[Senate Hearing 116-26]
[From the U.S. Government Publishing Office]


                                                          S. Hrg. 116-26

                 SMALL BUSINESS AND THE AMERICAN WORKER

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

                                HEARING

                               BEFORE THE

                      COMMITTEE ON SMALL BUSINESS
                          AND ENTREPRENEURSHIP
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 6, 2019

                               __________

    Printed for the Committee on Small Business and Entrepreneurship
    
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            COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                     ONE HUNDRED SIXTEENTH CONGRESS

                              ----------                              
                     MARCO RUBIO, Florida, Chairman
              BENJAMIN L. CARDIN, Maryland, Ranking Member
JAMES E. RISCH, Idaho                MARIA CANTWELL, Washington
RAND PAUL, Kentucky                  JEANNE SHAHEEN, NEW HAMPSHIRE
TIM SCOTT, South Carolina            EDWARD J. MARKEY, Massachusetts
JONI ERNST, Iowa                     CORY A. BOOKER, New Jersey
JAMES M. INHOFE, Oklahoma            CHRISTOPHER A. COONS, Delaware
TODD YOUNG, Indiana                  MAZIE K. HIRONO, Hawaii
JOHN KENNEDY, Louisiana              TAMMY DUCKWORTH, Illinois
MITT ROMNEY, Utah                    JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
             Michael A. Needham, Republican Staff Director
                 Sean Moore, Democratic Staff Director
                            
                            
                            
                            C O N T E N T S

                              ----------                              

                           Opening Statements

                                                                   Page

Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida.........     1
Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from 
  Maryland.......................................................     3

                               Witnesses

Cass, Mr. Oren, Senior Fellow, Manhattan Institute, New York, NY.     5
Stevenson, Dr. Betsey, Associate Professor of Economics and 
  Public Policy, Gerald R. Ford School of Public Policy, Ann 
  Arbor, MI......................................................    40
Lettieri, Mr. John, President and CEO, Economic Innovation Group 
  (EIG), Washington, DC..........................................    25
York, Ms. Caryn, Executive Director, Job Opportunities Task 
  Force, Baltimore, MD...........................................    47

                          Alphabetical Listing

Cardin, Hon. Benjamin L.
    Opening statement............................................     3
Cass, Mr. Oren
    Testimony....................................................     5
    Prepared statement...........................................     8
Lettieri, Mr. John
    Testimony....................................................    25
    Prepared statement...........................................    28
    Responses to questions submitted by Senator Hirono...........    80
Rubio, Hon. Marco
    Opening statement............................................     1
Stevenson, Dr. Betsey
    Testimony....................................................    40
    Prepared statement...........................................    42
    Responses to questions submitted by Senator Hirono...........    82
York, Ms. Caryn
    Testimony....................................................    47
    Prepared statement...........................................    50

 
                 SMALL BUSINESS AND THE AMERICAN WORKER

                              ----------                              


                        WEDNESDAY, MARCH 6, 2019

                      United States Senate,
                        Committee on Small Business
                                      and Entrepreneurship,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:33 p.m., in 
Room 428A, Russell Senate Office Building, Hon. Marco Rubio, 
Chairman of the Committee, presiding.
    Present: Senators Rubio, Risch, Scott, Ernst, Young, 
Romney, Hawley, Cardin, Cantwell, Shaheen, and Rosen.

OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A U.S. SENATOR 
                          FROM FLORIDA

    Chairman Rubio. Today's hearing of the Committee on Small 
Business and Entrepreneurship will come to order.
    I want thank all of you for being here. I extend a welcome 
to our witnesses. We will introduce them in a moment.
    I am very happy that we are holding today's hearing titled 
``Small Business and the American Worker,'' and the hope is to 
explore the ties between the health and dynamism of small 
business and the well-being of American workers.
    For far too long, in my opinion, policymakers have focused 
almost exclusively on consumer welfare. We pay very little 
attention in public policy to the welfare of workers. The idea 
that any type of economic efficiency is beneficial, so long as 
those left behind can rely on some sort of government safety 
net, overlooks the fundamental role of the dignity of work. It 
is through dignified labor and dignified pay for that labor 
that American workers create the stability and the vitality of 
families, communities, and country.
    Yes, of course, we want to see strong economic growth, but 
we want strong economic growth that creates good and dignified 
jobs, not just good statistics. You need both.
    It is instructive to note that as GDP has risen from 
roughly $2.6 trillion in 1979 to almost $21 trillion in the 
last quarter of last year, the percentage of means-tested 
government transfers to middle-income recipients has more than 
doubled according to a study by the Brookings Institution. It 
tells us that a broad swath of Americans, despite all this 
growth, have been left behind.
    This is evident in our stagnant labor force participation 
rates and falling annual incomes of high school-educated 
workers. It is evident in the precipitous decline in community 
life and engagement with the institutions that are critical to 
a thriving society.
    Americans now find themselves feeling more disconnected and 
alone than ever before. We are not powerless to act. It is 
incumbent upon us to find innovative policy solutions that 
empower a broad range of American workers and place the 
vitality of the labor market at the forefront of our decision-
making. In doing so, we must not disregard the power of free 
markets and competition as an engine of economic growth. It is 
the most powerful engine of economic growth man has ever known.
    But as this Committee heard from a panel of witnesses last 
week, our failure to respond to Made in China 2025 and other 
foreign industrial policies diminishes our core productive 
capabilities and eliminated the livelihoods of thousands of 
small business manufacturers and millions of American workers.
    There was once a notion in this country that if you work 
hard and you put your mind to it, you could support a family, 
buy a car and a home, and live the American dream. It is 
unrealistic to believe that this social contract can be 
replaced by a check from the government. Our country cannot 
have the sustained benefits of economic growth without a strong 
productive sector which increases social mobility, advances 
small business dynamism, and strengthens our Nation's overall 
productive capacity.
    At the core of this reorientation must be a policy 
framework that encourages businesses to invest in physical 
capital, as well as their workers' skills and their workers' 
productivity.
    Long-term growth also requires investment from government 
in infrastructure, education, and research and development as 
well as a commitment to aligning regulation with labor market 
needs.
    Such investment should take the form of a national 
innovation strategy, which will enable small businesses to 
modernize and compete on a global scale, as the Committee 
discussed last week.
    In working toward this strategy, this Committee will focus 
on orienting the programs within the Small Business 
Administration to foster greater innovation and small business 
growth.
    Strengthening America's labor markets also entails a 
focused effort to improve the conditions under which this 
market operates.
    Harmful artificial restrictions, such as burdensome 
occupational licensing and one-sided non-compete agreements for 
low-skill and entry-level employment, those things impede 
worker mobility and choice. These obstructions to work are most 
acutely felt by Americans with fewer job opportunities, and 
they must be removed.
    In addition, policymakers have often overlooked the 
fundamental role of the family and nongovernmental social 
institutions in the vitality of our labor market and country as 
a whole.
    I fought personally to reduce the tax burden on middle-
income families and foster an economic environment conducive to 
family formation and prosperity through efforts such as 
increasing the Child Tax Credit.
    We need to consider policies which allow for flexibility in 
training and work. One such idea is a Federal program to enable 
parental leave, such as the one I have introduced last Congress 
and ideas that others, including members of this Committee, are 
working on separate bills that would do the same.
    Under this plan, workers would be empowered to engage in 
family life without sacrificing their ability to make ends meet 
in a way that balances fiscal priorities and the needs of 
employers.
    Ultimately, for the sake of our Nation's long-term success, 
it is the responsibility of our government to emphasize 
dignified work in a production-focused economy.
    And so I look forward to today's discussion that will 
explore policy solutions to America's labor market challenges, 
in particular, as it relates to small businesses in this 
country.
    And now I turn it over to Ranking Member Cardin.

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, RANKING MEMBER, A 
                   U.S. SENATOR FROM MARYLAND

