that program years ago for CalPERS, and I 
want to make sure that we have diversity and inclusion. I will 
get back to CalPERS. Thank you. I yield back.
    Chairman Sherman. Thank you. I now recognize Mr. Stivers 
from Ohio.
    Mr. Stivers. Thank you, Mr. Chairman. I appreciate it. And 
I appreciate you holding this hearing. I think it is a very 
important hearing, and there are a lot of changes moving 
forward that we need to react to.
    My first question is for Mr. Bradley. Mr. Bradley, I want 
to thank you for supporting a bill that I am co-leading with 
Chairman Sherman, H.R. 7375, the Access to Small Business 
Investor Capital Act, which you quickly mentioned in your 
verbal statement, but have mentioned a little more deeply in 
your written statement.
    I believe the chairman and I are aligned on the importance 
of getting capital to small business, and I thought maybe you 
could explain why getting capital to small business is so 
important at this time?
    Mr. Bradley. Thank you, Congressman, and thank you for your 
and Chairman Sherman's leadership on that bill and other 
initiatives on capital. One of the great challenges that small 
businesses of all shapes and sizes across sectors, independent 
of the owners, have, is accessing capital. It is much easier 
for larger corporations, who have established relationships, to 
access, whether it is debt or equity markets, and it is harder 
for small businesses to access venture capital.
    [inaudible] Congress has done over the last several years--
in fact, going all the way back to the early 1980s--create 
vehicles like BDCs to help get investment targeted and focused 
on these small businesses is literally the difference between 
life and death for those businesses. You can have a great idea, 
you can have a great work ethic and a great workforce, but if 
you don't have the capital to deploy it, you are not going to 
get very far.
    And so, continuing to strengthen business development 
companies (BDCs), continuing to focus on things like 
crowdfunding, we think is essential, particularly in a moment 
like this, where small businesses are particularly having 
difficulty accessing capital.
    Mr. Stivers. Thanks, Mr. Bradley. Could you also mention 
one of the drivers of jobs in the last 60 days? Hasn't that 
been smaller businesses?
    Mr. Bradley. Smaller businesses are coming back, and one of 
the most exciting things we see is that new businesses are 
emerging. We do know that when we come out of this pandemic, 
the economy is not going to look exactly like it looked like 
before. There are going to be new opportunities created.
    The thing that it is important for public policy to do, 
from our perspective, is to make sure that the folks who are 
creating those new opportunities have the ability to access 
capital, to do the things that they need to do, to turn those 
new dreams, those new business ideas into a reality. That is 
actually going to make us stronger coming out of this, not 
weaker.
    Mr. Stivers. Thank you. I think that is really important. 
Another thing that I wanted to quickly have you mention, Mr. 
Bradley, early on in the pandemic, many businesses were forced 
to make very difficult choices, and I have heard many stories 
about employees whose hours were reduced, but they weren't 
reduced enough to make them eligible for pandemic unemployment 
insurance. Do you think Congress should do something for this 
group of individuals who are still working, but aren't working 
nearly as many hours, and obviously are struggling to continue 
to pay their bills?
    Mr. Bradley. There is some creative work being done here, 
particularly with partnerships with the State, on work-share 
arrangements. You all partially funded those programs as part 
of the CARES Act. I think you can do more in this next phase 4 
bill. What that really allows is the State labor departments to 
work with businesses who are in exactly the situation you 
described, to keep people paid, but also, help offset that lost 
income that they are facing because of a reduction in hours. 
That would be a very timely and targeted thing to do as part of 
this next phase 4 package.
    Mr. Stivers. Thank you very much. I appreciate it. I do 
have a few seconds left, and I want to ask Ms. Simpson a quick 
question. In reviewing your testimony, I noted that CalPERS' 
stock return in the 52 weeks that ended June 28, 2019, was only 
6.1 percent, compared to the S&P return of 8.22 percent. And on 
behalf of your public workers in California, I am very, very 
concerned about your underperformance, and I am curious what 
you are going to do to help those firemen and public workers 
who are being short-changed by inadequate performance at 
CalPERS?
    Ms. Simpson. Thank you, sir, for the question. The issue of 
the performance of the CalPERS fund is our top priority, and 
you will have seen our chief investment officer's presentation 
of our new strategy towards the 7 percent goal, which was 
presented to our investment committee, to our board, last 
month.
    A critical part of this is making sure that we can access 
more assets, but better assets, in order to improve our ability 
to hit that 7 percent. I would also say that over the long 
term, this is where we are focused. We can't just invest in the 
stock market, we also have to invest in--
    Chairman Sherman. The time of the gentleman is expired.
    Ms. Simpson. Thank you.
    Mr. Stivers. I realize my time has expired, ma'am. I will 
follow up in writing. I am concerned about your target being 7 
percent as opposed to--
    Chairman Sherman. The time of the gentleman has expired.
    Mr. Stivers. I yield back.
    Chairman Sherman. It is good to see the gentleman from Ohio 
so concerned with CalPERS. I am a participant in CalPERS. You 
are from Ohio. I think they are doing an excellent job. I now 
recognize Representative Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman. And I thank all of 
the witnesses who are here today. I would like to follow up on 
Ms. Simpson's testimony.
    Ms. Simpson, in February, our committee passed the 
Workforce Investment Disclosure Act, which would require 
publicly traded companies to disclose certain detailed 
information regarding human capital management policies, such 
as you discuss, and practices and performance.
    The SEC also recently proposed changes to Regulation SK, 
which would require human capital disclosures. The bill would 
require public companies to disclose information about their 
workforce, which would ensure that investors have the 
information they need about one of the company's most important 
assets, its workforce, before they make their investment 
decision.
    However, the SEC's proposed approach to disclose gives 
company executives discretion over what they tell investors. 
Can you please explain why this might be problematic?
    Ms. Simpson. Thank you, Congresswoman Maloney, and we agree 
with your important comment that investors need reliable, 
consistent, timely, verified information. Any information which 
an investor is able to act on, cannot be loosey-goosey and all 
over the place. It used to be like that over 100 years ago with 
definitions of profit, or even 11 years. And slowly but surely, 
we have understood that financials need to be standardized, 
they need to be audited, there needs to be regulatory oversight 
of those standards. And for human capital, which, as you say, 
has been thought of for too long as a cost, it is actually an 
asset.
    How human capital is going to be managed in a company is 
critical. So, we need the same standards of quality for this 
information as we have for accounting information. Otherwise, 
the market is not going to be able to respond, companies will 
not get the benefit of their good practice, and we won't be in 
a position to hold boards accountable when things need to 
improve. Thank you.
    Mrs. Maloney. Thank you. Ms. Busette, unfortunately, low-
income Americans in communities of color have been 
disproportionately affected by the economic fallout of the 
COVID-19 pandemic.
    As Fed Chairman Powell testified before the Committee on 
Homeland Security, ``The rise in joblessness has been 
especially severe for lower-wage workers, for women, for 
African Americans, and for Hispanics.''
    Could you speak to why we may see this disparate impact?