    Senator Cardin. Well, thank you, Mr. Chairman, and thank 
you very much for convening this hearing dealing with small 
business and the American worker. To me, it is a critically 
important topic. I listened very carefully to your opening 
statements, and I am very encouraged that I think we will be 
able to work together to advance the interests of our workforce 
as it relates to small business and helping our economy.
    As we begin the new Congress, wages and employment will 
once again be center stage, and rightly so. The story of the 
American worker over the past three decades has been bleak. 
Between 1980 and 2014, the top 1 percent saw their pretax 
incomes grow 204 percent, while incomes for the bottom 50 
percent remained virtually flat. And the gap between those at 
the top and everyone else is widening. The top 1 percent takes 
home more than a fifth of all income in the United States, 
about double their share in 1980.
    If we do not take swift action in Washington to address 
income inequality, we run the risk losing the promise of upward 
mobility at the heart of the American dream.
    Small businesses play a vital role in keeping that dream 
alive. We all know the numbers. Small businesses employ nearly 
half of our Nation's workforce and create two out of every 
three new jobs. They incubate breakthrough innovations, 
contribute to the health and dynamism of local communities, and 
provide the economic foundation for millions of American 
families.
    But we know that small businesses cannot survive without 
high-quality talent. Small firms face a unique set of workforce 
challenges. During the periods of low unemployment, they 
struggle to compete with larger businesses that have more 
resources to attract talent. We know that they cannot provide 
small businesses the same type of complete benefit package. We 
know they do not have a human resources department. They start 
with a disadvantage.
    The National Federation of Independent Businesses in an 
April study of last year showed that 88 percent of small 
businesses on job openings have few or no qualified applicants. 
The number of unfilled positions have more than doubled since 
2012. We need the right workforce development system, and that, 
I hope, will be part of the work of this Committee.
    In my own State of Maryland, we are taking our industry-
driven approach to workforce issues. I think that can help us a 
great deal. The governor has established a Skilled Immigrant 
Task Force. I think that is a step in the right direction, and 
we will hear from Caryn York about the Job Opportunity Task 
Force that advocates on behalf of low-wage workers.
    We have opportunities in this Congress. We will be 
considering the Workforce Innovation and Opportunity Act. It 
will not come through this Committee, but it will come through 
the United States Senate, and I hope this Committee will be 
active in how that bill is tailored. We want to have strong 
small business input into workforce plans.
    We also can look at innovative approaches to help small 
businesses; for example, ensuring apprenticeship programs are 
tailored for small businesses, recognizing that there is a 
source of opportunity here and returning citizens and how can 
we help small businesses in dealing with a larger labor pool.
    Workforce issues give us an opportunity to close the gap 
that I referred to in the opening of my statement. We will have 
opportunities during this Congress to deal with related 
issues--the Higher Education Authorization Act, which we will 
take up in this Congress. Education to me is the great 
equalizer. The Chairman mentioned it in his opening comments. 
Higher education is key because those who participated in 
higher education have a wage premium. We all know that. They 
make more money. We should be doubling down to make access to 
higher education available to more of our citizens who today 
cannot afford it because of tuition costs.
    We need a balance between those that go on to higher 
education and those that need career and technical education 
for vocational pathways, but that has to be done in a balanced 
way because if you come from a disadvantaged community, you 
should have equal opportunity as to what is best in your 
future, and I would suggest that is not necessarily the case 
today.
    We should not ignore the immigrant population. The 
immigrant population is critically important to small 
businesses; 27.5 percent of our Nation's entrepreneurs are 
immigrants. One out of every four tech and engineering 
companies has at least one immigrant as a cofounder.
    We also need, as the Chairman pointed out, to look at the 
tools within the Small Business Administration to see if they 
are fine-tuned in order to meet these needs. I hope as we do 
that, we recognize that one way to close this gap is to make 
sure that these tools are focused and helping minority- and 
woman-owned businesses because they have not gotten a fair 
share of these tools in the past. I think these are all ways 
that we can help deal with these critical problems.
    So I welcome our panel. We have four distinguished 
witnesses that can help us through this to better serve small 
businesses, to raise wages, to narrow the opportunity gaps in 
our community, and meet the challenges of the 21st century.
    Chairman Rubio. Thank you.
    I want to welcome our panel of witnesses. Oren Cass is a 
Senior Fellow at the Manhattan Institute, where he focuses on 
strengthening the labor market. He previously served as 
domestic policy director for Mitt Romney's presidential 
campaign in 2012, as an editor of the Harvard Law Review, and 
as management consultant at Bain & Company.
    John Lettieri is the president and CEO of the Economic 
Innovation Group, a bipartisan public policy organization 
focused on fostering economic dynamism throughout the country. 
He has testified before this Committee a number of times, most 
recently on opportunity zones in the tax reform bill. Before 
joining the Economic Innovation Group, he was the vice 
president of Public Policy and Government Affairs for the 
Organization for International Investment, and he served as 
foreign policy aide to former U.S. Senator Chuck Hagel.
    Betsey Stevenson is an associate professor of Public Policy 
at the University of Michigan, Ford School of Public Policy. 
Previously, she served as a member of the White House Council 
of Economic Advisers and as the chief economist at the U.S. 
Department of Labor.
    Caryn York is the executive director of the Job 
Opportunities Task Force, a statewide nonprofit organization in 
Maryland that promotes policies and programs to help low-wage 
workers advance to high-wage jobs.
    We thank all four of you for being here today, and let us 
just begin from left to right. Mr. Cass, thank you for being 
here.

   STATEMENT OF OREN CASS, SENIOR FELLOW, MANHATTAN INSTITUTE

    Mr. Cass. Well, good afternoon, Chairman Rubio, Ranking 
Member Cardin, and members of the Committee. Thank you very 
much for the opportunity to testify today.
    My name is Oren Cass. I am a senior fellow at the Manhattan 
Institute, where my work focuses on strengthening the labor 
market.
    My written testimony focused on three topics. The first was 
the limitations of consumer welfare as the relevant measure of 
economic policy and the importance of focusing instead on 
production and people's capacity as workers as we understand 
the effects of policy; second, a concept that I call 
``productive pluralism,'' which is the idea that the conditions 
we should be striving for in this society are ones where people 
of all aptitudes in all places have the opportunity to find 
work that will allow them to support their families and their 
communities; and then, third, the central role of labor markets 
and particularly as it pertains to small businesses and 
entrepreneurs in creating those conditions.
    My central message for the Committee is that a labor market 
that facilitates those conditions and allows people to work in 
ways that support their families and communities is the central 
determinant of long-term prosperity for this country and so 
should be the central focus of our public policy.
    I will summarize these points briefly here with an emphasis 
on the implication for policymakers.
    So, first and foremost, why do we care so much about labor 
markets? In my view, the answer is because work matters. We 
understand that on an intuitive level, but we do not actually 
credit it very much in our economic policy. We do not 
appreciate the extent to which work is critical to individuals, 
their self-esteem, their mental health, their life 
satisfaction, and their own economic opportunity over time.
    I think even more importantly, work is incredibly important 
to families and communities, the foundation of our society. 
Work is incredibly important, and here, especially for men, 
work is an incredibly important driver of family formation and 
family stability. Work is an incredibly important driver of 
outcomes for children. Children have better outcomes in 
households where adults are working and even just in 
communities where adults are working.
    And thinking more broadly about these communities, work is 
a nexus of community, and conversely, where people lack work, 
we see incredible erosion in community, higher levels of crime, 
higher levels of addiction, far less investment in social 
capital.
    So if we want a flourishing society and the dynamic economy 
that it produces, it is not sufficient to simply grow GDP to do 
what we call ``growing the economic pie'' by whatever means 
necessary and then giving everybody a big enough slice. We 
actually need everyone to be involved in the process of 
producing that pie and, importantly, to be able to be involved 
in that from the places they are with the aptitudes that they 
have.
    This is not something that will happen on its own. It is 
incredibly important to recognize that nothing in economic 
theory says that just allowing the markets to run, just 
achieving the efficient outcome, just maximizing how much cheap 
stuff we can buy is going to leave us with a labor market that 
gives these opportunities to everybody.
    And so I think this is a challenge for policymakers across 
the political spectrum. It is a challenge for those on the 
right whose tendency is to trust markets because, in fact, the 
market outcome is not necessarily going to be the socially 
desirable one, but it is also a challenge for policy makers on 
the left whose tendency is more often to command an outcome 
where the market is not producing the desired one.
    As Senator Cardin noted in his opening statement, small 
businesses in particular are limited in many cases in the types 
of wages and benefits and so forth they can provide to workers, 
and so if we want better jobs and a healthier labor market, it 
is not sufficient to mandate one. We actually need to create 
the economic conditions in which small businesses, in which 
entrepreneurs can create attractive jobs and greater economic 
value throughout the economy.
    I would like to highlight a few ways in which the standard 
policy responses that we have been emphasizing I think are 
insufficient.
    One is that almost by definition, redistribution is not a 
solution. We cannot redistribute productive capacity and good 
jobs from winners to losers in our economy.
    Second, education and training I think are wonderful goals 
and things we should continue to invest in, but we also need to 
recognize that we have made very limited progress in decades 
now in, for instance, increasing the share of the population 
that achieves a bachelor's degree. And it is going to be 
important to build a labor market that meets people where they 
are and supports them in the jobs they are prepared to take 
rather than simply hoping they achieve something better.
    And then, third, relocation is not a response. We need to 
meet people where they are literally as well as figuratively. 
We need to pursue a national economy with broad-based 
prosperity in which people in wherever they live in the country 
have these opportunities. So I think small business and firm 
formation are especially important in this respect in ensuring 
the economy is not one that flourishes only in isolated coastal 
hubs.
    There are a number of policy responses we should consider. 
I will mention them briefly here, and I hope we can speak about 
them more. I think we need to focus on a regulatory environment 
that encourages job creation. I think we need to build an 
education system and focus much more heavily on those not 
pursuing college.
    I think we need a trade policy that focuses on balance and 
ensuring that we are exporting and creating opportunities for 
workers as much as we are importing and providing cheap stuff 
to consumers.
    I think we need a labor policy appropriate to the 21st 
century that allows workers to collaborate amongst themselves 
and with employers.
    And I think we need a safety net that includes a wage 
subsidy and encourages workers to work and supports them in 
doing so instead of just supporting them, regardless of work 
and in their conditions of poverty.
    Thank you very much.
    [The prepared statement of Mr. Cass follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Rubio. Thank you.
    Mr. Lettieri.

    STATEMENT OF JOHN LETTIERI, PRESIDENT AND CEO, ECONOMIC 
                        INNOVATION GROUP

    Mr. Lettieri. Chairman Rubio, Ranking Member Cardin, and 
members of the Committee, thank you for inviting me to testify 
today.
    The well-being of American workers depends upon 
entrepreneurs, and entrepreneurs are facing serious challenges.
    Chairman Rubio. I am sorry. I think your microphone may 
have come off.
    There you go.
    Mr. Lettieri. Sorry about that.
    Unless policymakers take action, the future of American 
entrepreneurship will remain under threat from structural and 
policy forces that have already combined to diminish the 
dynamism of the U.S. economy across every sector and every 
region.
    So how does entrepreneurship benefit the American worker? 
New businesses unleash chain reactions throughout the economy 
that help ensure the labor market works for working people. 
First, new businesses are a critical source of new demand for 
workers and a driving force behind net job creation.
    New forms also enhance competition, driving unproductive 
firms out of business and clearing the way for more innovative 
and productive ones to thrive. Through this process, workers 
reallocate to companies that enable them to be more productive 
and earn higher wages too.
    Before going further, I want to address a common 
misconception about the labor market, and that is the notion 
that workers today experience greater job churn than ever 
before. This is simply not the case.
    Even today, after a long economic expansion, turnover rates 
today only barely match those from the depths of the prior 
recession, the early 2000s. This matters because job churn is 
vital to workers' interest in the labor market.
    Studies show that one-third of early career wage growth 
comes from job hopping, and that those early gains are critical 
to establishing a lifetime of employment trajectory.
    Research also shows that a reduction of labor market churn 
has a three and a half times stronger negative impact on young 
men with only a high school diploma than it does on those with 
a college degree. Young people, those with fewer skills, the 
currently unemployed, and the formerly incarcerated are the 
first to lose out when job churn slows down.
    So we know that workers benefit from the economic effects 
of entrepreneurship, but what is the state of entrepreneurship 
today?
    The state is troubled. Over the past several decades, the 
startup rate has declined across virtually all regions and all 
sectors of the economy before collapsing with the Great 
Recession. This collapse is reflected across every sector, and 
unfortunately, the national economic recovery has done little 
to improve the rate of business formation nationwide.
    Even the post-recession high reached in 2016 left the 
startup rate a full 2 percentage points below its long-run 
average.
    How does that translate for workers? For workers, that 
means that each and every year on record since the Great 
Recession, roughly 100,000 fewer new companies have come online 
to compete for their labor.
    Furthermore, the U.S. economy is less dynamic across all 
regions today than even a short while ago. At EIG, we evaluated 
State-level dynamism across even different metrics from 1992 to 
2014. What we found was the most dynamic State today scores 
like one of the least dynamic states of the early 2000s--or 
early 1990s. This is a trend that leaves no corner of the 
country untouched.
    Another reason for concern is the strong relationship 
between demographics and dynamism. The rate of U.S. population 
growth now stands at its lowest level in the last 80 years. EIG 
will soon release new research finding that 86 percent of 
counties are now growing even more slowly than the country as a 
whole, and half of counties are losing population each year. 
Worse, two-thirds of counties are losing prime-age adults. 
Absent an aggressive policy response, small businesses, new 
businesses, and the American worker will find themselves 
navigating unfriendly terrain in the years ahead.
    So how should policymakers respond? I offered several 
policy recommendations in my testimony, but I want to emphasize 
two of those in particular now.
    First, there is a simple way to boost wages, to boost 
innovation, and to increase entrepreneurship without enacting 
any new program or incurring any cost to the Federal 
Government, and that is by banning the use of non-compete 
agreements.
    Roughly one in five workers is covered by a non-compete. 
These clauses are almost never negotiated, and they rarely come 
with any added benefits to the worker. Why should policymakers 
care? It is because non-competes are both unnecessary to 
protect trade secrets and are proven to stifle the very forces 
of healthy churn that are desperately needed in our economy 
today.
    Enforcement of non-competes leads to significantly lower 
rates of business entry. The new businesses that do form tend 
to be weaker, smaller, and more likely to fail within their 
first 3 years.
    Workers in states that enforce non-competes earn less, they 
stay longer in their jobs, and they are less satisfied with 
their jobs.
    These provisions almost certainly diminish overall levels 
of innovation by restricting the mobility of the economy's most 
productive workers and lowering rates of entrepreneurship. 
Banning them would have an immediately favorable impact on 
entrepreneurship, innovation, and wages. I encourage Congress 
to do so.
    Second, we must enact a coherent immigration strategy. An 
effective immigration policy would help us boost 
entrepreneurship, spur innovation, and tackle all the 
demographic challenges I mentioned, all at once. And I would 
emphasize two ideas that get to the heart of the issues I have 
covered in my testimony.
    First, like a long list of other advanced nations, the 
United States should have a startup visa. Any entrepreneur who 
can pass a national security check and demonstrates the ability 
to fund-raise against a sound business plan should be welcome 
to start their business in our country.
    Second, we should open new pathways for immigrants, 
particularly high-skilled immigrants to connect with 
communities facing chronically slow or negative population 
growth, enacting a place-based visa. One tied to certain 
geographies rather than a single employer would help declining 
communities make better use of excess capacity, improve their 
fiscal stability, and boost local dynamism to the benefit of 
all workers.
    Policymakers should move quickly to enact bipartisan 
solutions, like the ones I have mentioned in my testimony. It 
would help American workers and entrepreneurs and communities 
thrive.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Lettieri follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Chairman Rubio. Thank you.
    Dr. Stevenson.

 STATEMENT OF BETSEY STEVENSON, Ph.D., ASSOCIATE PROFESSOR OF 
 ECONOMICS AND PUBLIC POLICY, GERALD R. FORD SCHOOL OF PUBLIC 
                             POLICY

    Ms. Stevenson. Chairman Rubio, Ranking Member Cardin, and 
members of the Committee, thank you so much for the invitation 
to be here today.
    You have heard about the importance of entrepreneurship and 
jobs. I want to address the fact that technology is changing 
both entrepreneurship and jobs.
    Rather than eliminating many types of jobs, as is often 
reported in the press or feared, what technological change is 
likely to do is change the tasks that workers do in jobs. MIT 
researchers have gone occupation by occupation looking at the 
multiple tasks that are done and shown that most jobs will have 
tasks that are eliminated by technological change, by 
artificial intelligence and machine learning, but very few, if 
any, jobs will be completely eliminated by that.
    So the future holds a world in which jobs, almost all of 
them, need to be redesigned, and they need to be redesigned in 
a way to take advantage of the comparative advantage of human 
workers.
    Preparing people for the jobs, the way jobs will change, 
requires greater investment in education and worker training. 
Today's workers get only a few hours of training from their 
employers, while workers generations ago received much greater 
training from their employers.
    Apprenticeship programs that I know Ms. York will speak 
about that receive public funding, provide compensation to 
workers, and encourage employers to take a chance on new 
workers are essential to this change, but these programs must 
adapt to the changing jobs of the U.S. economy. The U.S. 
economy is a service-based economy. Eighty-four percent of 
workers employed in the private sector are in the services. A 
third of our exports is services, and these are where the good 
jobs are and the good exports are and where we are growing our 
exports.
    Internationally, our comparative advantages are a highly 
skilled workforce, but we are losing ground to other countries. 
To preserve our place in the global labor market, we must make 
sure more Americans successfully complete college.
    In the last century, we made it possible for nearly all 
Americans to get a high school degree, even though other 
developed countries told us it was impossible. They said some 
people were simply not suited for higher education, ``higher'' 
meaning high school.
    Today, we are making the same arguments about our own 
citizens, while other developed countries succeed with a much 
higher percent of their citizens completing college.
    In the U.S., nearly two-thirds of young people start a 
college degree, but inadequate financial support, the 
challenges of raising a family while in school for some, and 
insufficient education prior to college--in other words, the 
failure of our school system before you get to college--mean 
that only 36 percent of people in their late 20s and early 30s 
have actually completed a college degree. We can, and should, 
have the majority of our young people successfully completing 
college.
    Let me address a second aspect of redesigning work. Total 
work hours may decline. The challenge is not about making sure 
that work does not decline. It is making sure that it declines 
only in a desired way and that it does not create the 
marginalization of communities without work.
    Historically, technological change has reduced work. We no 
longer send children into factories. We now enjoy retirement, 
and some people choose to stay home and raise their children, 
focus on their families and their communities rather than work. 
This is not a bad thing. We have thought that this was a good 
choice.
    So what can we do to make sure that any change in hours is 
done in a positive way? We need to provide an infrastructure 
that supports working families and allows some importantly, 
broadly shared declines in work, a decline in working while 
sick, a decline in working while dealing with a medical crisis 
of a loved one, while having a newborn in the home, people 
being able to afford to take time out of work and then get back 
to work once these crises have passed or once a newborn is 
ready to be left in child care.
    Too often, people are completely pushed out of the labor 
force when they are forced to choose between family obligations 
and work. Roughly half of parents say that they have turned 
down a job because they could not make it work with their 
family needs. That is a lot of parents who are forced to make 
very difficult choices.
    Paid sick leave encourages workers to stay home when they 
are sick. With contagious diseases, this benefits businesses 
and improves overall productivity, but sick leave policies that 
allow workers to stay home to care for a loved one may not 
directly benefit their employer. But they do directly benefit 
society, and that is why government has a role in ensuring that 
all people have access to that kind of leave.
    Similarly, parental leave policies generate benefits for 
society providing health and development benefits to children.
    The one last thing I want to mention is the importance of 
Congress and this Committee to ensure that we are building 
trust in society. There has been a large decline in trust, and 
some of that decline in trust is connected to not having that 
infrastructure that supports working families.
    People who do not trust other people are not themselves 
trustworthy, and that is something that impedes our 
entrepreneurship. It impedes our economic growth because we 
divert resources toward monitoring people rather than being 
more productive in our day-to-day world.
    I will end there. Thank you.
    [The prepared statement of Ms. Stevenson follows:]
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    Chairman Rubio. Thank you.
    And, finally, Ms. York.