    Ms. Busette. The disparate impact that you just described--
and thank you very much for the question, Congresswoman 
Maloney--is, again, perpetuated in the current labor 
statistics. As we saw most recently from BLS, the unemployment 
rate, overall was 11.1 percent, but the Black unemployment rate 
was 16.6 percent, and the Hispanic unemployment rate was about 
15.4 percent, which would suggest that the difficulties that 
minorities were having in the pre-pandemic economy continue, 
and much higher unemployment rates persist in the pandemic 
economy and in the early recovery.
    There are multiple reasons for this, and are a result of a 
very long history of exclusion from employment, from education, 
and from a variety of other advantages, such as owning homes, 
access to business capital, et cetera, and without proactive 
directive action on the part of Congress, both in the financial 
services sector, and in other related sectors, this is likely 
to persist.
    Mrs. Maloney. Thank you. Dr. Spriggs, in the fallout of the 
COVID virus pandemic, our private companies are just 
disproportionately declaring bankruptcy and laying off 
employees. As the crisis has highlighted, investments in 
private markets are inherently riskier, because private 
companies are subject to fewer regulations. In contrast, our 
public markets are designed to protect shareholders with the 
transparency needed to protect investors, and allow workers to 
stay focused.
    Do you think it is important to encourage companies to 
enter the public markets, and what are some of the ways we can 
do that, Dr. Spriggs?
    Mr. Spriggs. Thank you for the question. I think it is 
important that we think of the aid that we are dispensing, so 
that it can be readily accessible by some private firms, but, 
again, with the condition that we want to make sure that 
workers will be safe, and that the firms are committed to the 
virus. We need to be rolling in the same direction.
    Chairman Sherman. The time of the gentlelady has expired. I 
now recognize the gentlelady from Missouri, Mrs. Wagner.
    Mrs. Wagner. Thank you, Mr. Chairman. It would be my 
assessment that some or all of these bills presented for this 
hearing would be costly to companies, and must also be passed 
along to real people, real investors, and real constituents in 
my own Second District of Missouri.
    Mr. Bradley, could you talk a little bit about this? What 
impacts do costly regulations, such as unnecessary disclosures 
or limits on capital allocation options have, especially on 
smaller or younger companies?
    Mr. Bradley. Representative Wagner, thank you for bringing 
this up. It is an excellent point. Disclosure sounds simple and 
easy, but it is actually often quite time-consuming, 
particularly in a litigious environment and in a regulated 
environment. It costs, on average, about $2.5 million for a 
publicly traded company, a small publicly traded company to 
comply with existing disclosure requirements. You add 
additional requirements, and the additional costs expand. This 
is particularly problematic for newer companies, smaller 
companies, companies which are operating on very thin margins, 
because that is a fixed cost imposed on them by the government. 
They have no choice but to comply with the mandates passed by 
Congress and to absorb that cost, or pass it along in some form 
or fashion.
    Congress actually recognized this problem on a bipartisan 
basis back when the original JOBS Act was passed. You may 
recall that part of the premise of that was to streamline 
disclosures and regulations as a way of making it easier for 
new companies to have less costs if they access financing. The 
proposals that have been noticed as part of this hearing today 
would move us back in the opposite direction from where we came 
with the jobs.
    Mrs. Wagner. And do you agree that burdensome regulations 
generally have a more significant impact on smaller companies 
compared to larger companies?
    Mr. Bradley. Absolutely. It has an impact for everyone, but 
it is much harder for a smaller company, with a smaller 
compliance office, with less resources to absorb.
    Mrs. Wagner. And added regulatory burdens on public 
companies help achieve higher growth? Would that be an accurate 
statement?
    Mr. Bradley. Higher regulatory costs? No, the higher 
regulatory costs on public companies impede growth and go in 
exactly the opposite direction.
    If our goal is to take more private companies and make them 
public for the reasons that Dr. Spriggs, for example, 
discussed, then you want to reduce the burden and the cost of 
becoming a public company.
    Mrs. Wagner. And this is my point, it is very clear to me 
that these bills would harm the quality of capital allocation 
decisionmaking.
    Do you have any suggestions, Mr. Bradley, that might 
improve capital allocation?
    Mr. Bradley. Well, access. This is about access to capital 
financing. We have to recognize that just like not every 
business in the United States is the same, the ways in which 
they access capital is not going to be the same. So, to the 
extent that we can protect and expand multiple ways for 
businesses to get to the capital that they need to start and to 
grow, we are going to be more successful in creating more 
companies.
    That is why crowdfunding has become so important. That is 
why targeting offerings are important. We have to adapt the 
model of providing capital and equity to companies to adapt to 
the current real-world scenarios that businesses face.
    Mrs. Wagner. Would any of these bills encourage companies 
to begin the IPO process, and do any of these bills encourage 
companies to identify or track new investors?
    Mr. Bradley. No, none of them would.
    Mrs. Wagner. Would you, instead, recommend that this 
committee focus--and I hope we could--on pro-growth capital 
formation bills, such as those that passed, frankly with 
unanimous or near unanimous support, in the 115th Congress?
    Mr. Bradley. I would. I think it was over 400 votes that 
the package JOBS Act at 3.0 passed. Not only was it good 
policy, it was a shot in the arm to entrepreneurs across this 
country to see Congress coming together on a bipartisan basis 
to do something to support them. The more we can replicate 
that, the more we can get that bill enacted into law, the more 
confidence you are going to instill in this economy and in 
entrepreneurs.
    Mrs. Wagner. I couldn't agree more. We had so many pro-
growth capital formation bills that were unanimously passed in 
the 115th Congress. I wish that we could have considered some 
of those, especially during these distressed economic times. I 
appreciate you highlighting some of that and the costliness and 
the burdens that are being passed along with some of the bills 
being considered today. I thank you and all of our witnesses.
    Mr. Chairman, I yield back.
    Chairman Sherman. Thank you. I now recognize the gentleman 
from Georgia, Mr. Scott.
    Mr. Scott. Yes. Thank you. Dr. Busette, here is what I 
think is the real situation. We have some companies that can 
offer teleremote work to the tech workers and keep productivity 
high. But on the other hand, we have other industries that rely 
almost entirely on physical, frontline workers who are mostly 
women, African American, and Hispanic workers with no 
telecommunication options, and at the same time, are paid the 
lowest wages.
    Dr. Busette, have industries and companies that allow for 
teleworking been more able to adapt to the COVID-19 crisis and 
keep productivity high? And is it possible that the market will 
value these companies and industries more highly because they 
are able to be responsive and maintain productivity in the face 
of the massive interruptions like we are seeing today?
    Ms. Busette. Thank you, Congressman Scott, for that 
question.
    As you mentioned, as the pandemic set in, there became a 
distinct difference between the types of working situations 
that workers were able to enjoy. For some people, they were 
able to move their work to telework, and some companies were 
able to benefit from that. Other companies, and the nature of 
the work, did not allow for the movement to telework. Those 
types of industries and companies employ essential workers, and 
as we know, essential workers seem to be predominantly Black 
and Brown and low-wage workers, and in those industries, people 
had to come to work.
    So as a result of that, companies that were able to keep 
their production moving and their productivity moving in the 
same direction because they were able to implement telework 
clearly had less of an interruption in their revenue 
production.
    Mr. Scott. I just wanted to say, you touch upon another 
point that what you are saying results in. Since women, African 
Americans and Hispanics, hold more of these physical, you-have-
to-be-there-in-person front-line jobs with no opportunity to 
telework, are you concerned that this diversion will widen the 
wealth gap?