STATEMENT OF CARYN YORK, EXECUTIVE DIRECTOR, JOB OPPORTUNITIES 
                           TASK FORCE

    Ms. York. Greetings, Chairman Rubio, Ranking Member Cardin 
from the great State of Maryland, and an alum, as I, of the 
best high school in the country, the Baltimore City College 
High School. I just had to flag that, ladies and gentlemen.
    And, members of the Committee, my name is Caryn York. I am 
executive director of the Job Opportunities Task Force, and I 
am thrilled to join you today to discuss the realities of the 
American worker in 2019.
    Job Opportunities Task Force, JOTF because it is a 
mouthful, is an independent statewide 501(c)(3) nonprofit 
organization. Our mission is to help low-wage workers advance 
to high-wage jobs. Our mission, again, is to eliminate 
educational and employment barriers and is achieved via three 
strategies.
    Number one, program development. For the past 12 years, 
JOTF has partnered with Associated Builders and Contractors, 
Baltimore Metro, to run Project JumpStart, a 14-week pre-
apprenticeship construction training program that helps 
Baltimore City residents obtain entry-level construction skills 
necessary to enter jobs in the building trades with a direct 
link to apprenticeships. Approximately 75 percent of city 
residents enrolled in Project Jumpstart are unemployed or 
under-employed. Many have limited work experience, and most 
have a significant history of criminal justice involvement. 
Thus, Project JumpStart was designed to address these barriers 
by providing a basic set of entry-level construction skills in 
carpentry, electrical, and plumbing, a strong focus on 
construction math and measurement, and certifications in 
safety, OSHA 10, first aid, and CPR.
    Associated Builders and Contractors, they cover the 
instructional training. JOTF, we provide the critical, 
intensive, customized case management services. Each student is 
provided with a $25 stipend per class to help mitigate costs 
like transportation, and JOTF pays for students to attend 
driver's education for $250 to start them on the path toward 
securing a driver's license, which we know is crucial to 
employment.
    Students also receive case management services that include 
assistance with housing, benefits screening, legal challenges, 
and financial education. Upon completion, graduates receive, 
because we also work with them after they have left the 
program, job placement support, a set of brand-new industry-
approved starter tools, certifications related to construction 
and construction safety, and access to a JOTF-secured low-
interest bank loan for up to $2,500.
    But Project JumpStart cannot fix everything. Many times, 
our Project JumpStart team will find that there are public 
policies that are preventing graduates who are employed from 
moving ahead and now risk falling back. This is where JOTF's 
second strategy comes in, public policy advocacy.
    Our policy priorities generally fall into the following 
categories: adult education, postsecondary access, and 
affordability; skills training; wages, benefits, and supports; 
reducing the impact of incarceration on workers; and 
transportation.
    Over the years, we have been instrumental and continue to 
be a leading voice in successfully educating State and local 
policymakers and business leaders about some of the most 
critical workforce issues, including but not limited to 
investment, investments in adult education and skills training.
    JOTF was the original architect of the Maryland EARN 
program, Employment Advancement Right Now, sector-based 
partnerships, paid leave, unemployment insurance for part-time 
workers and new labor force entrants, and the impact on 
incarceration that includes ban the box on both job and college 
applications, expungement reform, bail reform, occupational 
licensing reform, and accessible and affordable transportation 
options.
    These policies are crucial to ensuring the success of our 
folks like Project JumpStart graduates, but to round out our 
mission, we also provide research in public education. Our 
reports like ``Overpriced and Underserved,'' which highlight 
the cost of being poor, housing, transportation, and food; 
``Priced Out,'' which focuses on access and affordability for 
postsecondary education; and ``The Criminalization of 
Poverty,'' which highlights the laws and policies that 
unnecessarily penalize and criminalize our poor workers have 
helped to educate the public, which includes policymakers and 
business leaders and the general public on the barriers that 
impact an individual's ability to secure and maintain 
employment.
    Mr. Chairman and members of the Committee, I provide this 
lengthy background to illustrate JOTF's deep understanding of 
the barriers that are impacting not just the worker, but 
employers and ultimately cities, states, and our country as a 
whole.
    According to the Georgetown Center on Education and 
Workforce, by 2020, about 65 percent of all jobs will require 
some form of postsecondary education, and at our current rate 
of production, the United States will fall short by 5 million 
workers. This is a problem for us all.
    We hear that there are no jobs. Nonsense. The jobs are 
here, and they are coming. The problem is that our workers 
cannot access these jobs.
    And so, because I know I only have a little bit of time 
left, when we talk about how to ensure that workers can access 
these jobs and we talk about it within the context of things 
like opportunity zones that have been designated according to 
low-income zones, if we want to incentivize businesses moving 
into these zones, then we need to make sure that businesses 
have access to an educated, skilled workforce.
    In my neighborhood in Baltimore City, 40 percent in 
Southwest Baltimore, 40 percent of residents lack a high school 
diploma, and the median household income is $10,500. And so 
there are a number of recommendations that I have highlighted 
in my written testimony, but I just want to make sure that I 
bring to your attention this afternoon, as we talk about things 
like apprenticeships and skills gaps and reentry and what to do 
about the excitement surrounding opportunity zones.
    I ask the Committee to consider the following: providing 
additional funding for work-based training programs, including 
pre-apprenticeship programs and apprenticeship opportunities, 
career technical education and job training, expanding Pell 
grants to people seeking short-term training programs that lead 
to in-demand jobs, funding for issues that apprentices may need 
additional support to address, such as transportation and day 
care; ease restrictions for workers seeking occupational 
licensing, particularly workers with a criminal background--
Senator Cardin, Maryland leads the Nation in the most 
burdensome restrictions for prospective licensees; we need to 
do something about that--reducing the impact of incarceration 
on workers via banning the box on both job and college 
applications; expanding criminal record expungement, 
eliminating criminal justice fines and fees that lead to 
criminal justice debt; reform of child support enforcement laws 
that are sensible, family supporting, but punitively apply to 
noncustodial parents; and create tiered incentives to ensure 
low-income residents access to high-income job opportunities, 
particularly local hiring, local job creation, community 
engagement, and job training within opportunity zones.
    This can be done by aligning workforce development with 
economic development, investing in skills training, increasing 
access and affordability of postsecondary education, reducing 
the impact of incarceration on the workforce, and supporting 
public policy efforts that ensure workers and families are able 
to live, survive, and thrive in today's economy.
    Thank you for your time, and I look forward to answering 
any--well, it depends on the question.
    [Laughter.]
    But I look forward to answering questions from the 
Committee. Thank you.
    [The prepared statement of Ms. York follows:]
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    Chairman Rubio. Great disclaimer. Perfect disclaimer.
    Before we get into questions, he was not here at the 
outset, but I wanted to give Senator Romney just a second 
because I know Mr. Cass has worked with you for many years, and 
he wanted the opportunity to introduce him.
    Senator Romney. Has Mr. Cass spoken yet?
    Chairman Rubio. Well, he gave his opening statement.
    Senator Romney. Oh, he gave his statement. So I get to ask 
him a question, then, or do you just want to--first, I want to 
say hello.
    For those that do not know, Oren Cass was kind enough to be 
my domestic policy advisor, and he was responsible for all the 
good things I came out with. I am responsible for the mistakes.
    [Laughter.]
    And, as you all know, he has taken his experience and 
perspective and brain power to extraordinary heights in being 
an author of a very interesting reevaluation of how we think 
about success in this country and how we create not just a 
growing economy, but growing happiness and stability and 
satisfaction on the part of the American worker and the 
American family. And it is an approach which obviously has 
garnered great attention from some of the columnists of the 
leading papers in the country, but also policymakers and 
thinkers. And I appreciate his help in the past and his help in 
the future.
    Thank you, Mr. Chairman.
    Chairman Rubio. And I am going to generally waive my time, 
other than the first question to you, Mr. Cass, because I know 
there will be a vote here at 4:00, and I want to make sure 
everybody here gets to go and do that. I am going to be here to 
the end.
    Both in your opening statement and in the book that has 
gotten a lot of attention, you make the fundamental argument 
that American policymakers have been hyper-focused on consumer 
prices, raising standards of living, and redistributing income 
when in fact--and I will just focus on just growing the economy 
at any cost, but that that focus is the wrong one. That, 
instead, our focus should be on creating dignified work that 
supports strong families and communities, and that that, 
ultimately, is what leads not just to sustainable growth that 
is positive and raising standards of living and the like, but 
it also leads to long-term prosperity.
    So I just want to give you a chance to outline that. To a 
lot of people, that is a different construct than they perhaps 
heard, certainly from my side of the aisle in many cases.
    Mr. Cass. Sure. Thank you, Senator, and thank you, Senator 
Romney, for that.
    You know, I have likened our situation to the romantic 
comedy heroine in the kind of generic trailer who has it all or 
so she thought, dot-dot-dot. You know, she has the car and the 
apartment, and yet something is missing.
    What we found, I think, if you look at our economic data, 
is that on the terms we have set of growing the economic pie of 
raising material living standards, we have succeeded. The 
economy has grown enormously. We redistribute more than ever to 
the lowest-income households, and everyone's material living 
standards have risen. And yet, in conjunction with that, we see 
all of these very serious maladies, whether you are talking 
about collapsing families and communities, declining personal 
health, declining life expectancy, exit from the labor force, 
and so on and so forth.
    And I think what we have lost is the recognition that what 
is ultimately most important to individuals and what provides 
the basis for our communities, our families, and for the 
economy ultimately is not how much you can consume. It is your 
opportunity to engage as a productive contributor in society.
    I think in our single-minded focus on just consumption, we 
have actually managed to erode, to a significant degree, the 
health of the labor market that provides the real foundation 
for a healthy society.
    So it comes down to a lot of choices we make on a whole 
bunch of different dimensions and tradeoffs that we face and 
that we need to take a hard look at if we want to really make 
sure that, first and foremost, we are giving everybody the 
opportunity to, I would say, achieve what truly is the American 
dream, which is not in terms of how big your television is. It 
is about being able to, a lot of times, grow up in the 
community that you grew up in, to stay there, to build a 
family, to support it, to contribute, to save for your kids, to 
set them on a path to success as well. And I think we are going 
to have to make some sacrifices elsewhere on the consumption 
front if we really want to put that front and center.
    Chairman Rubio. Thank you.
    Ranking Member.
    Senator Cardin. Well, I thank all four of you. You have all 
pointed out that one of the problems we have in getting 