    Ms. Busette. Thank you for that question. Yes, of course, I 
am concerned that it will widen the wealth gap, for a number of 
reasons, first of all, because of the predominance of people of 
color in low-wage jobs. Low-wage jobs, in general, do not come 
with the kinds of benefits, or obviously, the kind of income 
that would be necessary to decrease the racial wealth gap and 
the racial income gap, both of which have increased since 2010.
    Mr. Scott. Now, I want to ask you, because it has been the 
hallmark of our committee, many of us have been working to 
provide answers to closing this wealth gap, and this is 
particularly true for African Americans. Nobody has suffered 
more. Since the advent of slavery, we have been trying to close 
this wealth gap. And I see excellent opportunities within this 
crisis, within what we can do in Congress to give financial 
stability, increase financial security for the African-American 
community. But tell us, if there were one or two things that we 
could do in this Congress, using this pandemic crisis, what 
would you would recommend we do?
    Ms. Busette. Those two things would be ensuring that the 
Federal Reserve is charged with taking its management upon 
employment rate to bring down the Black unemployment rate to 
the White unemployment rate, that is number one. Number two is 
financing small businesses, minority- and Black-owned small 
businesses.
    Mr. Scott. Thank you very much. I appreciate it.
    Chairman Sherman. I thank the gentleman from Georgia.
    The Chair now recognizes Mr. Hill, the gentleman from 
Arkansas.
    Mr. Hill. Thank you, Mr. Chairman. Thank you for holding 
this hearing. We need bipartisan solutions to worker safety, 
and student and teacher safety in order to return to school. 
For those who are still not back at work, we need a solution 
for them in the coming months.
    But today, despite our fine witnesses, this hearing is of 
little value on those important pending decisions before the 
Congress. Instead, we are welcomed back to another edition of 
our Capital Markets Subcommittee, which I call the, ``broken 
record edition,'' discussing capital markets, which like so 
many other hearings, is organized to somehow turn back to stock 
buybacks.
    I specifically draw attention to hearings from last 
October, and last May, when I focused my questioning of our 
witnesses around stock buybacks. As I stated during those 
hearings, and will highlight again today, government 
interference in public companies' capital decisions leads to 
inefficient outcomes by limiting wage growth for companies' 
employees and hindering long-term economic growth.
    Companies that engage in strong research and development, 
and strong capital expenditures all can, in times of high 
profits and high economic growth, have payouts to their 
shareholders in the form of dividend payouts or stock buyback. 
When times are tough and profits fall, stock buybacks and 
dividend payments decline. And that is what is happening right 
now under these market conditions.
    We don't need Congress to tell people what to do about 
that. Their long-term financial benefit for their company's 
existence, their employee's well-being, their mission, their 
ability to generate a long-term return for people, like 
CalPERS, that are severely underfunded and reducing the number 
of investment opportunities they have, all are benefiting in 
the long run by companies doing that fiduciary capital 
allocation.
    And don't take it from me, take it from Warren Buffett, who 
is frequently in the national news talking about this issue, 
saying that if a company stock is below its intrinsic value, it 
absolutely makes complete sense for that company to acquire 
those shares. But as I say, that is not where we are in the 
economic cycle now. We are in the capital preservation mode, in 
a company preservation mode, and so it is completely out of 
character and out of tune to be talking about stock buyback 
measures today when we should be talking about bipartisan 
solutions to a faster economic growth.
    The idea is expressed, again, in Mr. Casten's bill, in 
which he wants to stop buybacks during the course of the 
pandemic. We don't need to worry about it. The market has 
already taken care of that.
    In fact, Goldman Sachs is anticipating a 30 percent decline 
in buybacks during 2020, which is consistent when you go back 
and look at previous recessionary periods, most recently 2008, 
2009, that kind of decline. And, again, it is because 
companies' management have a clear focus on what they need to 
be doing to preserve their mission, preserve their 
opportunities to employ their workers, preserve capital in 
order to get through the virus and get back to full economic 
capacity. Companies should be determining how their money is 
allocated, not the government.
    Mr. Bradley, SEC Chair Clayton has previously testified in 
front of this committee that it is not within the purview of 
the SEC to determine a company's individual asset allocation. 
Do you share that view?
    Mr. Bradley. I do.
    Mr. Hill. And if the government did interfere, directing 
companies' broad capital allocation decisions, what do you 
think would be the potential ramifications of that to 
macroeconomic growth?
    Mr. Bradley. It would significantly hinder growth. It would 
stop the new business formation. It would encourage more 
companies to remain private or go from being public to being 
private, because there is simply no way that the SEC or 
Congress could write a rule that reflects the individual needs 
of every single diverse business in America. And if you attempt 
to write a rule to do that, you will simply misallocate 
capital, and investors and others will seek relief outside the 
system that you are regulating in order to be able to conduct 
business.
    Mr. Hill. Thank you.
    I would like to say, too, Madam Chairwoman, that 
Representative Donna Shalala and I are working together on a 
bipartisan basis to make sure that the Fed and the Treasury do 
implement the bipartisan set of limitations connected to the 
Fed and Treasury financial products and services during the 
pandemic.
    So, thank you for the time today.
    Mr. Chairman, I yield back.
    Chairman Sherman. Thank you. I will point out that my 
comments about stock buybacks were focused on companies who are 
getting loans from the Federal Government.
    I now recognize Mr. Himes from Connecticut.
    Mr. Himes. Thank you, Mr. Chairman. And thank you to our 
witnesses for today.
    I have some questions for Ms. Simpson, but I did want to 
make a brief comment on the exchange between Mrs. Wagner and 
Mr. Bradley. It is a little dispiriting, candidly. And by the 
way, I don't even disagree with the points you made. There 
probably are some bad ideas in this list of legislation, and I 
have spent the better part of 11 years trying to find the right 
balance of regulation in our financial services sector. But to 
hear the same old script about how it is a choice between 
growth and safety is really dispiriting. And just to illustrate 
that, I want to point out that even as we bail out every single 
member of the Chamber of Commerce with public funds from the 
airlines down to businesses, large and small, there is one 
group that we are not bailing out, and that is the big banks 
and the financial services industry. The banks are well-
capitalized, with 12 percent capital ratios.
    In a stress test, we are fine. We talked to the Federal 
Reserve yesterday and they said two things, and this is Mike 
Gibson, who is the Director of the Division of Supervision and 
Regulation. He said, ``Our stress test scenarios suggest that 
the banks are in good shape, and a large part of that is due to 
the Dodd-Frank Act.'' And I listened to my Republican friends 
and the Chamber fight Dodd-Frank tooth and nail. So I had just 
had to make that point that, let's at least be humble about 
what we have achieved. And if there is one good thing to be 
said about where we are today, it is if we deal with a health 
emergency and an economic capacity, we are not looking at the 
banks flat on their backs the way we were in 2009 and bailing 
them out the way we did in 2008 and 2009.
    Ms. Simpson, one of the things that strikes me, 
representing southwestern Connecticut, that comes up in spades 
around the COVID crisis is the disparities involved. In my 
community that I represent, I have some of the most profoundly 
poor communities, largely urban poverty, and I also have some 
of the wealthiest people on the planet, largely working in the 
financial services industry. I sort of marvel at the persistent 
profitability of the industry.