qualified workers is the fact that we do not have enough people 
who are educated and trained at the level we need, and we have 
discriminated against a large segment of our population who 
have criminal records. If you are a small business with a 
limited pool, you have a hard time competing with the qualified 
applicants that are available.
    So, Ms. York, I want to just follow up on the point that 
you mentioned quickly about Maryland and the problems on 
licensure.
    It has been estimated as many as 600,000 people return from 
prison every year in the United States, and that as much as 64 
million Americans, adult Americans, have a criminal record. 
That is 25 percent of our adult population.
    So this is a huge number, and we talk about opportunities 
of returning citizens, and yet we know it is extremely 
difficult.
    You mentioned in my own State of Maryland, we have 
restrictions in regards to licensing. Could you just briefly 
tell us what you have been able to do to try to provide 
opportunities for those who have served a prison term, who are 
returning to our community, who have not only an opportunity, 
but the skills necessary in order to compete?
    Ms. York. Thank you.
    You are absolutely right in terms of the stats that were 
articulated around the numbers of individuals who are returning 
back to our communities from incarceration because we should 
all know that if you were not sentenced to life, you are coming 
home. And so if they are coming home, it is incumbent upon all 
of us to think about how we want them to return and how we can 
ensure that they do not return back.
    And so, when you take these large numbers of individuals 
who are returning back to our communities with a criminal 
background, with a criminal record that is used in hiring 
decisions and even housing decisions, and then you juxtapose 
that against the number that shows us that the majority of jobs 
nowadays requires some type of occupational license and the 
policies that actually prohibit individuals or that allow 
boards to deny licenses to these individuals, then you begin to 
see how these criminal justice challenges actually become 
workforce challenges.
    And that is why an entity like the Job Opportunities Task 
Force is actually involved in this work. We found that there is 
a significant segment of the working population that is 
effectively unemployable as a result of a criminal record.
    There are a number of job opportunities, but yet folks were 
unable to access them because of their criminal record or 
because of the communities that they were raised in, which made 
it really difficult for them to access the educational 
opportunities that would allow them to access high-wage 
employment opportunities.
    So whether it is through Project JumpStart, where we are 
taking city residents and training them in the trades and then 
helping to deal with all of these wraparound case management 
services that, quite honestly, business owners and employers do 
not have the time to deal with but understand how important 
they are, as it is related to someone's ability to actually 
secure and maintain employment.
    So pre-apprenticeship--we talk about apprenticeship. Pre-
apprenticeship is so important to ensuring that the individual 
is actually successful in the apprenticeship program, and then 
ensuring that we are supporting those policies that 
successfully facilitate the individuals once they are 
matriculating through the programs and then afterwards because, 
in today's market, you will hear from employers that, you know, 
the workforce has changed, and so the workforce is aging. They 
are now looking for workers, and that includes workers with 
criminal backgrounds, and so how can we fix this disconnect so 
that employers have access to qualified workers and workers get 
jobs?
    Senator Cardin. I am going to look forward to looking at 
some of those specific recommendations.
    I think we have an opportunity here. This past Congress 
passed the FIRST STEP Act, which I thought we came together in 
a sensible way on sentencing. Now I think it is important for 
us to come together on dealing with the realities of the 
population of our country.
    All of you have mentioned the importance of higher 
education and the availability and access to higher education. 
You have all talked about the appropriateness for technical 
education. Not everyone should go to college, and the 
importance of that.
    My concern is that if you look at those that are going to 
be on track for higher education and those that may be on track 
for technical education, there is a disconnect between the 
communities you come from.
    So how do we provide equal opportunity so that those who 
should be going to college can have a better opportunity for 
income are not denied that opportunity because of the community 
they happen to come from?
    Mr. Cass, do you have an idea on that? You talked a little 
bit about equalizing through wage, directly through wages. But 
would not it be better that someone who should be in college 
has that opportunity rather than saying that we are going to 
get you into a technical program, which is important? I am for 
technical education, but it should be based upon aptitude and 
need and talent.
    Mr. Cass. Well, I certainly agree with that.
    I think the first step in any system that has multiple 
tracks should be to ensure that the choices the students and 
their families, which track that they move on to.
    Senator Cardin. Would you acknowledge that today that is 
not necessarily the case in America?
    Mr. Cass. Well, we do not have a multitrack system today in 
America. We have a system that attempts, I would say, to push 
everybody into a college pipeline and essentially abandons 
those who do not reach it.
    Senator Cardin. Not if you come from certain neighborhoods.
    Mr. Cass. No, not for every neighborhood. But, certainly, 
if you look, for instance, with respect to funding at what we 
spend money on or if you look at where Federal attention is, it 
is almost entirely on trying to increase the share of people 
attending college.
    So I think it is very important to recognize that while we 
want to make sure we have two robust tracks, the imbalance we 
have today is the total lack of a vital non-college track, and 
that when we lack that, it is those who would perform best on 
that track who we hurt most.
    I think a lot of folks look at, for instance, your 
observation that we might have a disparity in terms of people 
from which communities move on to which tracks and say, well, 
therefore, that is a reason not to have tracks. I think that is 
the wrong way to think about it.
    I think, essentially, we have a track, and it is a college 
track, and it is not the appropriate one for many people. 
Creating an additional track and giving people the option of 
accessing it would be a tremendous benefit to a tremendous 
number of people who do not have access to it today and would 
bring our system much closer to one where as many people as 
possible are on a track that is appropriate for them.
    Senator Cardin. Thank you.
    Thank you, Mr. Chairman.
    Chairman Rubio. Senator Hawley.
    Senator Hawley. Thank you, Mr. Chairman, Ranking Member. 
Thank you for calling this very important hearing.
    I just want to pick up right there. It seems to me 
something you just said, Mr. Cass, is very important, which is 
that we essentially have at this point in this country an 
educational system, job system that pushes folks toward going 
to college, which is great, but if you do not come from the 
right background where you have advantages that get you there, 
then you are essentially left on your own.
    Too often, I think we have an economy where increasingly we 
say to folks who have not gotten a 4-year degree, ``Good luck 
to you. We cannot promise you a good-paying job. We cannot 
promise you will be able to find any good work,'' and we talk 
endlessly about getting better jobs for folks who have college 
degrees. What about those who do not have college degrees?
    I come from a State in which most folks have not gotten a 
4-year college degree, but they still want good work, and they 
still deserve good work. And our communities and families still 
depend on the availability of good work.
    I think my question is--and I will just pose it to the 
panel, but I will start with you, Mr. Cass, and go down the 
line--what should we be doing in order to ensure that we have a 
labor market that can provide good, honest-paying jobs for 
folks who do not have a 4-year college degree and who do not 
live in one of these metropolitan hubs on the coast, but who 
maybe come from a State like mine that is majority rural or 
majority ex-urban, who still want to have communities that are 
prosperous, who want to be able to support and raise a family, 
but who want to do that without having to move to someplace 
else, and who have not gone to college? A 4-year college was 
either not available to them or not for them, but yet they 
still want to have access to good-quality, meaningful work.
    Mr. Cass. Well, I think it is an excellent question.
    I would mention a few things. I think education certainly 
has to be at the top of the list, and I like how you described 
it, which is people get to age 17 or 18, from whatever 
background they come from, with the aptitudes and preparation 
that they have, and absolutely, we should be talking about how 
to do better reform in society as a whole to make sure that we 
get people to that level as prepared for success as possible.
    But to the extent that we are not, I think it is a mistake 
to just wish that we were and proceed from there.
    Given where people arrive at age 17 or 18 today, providing 
them with more of the apprenticeship-type pathway that we have 
heard I think is critically important. Frankly, investing 
Federal money that would otherwise go to the kids who are in 
college, I would rather see us investing in the kids who are 
not headed for college in a sense. So I think that is very 
important.
    Then one other thing I would mention is just our regulatory 
infrastructure right now wildly undervalues work and physical 
economy, whether it is farming, whether it is infrastructure, 
construction, resource extraction, manufacturing, and favors 
finance and technology. And we should not be surprised that 
that is where all the investment goes, and I think we need to 
recognize and put a much higher premium on the value of the 
work that people do in the physical economy.
    Senator Hawley. Thank you.
    Mr. Lettieri.
    Mr. Lettieri. I agree with much of that, so I will just add 
on the demand side.
    A tight labor market, strong demand pulls people into the 
labor market and boosts wages for lower-skilled employees, 
lower-paid employees. So I think that is very important to 
overall labor market stability and the health of people who 
have less of an education or less skills entering the 
workforce.
    I would also say, as I mentioned in my testimony, a healthy 
churn in the labor market is important for everybody, 
particularly marginally attached workers, and so the more--I 
will connect this back to entrepreneurship. The more firm entry 
you have in the business market, the more that chain reaction 
flows to the benefit of marginally attached workers, many of 
whom we have talked about here, who face a number of challenges 
entering the labor market.
    One of those is demand, and one of those is a static 
economy. So, when we have static economies, many of those 
regions you talk about are very static. They are not suffering 
from business decline. They are suffering from lack of business 
entry, and they are missing that chain reaction that business 
entry sets off.
    And so, to the extent that we can focus on entrepreneurship 
as well, that does create more labor market opportunities up 
and down the chain and more demand for work of all different 
types.
    Senator Hawley. Dr. Stevenson.
    Ms. Stevenson. So let me also focus on the demand side, 
putting this in a little bit in perspective.
    So, among people in their 20s, their late 20s, 64 percent 
do not have a college degree. Sixteen percent of our private-
sector jobs are in the goods-producing sector. So there is 
nothing that this Committee or this Congress can do that is 
going to be able to take most of the people who are not going 
to college and get them into some sorts of goods-producing job.
    So we need to be thinking about technical training in a way 
that is very different from the way we used to think about it, 
so things like computer coding, other types of service jobs are 
going to be an important place for good jobs. So do we have the 
training programs to make sure people can do those kind of 
jobs? That is an important question.