    So, Ms. Simpson, you are a participant in that industry. 
You said that you require a 7 percent risk adjustment return in 
order to make the $25 billion in payouts. Can you tell me 
please, and I am not asking about your administrative overhead 
costs, I am asking about the fees that you pay in the aggregate 
to manage that $400 billion portfolio. Can you tell me either 
in terms of that, I guess, that 7 percent where a dollar value 
against that $25 billion, what is the amount of aggregate fees 
that CalPERS pays to outside advisors and investment 
professionals?
    Ms. Simpson. Thank you for the question. The fees and the 
expenses for the funds are all on our website. I apologize that 
I don't have the details in front of me right now. The costs 
for managing the internal portfolio, which is over 80 percent 
of the assets, are modest. The main fees that we pay are in 
relation to the external managers that we employ, and these are 
typically in the private asset classes.
    However, the important thing for us is what is the bang for 
the buck, and those are the asset classes, where we have been 
able to earn the returns that we need. As an example, our 
private equity returns over 10 years are comfortably in excess 
of 7 percent, and, obviously, that is after fees. So, we look 
at this as risk return costs in order to be able to pay the 
benefits. I am happy to follow up with details.
    Mr. Himes. I would be very interested in understanding the 
aggregate drag on your 7 percent return. In particular, if I 
understand correctly, you have roughly a 20 percent 
alternatives portfolio. Twenty percent, of course, is the land 
of the 2-in-20 fee structure, right, where managers get 2 
percent of assets simply for turning on the lights in the 
morning, then 20 percent of profits.
    Could you estimate for us--first of all, if I am correct, 
20 percent of your portfolio, or roughly $80 billion, is in 
alternatives, can you estimate for us what the aggregate fees 
are that you pay for that alternative portfolio?
    Ms. Simpson. Thank you. In our private markets, which are 
real assets in private equity, this is an excessive 20 percent. 
And the reason to that is because of potential returns. And 
those returns are calculated after fees. So, the net gain to 
our members is what we are looking for in order to pay 
pensions.
    I would be glad to follow up with all the details on the 
costs as you are asking. Thank you.
    Mr. Himes. I would appreciate that. And just to be very 
clear, if you are paying for outperformance, God bless you, 
that is a good thing. But I would be very interested in seeing 
your fee structure against outperformance. I don't mean 
performance, I am not interested in just absolute performance. 
I am interested in, can people beat an index fund? And there is 
an awful lot of evidence out there that people are having a 
hard time beating an index fund. I would really appreciate the 
opportunity to look at those numbers in the case of CalPERS, 
not because I am interested particularly in CalPERS, but 
because you are one of the biggest funds in the country.
    So thank you, and I yield back the balance of my time.
    Chairman Sherman. Thank you. I believe we are down to only 
one more member from the minority party, Mr. Steil from 
Wisconsin, who is recognized for 5 minutes.
    Mr. Steil. Thank you, Mr. Chairman. Hopefully, last but not 
least. I appreciate you holding today's hearing.
    As I look at where we are at as a country, we have been 
attacked by an invisible virus that is affecting our health and 
our economy, in particular, jobs. And now more than ever, we 
need to see pro-growth policies being implemented to grow our 
economy and allow people to safely return to work. In fact, 
Congress and the Trump Administration stepped up and provided 
PPP funding, saving thousands of jobs, as governments were 
making orders for businesses across the country to shut down.
    As I have reviewed a lot of the bills attached to today's 
hearing, sadly, I don't see pro-growth policies being put 
forward. I am seeing additional burdens and regulations that 
would be put in place on job-creating businesses across the 
United States, which would slow our growth coming out of what 
is going to need to be a significant recovery to get all 
Americans back to work.
    I would like to dig into a few of those policies that I 
think will slow us down, ask a few questions, and then kind of 
look at some pro-growth policies, to proactively move forward.
    Mr. Bradley, I appreciate you being with us here today. One 
of the things that concerns me in today's proposed legislation 
is some of the ESG disclosures that would be required, without 
regard to materiality. And so, if you had paid attention to 
some of these hearings in the past, you would have heard me, 
time and again, talk about the core concept of materiality as 
being a core principle of our securities law in the United 
States, and a disregard for that materiality threshold in the 
legislation that we are looking at here today.
    Can you comment as to what burden this places on 
businesses? And particularly, the leadership team that is 
trying to find creative, innovative ways to grow their 
business, grow jobs during a really challenging period of time, 
to put additional reporting requirements on these companies 
without regard for any level of materiality?
    Mr. Bradley. Thank you, Congressman. You are exactly right. 
Materiality should be the cornerstone. These reports don't 
come, these disclosure don't come without a cost. As I 
mentioned in response to Congresswoman Wagner's questions, it 
costs about $2.5 million, on average, for a small business 
right now, to comply with current disclosure requirements.
    One of the things that is troubling about some of the 
recommendations included in the legislation attached to this 
hearing is that many of the things that it is asking for 
disclosure on are really intangible, very difficult to measure. 
That actually means that the cost is going to explode beyond 
the things that we are currently disclosing. It also creates 
tremendous pressure, because as executives, as boards find 
themselves liable for accurate disclosure, and you are trying 
to disclose something that you can't accurately measure, you 
really end up in a catch-22, which is why we always should go 
back to the cornerstone of materiality.
    Mr. Steil. I think it is so critical to think about 
materiality, and, particularly, as it relates to the SEC, which 
really is looking at getting the core information that 
investors need to make thoughtful decisions in their 
investments, not just putting forward information on the whims 
of Members of Congress, of whatever the flavor of the day is in 
Washington, D.C. I appreciate you there.
    Let me just shift gears slightly, and let's talk about 
resubmission thresholds for a minute. I have been a firm 
believer that it is important that we allow businesses to 
operate efficiently to move forward. We see, time and again, 
where there is a ton of time and effort spent by management, 
not on growing the jobs, not on growing wages for employees 
where it should be spent, but instead, dealing with 
resubmissions of all sorts of things that come in.
    The SEC is moving forward on this. One of the bills that is 
being proposed would pull the funding away and prevent that 
rulemaking from moving forward.
    Could you comment on the impact that would have on growing 
our economy and growing jobs in the United States if we could 
get better language on resubmission thresholds?
    Mr. Bradley. The proposal would simply shadow distances 
with more of the costs that I just described. I would note that 
in the House of Representatives, I know that the Chair of the 
House, the Speaker, or a committee, has the power to rule 
motions dilatory, because they waste the committee's time or 
they waste the Members of Congress' time. That is a common 
concept. Except what we have with respect to resubmission 
thresholds is that we have allowed dilatory motions, dilatory 
resolutions to be put forward year after year, even though 
shareholders reject them by overwhelming margins year after 
year.
    Mr. Steil. I am only going to cut you off, because I want 
to get to one positive thing. We will chat about emerging 
growth companies next time. I appreciate it, Mr. Bradley. I 
yield back.
    Chairman Sherman. Thank you. I now recognize the gentleman 
from Illinois, Mr. Foster.
    Mr. Foster. Thank you, Mr. Chairman, and I thank our 
witnesses. There are many observers of economic response to the 
COVID crisis have been that this is simply accelerated 
structural shifts, which are already underway.
    Even before the COVID crisis, we found that workers, 
particularly unskilled workers, were having a harder and harder 
time competing with machines for their jobs. And you are seeing 
that accelerated. Restaurants are finding it more efficient to 
have people order their food online, rather than hire minimum-
wage staff, and so on and so forth. We are seeing a lot of the 
shift toward purchasing goods online, resulting in a massive 
loss to retail stores, many of which, unfortunately, will 
disproportionately be removed from many of the communities.
    So, this is something that worries me a lot, that we are 
going to see with the acceleration of this trend. I was very 
interested to see that Representative Huizenga's proposal is 
effectively to subsidize labor. To understand that a business 
that simply maximizes profits will, over time, replace more and 
more human labor with robot labor. And unless you have some 
sort of subsidy program like Representative Huizenga talked 
about, you are going to have a hard time convincing a profit-
maximizing company not to replace their human labor.
    And I was wondering, is that something that is a worry for 
you, too, that structural changes are going to make the battle 
that we have been fighting even tougher?
    Ms. Busette. Yes, absolutely. Thank you for that question, 
Congressman Foster. I think it is very clear that the pandemic 
has accelerated the need for a skilled workforce. I think there 
is generally broad agreement that American workers will 
probably need to improve their skill levels. That is why I 
think at this point, we should be really thinking about making 
important significant public investments in upskilling, because 
the pandemic has clearly accelerated the changes towards the 
kinds of jobs that require higher skill levels.
    Mr. Foster. Mr. Bradley, is this tendency, that profit-
maximizing businesses will be replacing human labor with 
machine labor, something that we should lean against, or should 
we simply let it take place to whatever degree it is 
economically most profitable?
    Mr. Bradley. Congressman, I think it presents challenges 
and opportunities. And I think my colleague on the panel just 
accurately described what we ought to be doing to minimize the 
problems from the challenges of dislocation of workers and 
maximize the opportunity. We should be investing in job-
training programs and upskilling. We are not going to stand 
before history and say, ``Stop.'' We are not going to stand 
before Congress and say, ``Stop.'' We can decide to modify our 
programs or public support systems in a way that helps people 
manage the transition that technology is creating. That is a 
reasonable responsible approach for a public-private 
partnership, in our opinion.
    Mr. Foster. So, you would be in favor of increasing taxes 
to pay for more education to upskill workers?
    Mr. Bradley. I don't think I mentioned taxes at all, 
Congressman, but I think there is significant investment--
    Mr. Foster. Do you believe in balancing the budget? I think 
you can't have it one way or the other. If you believe in 
balancing the budget, the question is, are you willing to 
increase taxes to pay for more education to retrain workers?
    Mr. Bradley. Congressman, we should be investing in 
education. The Federal Government invests in a lot of things, 
including a lot of money in programs right now that I would 
suggest aren't nearly as important as the education and skills 
program that we are discussing. And we would be happy to work 
with you to identify some programs that we could repurpose into 
helping American workers.
    Mr. Foster. Does anyone else on the panel have any ideas on 
the best way to increase the incentives for companies to hire 
more workers, where it is a close call between replacing a 
worker with a machine or not?
    Mr. Spriggs. Congressman, I would rephrase the question. 
The problem through the last 40 years has not been the increase 
in productivity of American workers, it has been the increase 
in their pay to reflect their increased productivity.
    Our greater concern at the AFL-CIO is that we have not seen 
wages rise to meet that productivity gain. Our greatest concern 
right now is the distortionary effects taking place because we 
have to worry about competitiveness policies coming out of this 
crisis. Some of the efforts that we have taken hurt that 
competitiveness. And we don't want to just hand it to people 
because of the nature of this crisis that has favored some 
companies over others. We want to have you take that into 
consideration.
    Mr. Foster. Thank you. I am out of time, and I will yield 
back.
    Chairman Sherman. I will point out that we tax payroll, and 
we have incentives for the purchase of equipment built into our 
tax structure.
    I now recognize Mr. Meeks from New York.
    Mr. Meeks. Thank you, Mr. Chairman, for holding this 
hearing, and I thank the ranking member, and of course, the 
Chair of the Full Committee, Chairwoman Waters.
    For years, inequality in the United States has been 
increasing, but never in the post-civil rights era have the 
differences been so stark. Black, Brown and Native people are 
disproportionately contracting and dying of the coronavirus. 
And there is clear evidence that further indicates that lower-
income people are more likely to become infected than the 
wealthy, as indicated earlier.
    While the white-collar workers can hop on Zoom, Webex, and 
Teams, essential workers who still have a job must go to work 
in person. The NASDAQ, for example, is up over 20 percent on 
the year. Yet, at the same time, the unemployment rate has 
tripled.
    And one of the comments I do want to make--I know in the 
colloquy between Mr. Huizenga and Mrs. Wagner talking about 
people not going to work, I think that what you need to look at 
is, some people who have not returned to work, have not 
returned because they were making more money sitting at home, 
but it is because they are afraid of their health concerns, and 
their family's health concerns, when they go back to work, 
especially when you have some States where you can see the 
epidemic is growing every day, with really no national 
direction in that regard; people are going without masks and 
other precautionary--and take other precautionary measures to 
keep them safe.
    So, they have to make a choice for their health and the 
health of their families at times as opposed to even getting 
the money that they need to pay for rent, because no one is 
worried about paying for rent if you are not here and if you 
are not healthy. So, that is a big issue that has to be 
discussed and determined.
    And I also want to go back to the conversation that Dr. 
Busette was having with Congressman Scott dealing with the 
wealth gap, which is tremendously important. And I think Dr. 
Busette said that we will never close the wealth gap with just 
minimum-wage jobs. And I couldn't agree with that more, which 
is why we have to focus on trying to make sure that we get 
folks who are talented, and are able to move into jobs that are 
paying more than just the minimum wage. And we do, as indicated 
by Mr. Spriggs, have to make sure that those individuals who 
are on the low end and have increased productivity, that their 
wages similarly grow as productivity grows. That means you are 
sharing what the wealth of the company is with the wealth of 
the individuals.
    I do want to ask, in the little time that I have left, 
because sometimes--you know, I grew up in public housing, and 
they used to always say, you put your money where your mouth 
is, and that makes an important piece. And we were talking, in 
the last conversation, about whether or not we should increase 
taxes in regards to education to make sure we are having more 
of an upscaling of those who are being educated.
    And also, I want to say, Mr. Bradley, while I don't agree 
with the Chamber on some things, there has been a statement 
that there should be a focus on bolstering entrepreneurship and 
increasing employment opportunities in communities of color. 
But it seems to me that there are too many proposals of just 
rehashing unrelated bills and not putting your money where your 
mouth is.
    So if, in fact, we were putting capital into some of these 
Black and Brown communities and businesses, that would make a 
difference. When we talk about disparities, there are clearly 
disparities in education. I would think that a number of your 
companies could put a lot of money investing in schools, in 
these districts, so that you can get the upscaling as done in 
Germany, and then you can hire directly from some of these 
schools in these communities.
    What say you, Mr. Bradley? Can't the U.S. Chamber of 
Commerce get behind pushing to put money where you have been 
talking to so that we can improve the upscaling of these 
schools and creating jobs and opportunities where you can 
recruit people directly into jobs that are paying more than the 
minimum wage?