    And then the spillover effects for things like are we 
providing subsidies for high-quality child care, if we provide 
subsidies for high-quality child care, it makes it easier for 
families to work, and it also pushes up wages in the child care 
industry, which is an important industry. And we can make that 
a better paying job, a better job for people to feel that both 
men and women can enter their jobs of taking care of early 
childhood education.
    So we need to be both building the skills of the workers 
who are able and can thrive by having more skills. We need to 
be rethinking what we mean when we say technical training, and 
we need to be investing in the parts of our economy like health 
care and education services, where there is huge demand, but 
right now, those are seen as undesirable jobs. They are 
undesirable because they are low paid, and a lot of that pay 
interacts with public policy in terms of what is the 
reimbursement rate for an elder care worker, for example. So 
there are things we can do on that end that will both support 
families and work.
    Senator Hawley. Ms. York.
    Ms. York. Thank you. Great question.
    I listed a number of recommendations in my written 
testimony, which is five that I want to highlight.
    Number one, just understanding and making sure that we are 
clear about the fact that the worker is not monolithic, and so 
workers are going to be subjected to different barriers and 
challenges, depending on where they are from, but also maybe 
their race and their ethnicity and their gender, all dealing 
with different barriers.
    Also, redefining college. A lot of times when we talk about 
college and higher education, we are just thinking 4-year 
college degrees. Training programs should also be included when 
we talk about postsecondary education, and we cannot forget 
community college, which leads me to my third point.
    Many times, individuals are not able to access additional 
credentialing because of access or affordability, and sometimes 
community college can even be expensive for our low-wage 
workers who are seeking to obtain maybe evening classes or 
additional credentialing so that they can access high wages, 
and so redefining how we talk about college and then making 
sure that we are talking about the affordability of all levels 
of college.
    And then, lastly, aligning workforce with economic 
development. It is so frustrating to me and many other 
stakeholders when we talk about economic development and what 
businesses are looking for over here and then we talk about 
what it takes to actually move workers from A, B, to Z here. It 
is important that when we are talking about crafting training 
programs that we are listening to employers. What is it that 
you need so that we can craft the curriculum that will ensure 
that you can draw from these trainees, and then you can hire 
them and employ them? So that we are killing a bunch of birds 
with one stone.
    And so those in addition to all the many recommendations I 
have listed in my written testimony, I believe would help 
ensure that we are able to get to the labor workforce that we 
are looking for.
    Senator Hawley. Thank you.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you.
    Before I turn it over to Senator Young, yesterday I had a 
meeting with NIFB, which represents a lot of small, mid-sized 
business. And for the first time in years, the number one 
concern in their survey of business owners is the lack. They 
cannot find trained workforce to fill the jobs that they need 
at the small----
    Ms. York. Absolutely.
    Chairman Rubio. And they are willing to train people, but 
obviously, that is an additional burden that they are facing. 
So I think that is a very important question.
    Senator Young.
    Senator Young. Thank you, Chairman, for holding this 
hearing.
    I appreciate all of our witnesses for being here.
    Mr. Lettieri, you place great emphasis in your testimony on 
indicating that we should, at the Federal level, consider 
banning the enforcement of non-compete agreements, except for 
perhaps under narrow circumstances. It is a bold proposal and 
one that, in many ways, I find attractive.
    Could you please explain what exceptions might exist to 
that ban and enforcement, though?
    Mr. Lettieri. Yeah. Thank you, Senator.
    The most obvious exception is probably when a business 
owner sells his or her business to an acquirer. In that case, 
in many cases, the transaction itself would depend on there 
being a non-compete. So I think that is the kind of thing that 
makes a lot of sense.
    In California, the most restrictive State in the country, 
when it comes to non-competes, they allow for that exception. I 
think that makes sense as a national rule as well.
    Senator Young. Okay.
    There is another concern that I anticipate, should we go 
this route, and it is the states--this has traditionally been 
the prerogative of the states to determine whether or not to 
ban the enforcement of non-competes, and if so, whether they 
banned broadly or more narrowly.
    So what would be your response to someone who had these 
sort of federalist concerns?
    Mr. Lettieri. Sure. I think it is an important question to 
address.
    It has been the purview of the states because the Federal 
Government has chosen not to have a say in the matter, but non-
competes are properly understood as part of employment law, and 
employment law certainly is an area where the Federal 
Government has a strong interest and set a national baseline 
against which states can modify and do other types of their own 
prescriptions that are unique to their states.
    I think this is clearly a case in which both falling within 
employment law jurisdiction and being a matter of such 
importance to the overall health of the national labor market, 
there is both a compelling economic rationale and certainly a 
clear legal rationale as well I think for the Federal 
Government to have a say, as it does on many, many other 
employment law matters.
    Senator Young. Sure.
    I can anticipate a number of businesses. I grew up in a 
family business, and we would have sales lists, customer lists. 
And those were very important to our business model. So there 
is certain information that is important to certain types of 
businesses. Are there steps that companies can take without the 
use of a non-compete agreement under the law that can be used 
to protect those legitimate interests?
    Mr. Lettieri. I think that is one of the--this is one of 
the questions that gets to the heart of why non-competes are so 
problematic. It is for the very reasons that employers often 
use to justify their use. They are not necessary.
    Employers have access to trade secrets protection, to other 
protections of intellectual property. They have the use of 
nondisclosure agreements and non-solicitation agreements. When 
you look at the reasons that employers give for the use of a 
non-compete, they often fall into one of those other, more 
finely scoped categories. And those categories, those tools do 
not carry the same type of broad harm that non-competes carry 
throughout the labor market and throughout the economy.
    So if you have alternatives that are more finely scoped to 
the concerns that employers have, over legitimate concerns, 
frankly, for intellectual property and trade secrets, those are 
the best tools to apply to those challenges and leave aside the 
broad prohibition on the very thing that our economy is based 
on, which is competition.
    And for workers, their knowledge, their skills, that is the 
only thing they have to trade on. So this is the kind of thing 
that I would say, going further, really harms individual 
liberty and makes it very hard for us to get the kind of 
outcomes we all say we want, which is a boost in wages, more 
entrepreneur dynamism, more innovation in our economy. So we 
have to look upstream from that and say if this is a tool that 
is being misapplied, what are the alternatives? And when we ask 
that question, we find that there are many that employers have 
to reach to.
    Senator Young. So you mentioned dynamism, and I know that 
is something that you are intently focused on at Economic 
Innovation Group. You and I have discussed it at some length. 
Do we have economic literature? Is there some good evidence out 
there about the impact of non-competes on the marketplace, and 
if so, what conclusions can we draw?
    Mr. Lettieri. Very clearly, the literature agrees on a few 
fundamental things. One, that the enforcement of non-competes 
greatly harms new business entry and markets, in some cases, up 
to 20 percent. That it harms the overall wage environment for 
workers, even those not covered by a non-compete. But in states 
that enforce them, it has a depressing effect on everybody's 
wages in certain fields and on and on.
    I mentioned in my testimony job satisfaction, the amount of 
time that a worker stays in a job. All of them are harmed. So 
it is very hard to find an issue that unites the academic 
literature the way that non-competes does.
    It is not really a disagreement among academics as to 
whether they are harmful; it is just to what extent they are 
harmful. And the more literature we have, the more ways we are 
finding that they are harming both workers and entrepreneurs.
    Senator Young. Thank you all for being here.
    Mr. Lettieri, thank you for answering my questions.
    Mr. Chairman, I know it is very un-senatorial, but I yield 
back the balance of my time.
    Chairman Rubio. You had 2 minutes left.
    Senator Shaheen.
    Senator Shaheen. Oh, goody. Can I take it?
    Chairman Rubio. Yes.
    Senator Shaheen. Well, thank you all very much for being 
here. I apologize for missing your testimony.
    I want to begin with you, Dr. Stevenson, because I sort of 
heard the end of the question about child care, but in New 
Hampshire, child care, next to mortgage, is the highest expense 
that families face. For an average family with a newborn up to 
1 year old in New Hampshire, it is over $12,000 a year just for 
child care for that one child.
    So can you talk about the challenges that presents for 
families as they are trying to get in and out of the workforce? 
That is often coupled with the fact that most people do not 
have access to family medical leave or family leave around the 
birth of a child and what challenges that also presents. Where, 
on the one hand, they want to go back to work. The costs of 
child care are very high. They do not have leave to stay home 
with the child, and what kind of conundrum do families face?
    Ms. Stevenson. Thank you very much for that question.
    I think one of the real surprises in recent years is that 
we have been in this long boom, and yet fertility continues to 
decline.
    Why is it that millennials are finding it so hard to have 
children? Well, you touched on part of the reason, which is 
that they are graduating from college with enormous amounts of 
college debt, and then they are facing down child care costs 
that are--that is itself actually equal to the cost of going to 
college or even greater.
    So those costs combined with many of them having graduated 
in a recession, so not having the job changes what they needed 
to have to get the wage gains they needed early in their 
career, then they face unsustainable costs of child care, they 
are in jobs where they may not have access to paid leave, 
maternity leave, paternity leave, or flexibility or parental 
leave. All of these things are leading some people to say, ``I 
cannot afford to have children.'' So we are seeing fertility 
decline.
    What we see with the challenges from child care and not 
having access to what I think of as an infrastructure that 
supports families is some people choose not to have children, 
but other people get sidelined from the labor force.
    We see in the data very clearly that people who have access 
to paid leave, women who have access to paid leave are more 
likely to stay attached to the labor force, will be in the 
labor force for longer, and will have greater wage growth over 
the course of their lives.
    We see quite clearly in the data that women who feel that 
they need to take time out of the labor force have a really 
hard time getting back in.
    One of the problems with our labor force and with the lack 
of dynamism is that we are failing to provide the on ramps when 
people take an off ramp out of the labor force. So we get 
people who exit for some reason or another, and they cannot get 
themselves back in.
    For many women and many families, if you sit down--if you 
have a 1-year-old child and you sit down and you look at what 
is the cost of the woman going to work, what they are going to 
pay in child care, the marginal tax rates on the woman's 
additional work, the cost of her commute to work, they find at 