    Mr. Bradley. Absolutely, Congressman Meeks. We watched, 
about 2 weeks ago, an Equality of Opportunity Initiative, 
focused explicitly on closing this gap for Black Americans. 
Last week, we unveiled 30 specific action items. Some of them 
are action items for Congress, which we would love to discuss 
with the committee. Others are for State and local governments 
about [inaudible] Private sector to do exactly what you suggest 
to make these investments in these communities that need to be 
made so that we can close this gap.
    Mr. Meeks. I am out of time, but I look forward to sitting 
down to make sure these investments are made across America, in 
communities of color. Thank you.
    Chairman Sherman. I now recognize the gentleman from 
California, Mr. Vargas.
    Mr. Vargas. Thank you, Mr. Chairman, for this hearing, and 
I thank the ranking member. We did hear yesterday from the Fed 
that the banks are strong and not in threat of failing. And 
they did say that Dodd-Frank was a big part of the banks' 
stability and strength, as Mr. Himes pointed out.
    But I have been on this committee now for 6 years, and I 
have also heard quite a bit, the ideological statements that 
the regulations are just burdensome and unnecessary. It is 
certainly not what we heard yesterday. Also, coupled with some 
other statements made by some of our members, that if they had 
been here during the time of the Troubled Asset Relief Program 
(TARP), they would have voted against it, and just let the 
banks fail, and these other companies fail. Now, I find out 
that they are some of the biggest proponents of bailouts.
    I guess Ralph Waldo Emerson had it right, ``A foolish 
consistency is the hobgoblin of little minds.'' Because, boy, 
how things have changed with ideology.
    But, again, I am thankful now that we are working, I think, 
generally as a group to figure this out. And I have to tell 
you, I want to thank Mr. Bradley first, thank you. Some of the 
comments that you have made about the disparity between Blacks, 
Latinos, and the rest of the population is wonderful. Thank you 
for acknowledging that.
    We had the San Diego Chamber do that a number of years ago, 
the California Chamber, and they have been working on it. Now, 
to hear the U.S. Chamber saying these positive things, I 
honestly want to say thank you, I really do. I appreciate you 
doing that. I hope we can work on that structural rural change 
that you talk about. Again, thank you for doing that, I am very 
appreciative of it.
    I do want to ask Ms. Simpson, your firm is a strong 
advocate of the Environmental, Social, and Governance (ESG) 
Disclosures. As you know, I have a bill on that, and I think it 
is very important that you called it the natural, physical, and 
human capital. I think it is generally the same. You described 
it a little bit differently. But could you explain a little bit 
more how you think the profitability, in the long term, is so 
important as we look at these issues?
    Ms. Simpson. Thank you. Thank you very much, Congressman 
Vargas.
    Capital approach to what we call sustainable investment, 
exactly as you rightly say, is we are looking at all of the 
factors that can have an impact on risk and on return.
    So, let's take an environmental issue. We think of this as 
the natural capital that companies rely upon. We know something 
around climate change is having a big impact on companies' 
ability to perform. One example, we have extreme weather, heat, 
that not only imposes the danger of wildfire, it imposes the 
heat, imposes problems of drought, which is going to affect 
agriculture, it is even going to affect where companies decide 
to put their facilities, because people won't want to come and 
live and shop and spend money in areas that become too hot.
    So as we start to map these risks, we can see a direct 
impact from climate change onto our portfolio returns.
    There is also opportunity. We have investments in renewable 
energy, water storage, we are seeing companies making the shift 
from being dependent on fossil fuels and into low carbon 
energy, creating tremendous opportunity. We have just published 
our first report which shows that there is trillions of dollars 
of opportunity, but also that we need to be very vigilant about 
managing the risk, as one example.
    Mr. Vargas. So you would be in favor of standardizing those 
disclosures?
    Ms. Simpson. Correct. Because if the reporting is all over 
the place, financial markets simply can't use that information. 
So, we support standardized, timely, audited, regulated 
information on issues which are material to long-term investors 
like ours. Thank you.
    Mr. Vargas. Thank you.
    Dr. Spriggs, talking about workers, I am sure you know that 
in Europe, 19 countries require worker representation on the 
boards of certain companies, but only a handful of companies in 
the United States have experimented with worker representation.
    Could you comment on having workers actually on the boards?
    Mr. Spriggs. That is vital, because what it does is put 
another important constituent voice within the boardroom. And 
it is vital because workers are interested in the long term of 
the company. Workers would not be approving stock buybacks. 
Workers would want the company to take the money and invest it 
into profitable operations, not simply make stockholders get 
bigger dividends, or have CEOs hike up the price of the stock 
so they can get a bigger bonus.
    So having workers at the table adds another dimension. It 
adds another dimension because it adds the community, the 
investment that our cities and towns and counties make by 
lowering tax rates in order to induce corporations to locate in 
those places. They have an interest in making sure they get the 
full payback from that investment.
    Mr. Vargas. My time has expired.
    And, Mr. Bradley, I meant it, sincerely, thank you. I 
really do appreciate it.
    Mr. Bradley. It's good working with you.
    Mr. Vargas. Thank you, sir.
    Chairman Sherman. Thank you. Mr. Emmer from Minnesota has 
returned, and he is the next Republican Member, so we will 
recognize him for 5 minutes.
    Mr. Emmer. Thank you, Mr. Chairman. And thank you for 
convening this hearing today. Although we might have differing 
opinions about some of the bills that are the subject of this 
hearing, we also have many nonpartisan bills already up for 
consideration on capital market issues that will help improve 
the economy during this time of dealing with the coronavirus.
    For instance, Representative Vicente Gonzalez and I have 
introduced the Main Street Growth Act, which passed unanimously 
out of this committee last Congress. Mr. Bradley brought up 
this bill in his testimony, including many others that we can 
pass by an overwhelming majority if leadership simply allowed 
them to be considered.
    Now is the time to come together and do everything we can 
do to assist our fellow Americans. The Main Street Growth Act 
would establish venture exchanges as a means to assist emerging 
growth companies as well as to facilitate trading in thinly-
traded securities.
    The hallmark of our country is the ability for any person 
with a good idea to prosper and build a better life for 
themselves. In an era where we are increasingly going digital, 
giving these entrepreneurs the means to build capital from 
anywhere in the country through public offerings just makes too 
much sense.
    In this third hearing on capital markets in the era of 
coronavirus, I believe we have heard enough. Now is the time to 
act.
    Just a couple of weeks ago, the SEC sponsored a virtual 
forum on market structure where this very topic was featured. 
The Main Street Growth Act is widely supported, and companies 
are eager to establish and compete with their own venture 
exchanges.
    If we were to green-light this proposal like we did last 
Congress, we could jump-start an economy that is sorely needing 
a jump-start.
    Mr. Bradley, your testimony states, ``Swift enactment of a 
bipartisan package in addition to recent measures put forward 
in the wake of the pandemic would provide a big boost to our 
recovery.'' We have many new ideas and they deserve 
consideration. But we also have widely-supported ideas that we 
have not given the opportunity to flourish, and which would 
benefit us in a time exactly like right now.
    In a time where nonbipartisanship is required to accomplish 
victories for all Americans, we should be looking at some of 
these previously supported ideas.
    What do you think are the main barriers to enactment of 
some of these worthy proposals? Would the Main Street Growth 
Act and some of the other proposals--this is for you, Mr. 
Bradley--that you mention in your testimony, benefit the 
American worker right now, as the intention of this hearing is 
entitled, and if so, how?
    Mr. Bradley. They absolutely would, and thank you, 
Congressman, for your leadership on this bipartisan proposal.
    One of the things I mentioned in both my written and my 
oral testimony is some good news that is occurring, that we 
have a lot of new businesses being formed. Those are going to 
be absolutely critical for this recovery, because new 
businesses create the new jobs that replace the jobs that are 
displaced in a situation like the current pandemic crisis. If 
we don't have those new businesses formed, if they can't access 
capital, they can't create those new jobs so that the displaced 
workers can take those jobs.
    So, the fundamental thing we need to do is to continue to 
support new business formation. A key part of that is access to 
capital. So, anything that we can do, particularly things that 
are bipartisan that have been well-vetted, such as your 
mainstream lending initiative, ought to be enacted as soon as 
conceivably possible, both because of the access to capital, 
but also because it is a strong statement of this Congress' 
belief in economic recovery. And that is a statement that I 
think would be well-received across this nation.
    Mr. Emmer. Thank you, Mr. Bradley.
    Mr. Chairman, I will just conclude by saying that if we 
want to help the American worker and his or her family, now is 
the time that we should move the Main Street Growth Act forward 
so that we can create these venture exchanges and start to help 
these new growth emerging companies--and we are going to see 
them all over the place--to reach that next level, and to help 
American workers and their families at the same time.
    Thank you, Mr. Chairman, and I yield back.
    Chairman Sherman. Our next questioner is Katie Porter from 
California. One of the advantages of doing these remote 
hearings is we got to see her daughter just a minute ago, and 
now we get to hear her questions.
    Ms. Porter. Thank you so much, Mr. Chairman. As the only 
single mom in Congress with young children, and as a working 
parent, I know that single moms and parents generally are being 
asked to do the impossible right now. This isn't new, but the 
pandemic has only made it worse.
    Mr. Spriggs, pre-COVID-19, what were the margins like for a 
normal small business, say, a coffee shop owned and managed by 
a single mom like me with maybe 3 or 4 employees, what were 
their margins like?
    Mr. Spriggs. Most restaurants operate with small margins, 
and we do have to take seriously the fact that they do operate 
with small margins, but their health and the vitality of their 
business model is for us to beat this virus. And anything we 
can do and everything we can do to alleviate this virus first 
is important.
    Ms. Porter. And there were small margins for things like 
this coffee shop owner in normal times. What would happen if 
that bakery-owning single mom saw the price of a key input like 
coffee double?
    Mr. Spriggs. If her rent went up, or if the price of coffee 
went up, it would put a strain. But if her input went up like 
coffee, it is going up for all of her competitors. And so, this 
would be general inflationary pressures, and it wouldn't be 
anything particular for her. That would be something that all 
of her competitors would have to face. So, a rise in coffee 
prices would not mean anything disadvantageous to her.
    Ms. Porter. Let's take something else then. Let's take 
another input into her business. What if the cost of child care 
suddenly quadrupled, say, because this single mom's, this 
business owner's children couldn't go back to school safely, 
then what would happen to her business?
    Mr. Spriggs. It is not just her, but what is happening to 
the American workforce right now. This downturn 
disproportionately hurt women; they lost a much higher share of 
jobs. And if we don't get the HEROES Act, which the House 
passed, passed by the Senate, so that our State Governments and 
local governments can have the resources so that our schools 
can open safely, it is going to be a crisis for millions of 
American workers who are single parents, and are stuck with 
this difficulty of how to safely care for their children. 
Without the HEROES Act being in place, it just simply won't be 
possible for women to return to the labor market as they did 
before.
    Ms. Porter. And, yes, I think you are absolutely right, Mr. 
Spriggs. This affects small business owners. It affects 
everyone in the workforce. But especially if you are a small 
business owner and you basically are your own capital, there 
may be no other employee who can substitute for the work that 
you are doing. The cost of child care is quadrupling, due to 
the fact that schools are not open, and it would really make it 
difficult for these businesses to stay in business at all. And 
we will see some of these folks, I fear, exiting the labor 
force. A big labor force and labor market disruption that will 
disproportionately fall on women, on people of color, on our 
micro businesses, and on working parents who have young kids. 
And that labor market disruption, I think, is a long-term as 
well as a short-term crisis for our economy.
    I thank you for your contributions to this hearing, and I 
totally support any more funding towards State and local 
governments, including pushing for resources to help our 
schools figure out how to open safely and what alternatives are 
possible.
    Thank you so much, and I yield back.
    Chairman Sherman. Thank you.
    I now recognize the gentleman from Illinois, Mr. Casten.
    Mr. Casten. Thank you so much. I want to start just with an 
observation to the speakers, to my colleagues, and to the staff 
who are on the phone, and this is obvious, but I think 
sometimes we lose sight of the fact that we are in a massive 
economic downturn. Every single entity in our society is 
getting their cash constrained. Individuals who are losing 
their jobs, are having to dip into their savings and their 
retirement accounts. Small businesses are having to shoot 
through all of their working capital. States and municipalities 
are spending all of their rainy-day funds. And those of us who 
have the ability to deficit spend are doing so on a fairly 
significant basis right now, to put it mildly.
    I mention that because when this is all done, there will be 
a reckoning. Folks are going to look out and say, in this 
moment, who stepped up and acted with ethics, acted with 
clarity and looked out for those who are needy? And who decided 
to hoard their reserves? That is an ethical problem, it is not 
a political problem. But as we saw after 2008, as we saw 
through the Great Depression, those ethical problems quickly 
become political problems. And we have to all think about it. 
We have to all be thinking about what we are doing in this 
moment to help those in need.
    To that end, I want to start with a question for Ms. 
Simpson. According to Forbes analysis, there were $582 billion 
in stock buybacks in 2018, which represented more than a 52 
percent increase in 2017. Forbes estimates that the vast 
majority of that was due to the 2017 tax bill. Do you agree 
with that analysis, that the tax bill substantially experienced 
an increase in stock buybacks in 2018?
    Ms. Simpson. Thank you for the question. I am not familiar 
with the article that you are referring to, but CalPERS' view 
on capital discipline in a company is that capital allocation 
needs to be directed towards sustainable long-term growth. When 
there are opportunities for capital to be allocated in a way 
that fosters long-term sustainable growth, CalPERS is in full 
support. We do not support the use of capital allocation to 
promote short-term. or if you like to create a rosy picture; we 
want companies to strive for the long term. And it is that 
perspective that we bring to all of the considerations of 
capital allocation. Thank you.
    Mr. Casten. Okay. Mr. Spriggs, do you have a view on 
whether the increase in 2018 was just something exogenous or 
was that driven by the 2017 tax bill?
    Mr. Spriggs. Undoubtedly, some of it was the tax bill, and 
people took advantage of it. But some of it is this continued 
belief in short-termism and, a belief that if you are a CEO who 
gets a huge part of your pay through stock options, you have 
every incentive to want to incorporate stock buybacks into how 
you get your pay.