the end of the day, they are not netting very much.
    So many families then put themselves in a situation where 
they say, ``Well, maybe we cannot afford to have you stay in 
the labor force,'' but when you step out, you come in at much 
higher wages or maybe not at all.
    As I mentioned before, if we have greater support for child 
care, there are a couple things that happen. We invest more in 
children, and those children have better outcomes and earn 
higher wages. We have a large, large body of literature----
    Senator Shaheen. Right.
    Ms. Stevenson [continuing]. That shows that early childhood 
education reaps benefits for taxpayers over the course of that 
kid's life, but it also reaps benefits for families as women 
are able to get back to work, as they are able to support their 
families. Those kids, particularly lower-income kids, will grow 
up in a household with higher income, which generates its own 
second set of benefits.
    So this issue is very, very crucial to the success of 
American families.
    Senator Shaheen. I certainly agree, and I hope that we can 
find ways in which we provide more support for families around 
child care and early childhood education.
    My next question is really for any or all of you because 
one of the biggest challenges we have in New Hampshire right 
now is affordable housing.
    We have an economy that is generally doing pretty well, 
very well. We have a very low unemployment rate, one of the 
lowest in the country. We have a lot of jobs that are going 
unfilled, and we have companies that cannot get workers because 
they cannot afford housing in the communities that they are in.
    So does anybody have any suggestions about how we better 
spur affordable housing?
    Ms. York. So I will go first.
    You know, I am sure that John may have some comments around 
how there are a number of initiatives to provide for housing 
opportunities within the context of opportunity zones. 
However----
    Senator Shaheen. And we have those in New Hampshire, and we 
are seeing some benefits from those as well as we also have 
HUBZones, but they are not providing the incentives----
    Ms. York. Correct.
    Senator Shaheen [continuing]. That builders need to 
actually put in housing that is more affordable.
    Ms. York. Correct.
    So, you know, from a workforce perspective, this is 
something that the Job Opportunities Task Force has recently 
started to take on because we are finding that for low-wage 
workers, about 40 percent of their wages or more is going 
toward housing cost. And we are talking about renting.
    There was recently a study on CNN that showed that in 
Maryland, we were fifth in the Nation for how much you must 
make an hour to rent a two-bedroom home. It was somewhere 
around $29.50. So housing instability is a workforce challenge.
    So I think that this also goes toward an earlier comment 
that I made around aligning economic development with workforce 
development because you are absolutely right. Employers and 
businesses, in addition to looking for a pipeline of educated 
skilled workers to determine where they are going to move, they 
are also looking for the livelihood and what is it going to 
take to ensure that our workforce is going to be able to live 
and thrive, and one of that includes housing. Are there actual 
options, and are they affordable options?
    So I would highlight, of course, or uplift opportunity 
zones as a way to encourage localities and states to get 
creative with how to ensure that housing is provided at an 
affordable rate across income levels.
    I think that you are starting to hear creative options for 
whether they be housing co-ops, for particular populations. For 
instance, we have individuals that are returning from 
incarceration, and they need a place to stay as well. So how do 
we provide those housing opportunities for them so that it is 
not contributing to the larger homelessness situation?
    So that might not necessarily answer your question of what 
we can do to incentivize builders and others to move into our 
communities to ensure that we are providing this housing. I 
would say that the only solution is how can we use opportunity 
zones as a way to provide incentives to connect some of these 
dots.
    I do not know if John wanted to comment on this.
    Senator Shaheen. And that may work in 20 years. It is not 
going to work next year or in the next 3 years.
    Do you want to add something, John?
    Mr. Lettieri. I was just going to add that as we look at 
housing challenges around the country, the most fundamental 
relates to zoning and land use regs that are local, so that the 
prohibition on building toward density and scale of housing 
close to where the jobs are is a fundamental challenge that no 
matter how effective a subsidy, there is no way to get around 
that principal challenge, and no subsidy is going to be 
effective at overcoming that at scale.
    So I agree there is tremendous opportunity with opportunity 
zones to make certain types of deals more affordable and 
especially I think in workforce housing where there is a huge 
missing middle in the labor market. I see that as being a 
perfect match, but that does not compensate or only partially 
compensates for the fundamental challenge, which is too many 
places are far too restrictive about allowing for local 
building and density and their housing policy.
    Senator Shaheen. I certainly appreciate that. We have a 
project in downtown Portsmouth that has been held up around 
concerns by abutters. It is multifamily affordable housing that 
is right downtown.
    Now, I think it is going to go forward, but as you say, 
there are too many--there is the ability of too many 
restrictions to be put in the place of going forward with that 
housing.
    Thank you, Mr. Chairman.
    Chairman Rubio. Thank you.
    Senator Romney.
    Senator Romney. Thank you, Mr. Chairman, and to each of the 
panelists, thank you for your participation.
    It has been a puzzle, I think, for many to see that we are 
one of the very wealthy countries in the world, perhaps the 
wealthiest of the major nations in the world if you look at a 
GDP per capita basis. We have a lot more stuff than we used to 
have as middle-class families, 30 years ago. The things we have 
in our homes are extraordinary, and yet the degree of anxiety, 
unhappiness, anger, anger directed toward our politics and 
toward elements in our life that we are not happy with is at a 
very, very high level. And I think it has been instructive to 
recognize that perhaps some of this is too much focus on, if 
you will, GDP and GDP per capita and not enough on some of the 
other elements.
    You have described as part of the prescription to bring 
more family, work-oriented, and more satisfying life 
experiences, a dual track, if you will, in education. I want to 
put in a plug and then get to my question.
    The plug is that some years ago in the State of Utah, a few 
of the State colleges decided to make a change and became 4-
year colleges, at the same time said there is no admission 
requirement. Everyone is accepted, and you can come in and you 
can get certification to go into a job. You can get licenses to 
do various things. You can get an associate degree, or if you 
want, you can keep on going to get a 4-year degree.
    So, as you come in, you do not have to say which one you 
are going to do. You take different classes. You find which 
ones that you find most compelling and most interesting. You 
pursue that course, and off you go. Some go the 4-year route, 
some go 2 years, some get certification, but I will put that 
aside. But it is a very successful effort in providing people a 
wide range of tracks, if you will, in the same institution.
    But what I want to turn to is something which I have seen 
time and again, which is even with community colleges that talk 
to the local business community to say what kind of jobs are 
you looking for, what kind of training do we do. It seems to me 
that some of the most effective training is done by the 
business itself, by the company itself.
    We give R&D credit when companies are willing to invest in 
stuff. We do not give an R&D credit when companies are willing 
to invest in people, and I wonder whether you believe that 
employer-based education and employer-based training might be a 
highly efficient way of helping people find a satisfying career 
and whether we might be wise in providing a credit of some kind 
to businesses that hire someone who may have been incarcerated, 
someone who has been out of the workforce for a long time, 
someone who is just coming in for the first time, and then 
providing them this credit for training purposes to get them 
started in their career.
    Mr. Cass. Yeah. Thank you. I think that is exactly the 
right way to think about it, which is that employer-led 
training is pretty much, as far as we know, the only way to do 
training.
    I mean, when you have government-led programs that try to 
guess what the employers want, they tend to work out fairly 
poorly. Partly, it is a function of employers knowing better 
what they want. Partly, it is a function of just actually 
getting on the job sooner. So the kind of credit you have 
described I think is a very good approach.
    We actually have, to our detriment, I think, a wide variety 
of very targeted credits, so a credit if you hire this exact 
kind of hard-to-employ person in this industry and so on and so 
forth.
    I think a much better model and one that fits with the 
tracking concept we have discussed and with apprenticeships 
generally is to really focus the model on saying for folks who 
are sort of in those late teen years, essentially 17 through 
20, that is a period of time when we essentially want to 
subsidize the employment. That getting that person into a job, 
even while they are still in high school be on the job part of 
the time, it is going to be incredibly important to building 
skills sooner and ultimately saying we can get someone to age 
20 for less than we spend on college with earnings in the bank, 
years of experience, and industry credential and a job.
    So targeting more of what we call education spending right 
now toward supporting that kind of relationship I think is a 
very important approach.
    Senator Romney. Thank you.
    Any others that would like to comment?
    Yes, Ms. York.
    Ms. York. Thank you.
    So I do think you are on to something; however, I do think 
there should be multiple options in terms of training.
    I mentioned the Maryland program, the Employment 
Advancement Right Now. This is an employer-led program, where 
the employers--you have the jobs. You know the curriculum that 
you are looking for, and so you tell us the curriculum, and we 
partner, whether it is a nonprofit--for instance, in 
construction, it is JOTF, and we partner with the training 
provider, say Associated Builders and Contractors, or it could 
be a community college. But you are working with that community 
college to come up with the curriculum that is directly aligned 
with the jobs that you are looking for.
    But I also want to make sure that we are not moving away 
from community colleges because community colleges also provide 
an opportunity to access that training so that you can access 
the jobs, and then we can allow employers to build on top of 
that.
    Regarding your last point, tax incentives for employers who 
may be interested in hiring individuals with a criminal 
background, you know, I struggle with this because for the Job 
Opportunities Task Force, we are always interested in ways to 
incentivize businesses to hire, to incentivize businesses to 
ensure that they have a robust workforce.
    But the flip side of that is when we talk about individuals 
with a criminal background and we talk about providing a tax 
credit as an incentive, these are actually very qualified 
individuals. They are able-bodied. There is actually nothing 
wrong with them, aside from the fact that they have a criminal 
record.
    So, in today's market, when we have an aging workforce, 
when we have all of these challenges where employers are now 
having to recruit and consider employees, prospective 
employees, that before they did not necessarily have to, such 
as individuals with a criminal background, I worry that we may 
be sending the wrong message by relying too much on tax credits 
to incentivize employers hiring individuals with a criminal 
background, when these are probably--would be some of your best 
employees because they are hungry, they have something to 
prove, and would be eager to come on your job site and would be 
eager to be trained by you as an employer and everything that 
comes with that, outside of having a tax credit or some type of 
tax incentive.
    So, I mean, I struggle with it because I understand that we 