    So, I think that is the cautionary tale there. As Ms. 
Simpson was saying, it is not the kind of investment that you 
would think should take place. You should see companies using 
extra capital to go into increased productivity, the training 
for the workers to take advantage of that new machinery and 
higher wages, so that the company has long-term advantages.
    Mr. Casten. Thanks for that.
    I wanted to make an observation, because in the same year, 
2018, 35 percent of U.S. equities were owned by foreigners. 
That has increased significantly. So, if $582 billion of 
buybacks was because of a tax bill, then that means that we 
made a decision as a country to send 35 percent of that, the 
amount owned by foreigners, as a direct transfer from U.S. 
taxpayers to foreigners.
    I have a lot of respect for my good friend, Mr. Hill, but 
when he said that interfering with stock buybacks misallocates 
capital--we have an obligation not to misallocate taxpayer 
dollars. We made a decision to send $200 billion to foreigners. 
It was a wrong decision, but we made that decision, and we 
should bear responsibility for it.
    Dr. Spriggs, with my little bit of time left, William 
Lazonick at the University of Massachusetts calculated that 
from 2003 to 2012, buybacks accounted for 54 percent of the use 
of corporate earnings, and 37 percent of earnings went to 
dividends. That leaves just 9 percent for investment worker 
raises and debt repayment.
    In your opinion, should we ban buybacks until we are 
through this COVID moment?
    Mr. Spriggs. In this immediate moment, we do need to do it, 
because as you mentioned, there is a democracy issue that we 
are facing. People believe that the government acts to make 
wealthy people wealthier, and not to address the immediate 
needs of the country, which right now, the immediate need is to 
fight this virus, to have workers safe, to have workers stay 
home if they are sick. That is the immediate need, and all 
money must go to that.
    Mr. Casten. Thank you, and I yield back.
    Chairman Sherman. Thank you. I now recognize, last but 
certainly not least, Ms. Ocasio-Cortez from New York.
    Ms. Ocasio-Cortez. Thank you, Chairman Sherman, and thank 
you to all of our witnesses who are joining us today. Your 
testimony and insight is deeply appreciated.
    I think, especially as we are discussing capital markets 
and worker protections during this pandemic, it is an 
especially important topic as we are starting to see States 
reopen. So, I would like to thank the committee for including 
several of my bills that would place restrictions on 
corporations receiving public funds, and support protection of 
workers, and ensuring an equitable recovery.
    I will begin with Ms. Simpson, just kind of a basic, high-
level question, as an investor, when you invest in a riskier 
venture, would it be fair to say that an investor, investing in 
that risky venture, would be compensated with a higher rate of 
return because of the risk associated with that, as a broad, 
general assessment?
    Ms. Busette. Generally, that is correct.
    Ms. Ocasio-Cortez. And is that same kind of compensation 
true for workers, in that workers who are risking their lives 
in meat-packing facilities, and grocery stores, are their 
returns higher? Are they being paid--what does their 
compensation look like? Do you see hazard pay, which is 
supposed to be a form of compensation for risk, a norm in your 
view?
    Ms. Busette. Low-wage workers, particularly those who work 
in the industries that you mentioned--and thank you for the 
question, Congresswoman Ocasio-Cortez are consistently paid 
very low wages for these kinds of essential jobs that put meat, 
poultry, and vegetables on our table. That has not changed 
during the pandemic.
    Ms. Ocasio-Cortez. And so in your assessment, hazard pay is 
not the norm?
    Ms. Busette. Hazard pay is not the norm. There have been 
some corporations which have added some hazard pay, and then, 
since the economy has started to reopen in various States, have 
rescinded that.
    Ms. Ocasio-Cortez. So really, when we talk about 
compensation for risk, it is not that all people in our economy 
are compensated for risk, just that a certain narrow class is 
compensated for risk of capital, but not necessarily risk of 
life.
    Ms. Busette, can you briefly paint a picture of who these 
frontline workers are? Is there kind of a makeup in terms of 
race, age, class, et cetera, of those who are 
disproportionately represented in terms of these workers who 
are risking their lives?
    Ms. Busette. I am happy to do that. Low-wage workers, in 
general, are primarily Black and Brown workers, so Blacks, 
Hispanics, and others of that category, they also are 
predominantly in occupations that include things like grocery 
stores--I am talking about now during the pandemic--cooks, 
waiters, waitresses, who have moved to delivery and takeout 
options, and they also work in home health and in nursing 
homes.
    These are the kinds of occupations that tend to be 
extremely low paid, and on top of the information I just 
provided, low-wage workers also tend to not have completed high 
school. People who do not complete high school are at a real 
disadvantage in any economic circumstance, and in this one in 
particular, their unemployment remains extremely high, one of 
the highest levels, even as we start to turn the corner into 
the recovery.
    Ms. Ocasio-Cortez. Thank you. And I want to pivot quickly 
about giving folks and making sure that folks are able to 
preserve extended unemployment benefits during this pandemic. 
There is this argument that we should not extend $600 a month 
in unemployment benefits, but we have seen millions of jobs 
wiped out during this pandemic, and I want to ask anyone on the 
panel, what is the likelihood that these jobs have been lost 
for the foreseeable future, and what is the likelihood of all 
of these jobs suddenly coming back, which I believe would be 
the argument of not justifying the continuation of pandemic 
unemployment assistance?
    Mr. Spriggs. I will take a stab at that, really quickly. 
The 11 percent unemployment is the worst, other than the 2 
months that were the worst before that. This is still the worst 
labor market. We are still losing millions of jobs a month, 
even though we are gaining jobs. So, what the workers are 
looking at is the potential for long-term unemployment.
    If you are a worker in one of the hardest-hit industries, 
those unemployment rates are actually 34 percent. So, workers 
in that environment are very vulnerable. That is why millions 
of them went instantly back to work when they were given the 
opportunity. This $600 isn't about, ``I don't want to work.'' 
The $600 is that they face permanent job loss, and permanent 
job loss is very expensive.
    Ms. Ocasio-Cortez. Thank you.
    Chairman Sherman. Thank you. I would like to thank all of 
our witnesses for their testimony, and thank all of the Members 
for participating today. Today's hearing highlighted how public 
companies treat their workers, and how they account for human 
capital is critical to whether we recover from this virus, 
recover from the economic implosion that has brought us, and 
address systemic inequality that we have dealt with for decades 
and centuries.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Mr. Huizenga. Mr. Chairman?
    Chairman Sherman. The ranking member is recognized.
    Mr. Huizenga. Yes, thank you. Sorry. I tried injecting 
earlier. I do have one article, without objection, I would like 
to place into the record, ``CalPERS Prepares for the Long 
Haul,'' The Wall Street Journal article that was written by Ben 
Meng, and this conversation about CalPERS does affect those of 
us in Michigan and Ohio and other places as well, as we are 
talking about the long-term longevity of retirement for all 
workers, and Washington's seeming need to be bailing people 
out. So with that, I request that we submit that article for 
the record.
    Chairman Sherman. Without objection, it is so ordered.
    The hearing is adjourned.
    [Whereupon, at 2:09 p.m., the hearing was adjourned.]

                            A P P E N D I X



                             July 14, 2020
                             
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