want to incentivize businesses, but I also want to make sure 
that for individuals with a criminal background, we are not 
putting them in a box where we are assigning them some 
particular handicap because the only handicap is the fact that 
they have a criminal record. And we as a society have assigned 
the stigma to that record. But they can work, and they are 
great workers.
    Senator Romney. Thanks.
    Ms. Stevenson. So I think what we have learned in recent 
years is that when the labor market gets really tight, 
businesses hire people that they would not have looked at when 
the labor market is not so tight. It is not a big surprise. It 
means that incentives matter.
    How much of an incentive do they have to hire hard-to-
employ people? How much of an incentive do they have to provide 
training?
    One strong incentive is a tight labor market. We are not 
always going to be blessed with a tight labor market. So I 
think it is absolutely a good idea to be thinking about what 
are the other ways in which you can build incentives into the 
system when there is not a tight labor market.
    I do think that it would be very wise for the Committee to 
think about a set of incentives that might actually move with 
the state of the labor market. You might not need incentives as 
strongly today with our 4 percent unemployment, but I would 
sure like to see those incentives when employment is 6 or 7 
percent. And I would rather you debate that right now than 
waiting until we see unemployment at 6 or 7 percent and start 
debating it then.
    It is possible to have policies that are automatic 
stabilizers by increasing the kinds of incentives we provide 
employers to hire people as the unemployment rate rises.
    So I personally think that the types of tax incentives that 
you are talking about are a wise thing for you to be 
considering, and I would add to that to think about ways in 
which you could thinking about ramping that up and down as the 
business cycle changes.
    Senator Romney. Thank you.
    Chairman Rubio. Just some questions, now reclaiming my time 
I did not use at the beginning.
    Ms. York, let me ask you. I support--I think we all would--
the goal of helping those who have criminal backgrounds, 
convictions in their background, to finding meaningful work, 
but we are all aware there is a stigma associated with that. 
Some employers shy away from it for a lot of different reasons.
    Other than just the market need, we need to hire people. We 
are going to have to hire people that we would not have hired 
at other times. What have been some of the more successful 
methods that you have been able to use to convince employers to 
hire people that have had a previous conviction?
    Ms. York. So, I mean, one of the methods is actually one 
that is not led by JOTF. It is one that Dr. Stevenson just 
articulated, just the fact that we have a tight labor market. 
So, by default, they are having to consider workers who they 
would not necessarily consider.
    JOTF is also a member of a number of business associations. 
You would not think we are, but we tend to be because we have 
to be responsive to both the worker and the employer. We find 
that within those groups, those employers that for a long time 
maybe have always hired individuals with a criminal background 
are now able to anecdotally advise and inform and influence 
their colleagues and their partners on what it is like to 
actually have an individual with a criminal background on their 
job site and how the sky has not fallen, and ``Actually, it is 
one of my best employees.''
    Outside of that, it is really just getting folks to 
actually understand, particularly employers to actually 
understand the dynamics of an individual with a criminal 
background and add that humanistic approach because a lot of 
times, we just focus on the fact that you went to jail. You 
have this record, and that is all I see, and that is all I care 
about.
    These are individuals. These are our neighbors. These are 
our brothers and sisters. And, again, if they were not 
sentenced to life, they are coming home. So if they do not have 
access to employment, then they are going to jeopardize our 
communities because they will feel that they have to resort to 
an illegal means.
    This then becomes a business challenge for those businesses 
that are looking not just for a stable, educated, skilled 
workforce, but also a safe environment.
    So how can we talk about the importance of investing in 
these individuals? Not just for the moral, social, feel-good 
kind of thing, but making the business case for why this 
actually will ensure that our communities are safer and you 
have access to workers. But we are really relying on other 
anecdotes from other employers. We are relying on the fact that 
if you train them and provide them with the supports, quite 
honestly it does not matter that you have a criminal background 
because if you can get to work on time and if you have the 
skills and the training that is necessary, all of that is 
irrelevant outside of any regulatory challenges that are 
presented with the criminal background.
    Chairman Rubio. Mr. Cass, the strategy of productive 
pluralism that you describe, I think it could have some 
interesting implications for small business.
    The primary focus of labor market policy is on connection. 
That is what we made it, connecting workers, especially young 
workers, to productive employment that is consistent and builds 
skills. Then it seems like that might entail greater engagement 
for small business and entrepreneurs.
    I wonder if you could just discuss that because it sounds 
to me like that is tailor-made for connecting workers to the 
needs of small businesses, startup businesses, and unique 
industries.
    Mr. Cass. Yeah, I think that is right.
    There are two things that I would say about the special 
relevance to small businesses here. One is to recognize the 
role that small businesses play in the ecosystem of a local 
economy.
    Dr. Stevenson rightly pointed out that a very small share 
of overall employment is in manufacturer, for instance, but 
when you step back and look at the ecosystem of a local 
economy, what you tend to have is a few large employers, some 
of whom need to actually be sending something out to the rest 
of the world, and that then supports a much more robust and 
vibrant service sector around it. So I always say we cannot all 
serve each other coffee.
    So to have a vibrant small business sector, it cannot 
simply all be, for instance, child care providers providing 
child care for each other. We need to make sure that the 
economy is one in which the types of business that small 
businesses are likely to engage in can still connect to larger 
multinational, nationwide companies, and that is where a lot of 
their growth and productivity gains are likely to come from. So 
small businesses as kind of a key component of local economies 
in particular is very important.
    Then the second thing I would say--and this goes back to 
what we were speaking about a moment ago with respect to 
education--is that small businesses are in an especially tough 
place when it comes to training. A small business might need to 
hire one person every year or two. They cannot run a gorgeous 
global training program with three off-sites a year for their 
one worker per year. So for small businesses in particular, it 
is really important to have structures at the local level that 
allow multiple small businesses to come together to collaborate 
with larger businesses, a little bit like Ms. York was 
describing, where you design the curriculum. Maybe it is hosted 
at the community college, and then all the small businesses 
that need a particular skill set have access to those trainees.
    So having small businesses be able to collaborate in that 
respect is critical to having to be able to take on new 
workers, where they are not going to be able to invest in a 
full training program themselves.
    Chairman Rubio. I also wanted to ask you about--it is 
really impossible to talk about work today without automation, 
and when people think of automation, they tend to think of a 
robot or a computer that was going to replace their job 
entirely.
    I guess I can open this up to the entire panel.
    I know you, Mr. Cass, have a different view on this. 
Perhaps those of you have different views on it. But how should 
workers understand both the challenge and the opportunity 
embedded in automation and in technology, which does, as 
always, create the potential of displacement, but it also 
creates the potential of increased productivity and thereby 
higher pay and new fields opening up?
    You talk to people particularly in the small business 
world, but even in larger firms, there is just a lot of fear 
among workers that they are going to get replaced by a robot. 
So what is the best way for us to focus on that, particularly 
as it impacts entrepreneurship and startups?
    Go ahead. I will just go from left to right.
    Mr. Cass. Yeah. I will say one thing about it. I realize 
the more I talk about this that we have a real problem that we 
anthropomorphize robots, and so it sounds like it makes sense 
to say a robot could take your job.
    But a robot is just a new form of technology. You would 
never say electricity took my job. That would sound ridiculous. 
You would never say many of the sort of technological 
breakthroughs that have made people more productive over time 
took your job. It happens that the kinds of robots we are 
picturing look more like a worker, but at the end of the day, 
the effect is the same.
    As Dr. Stevenson said, rarely do they actually replace the 
person. They replace some portion of the person's tasks, and so 
the key is going to be for workers to collaborate with 
technology and to recognize that the technology is what makes 
the worker more productive.
    I think the one other thing we could focus on as we talk 
about it and as policymakers talk about it is to realize that 
workers are actually the constraints on how quickly we can 
deploy technology.
    When we talk about these jobs that we cannot find the 
worker for the job or we say jobs are going to change in these 
ways and workers are going to have to catch up, that is not 
actually true. Jobs can only change as quickly as we have 
workers to fill them, and one way of understanding the skills 
gap and these other challenges we have right now is that 
businesses have designed processes and tried to deploy 
technologies for which the workforce is not ready.
    So one effect of that is that is going to slow down the 
rate at which automation actually happens, but a second is to 
reconfirm the fact that this is going to accrue to the benefit 
of workers and really finding ways to design technology for the 
workers we have and equip workers to work with that technology 
is going to be the secret sauce for a labor market that 
thrives.
    Mr. Lettieri. Count me in as an automation apocalypse 
skeptic. I do not think there is evidence to back up many of 
the concerns that we often hear thrown around about the rise of 
automation as it relates to replacing workers.
    To Oren's point, there are very few jobs that can actually 
be replaced in full by a robot of any form.
    I think the key is that we are missing the kind of safety 
net that robust business dynamism used to provide. We have 
always had industries and jobs being phased out of our economy. 
That has always been true. Productivity gains, by definition, 
are displacing of some future potential worker as we get more 
efficient at doing certain things.
    The difference is we have not felt that in previous eras 
because we have had a more robust firm entry that has caught 
more of those being left out of certain jobs or taken out of 
certain industries and brought them back into productive use.
    So areas of the country that are particularly un-dynamic 
are the ones not with high death rates of firms, but of 
incredibly low birth rates of firms. That is what is missing.
    One of the major things that is missing I think as we think 
about the worker piece of all this, we need to think about the 
entrepreneur as well. Incumbent businesses tend to shed jobs on 
net every year as a whole, of any size, and so where we get net 
job creation is disproportionately from new businesses. When 
that fades--that is the engine of job creation--that is the 
missing safety net for workers.
    Ms. Stevenson. So my testimony focused much on this because 
this is something that I am thinking a lot about, and as has 
been repeated, the idea that automation does not take jobs. It 
takes tasks.
    But that creates an enormous opportunity for us to create 
jobs that are more meaningful, and this is one of the things I 
am looking at in my research. It is which are the tasks that 
are being taken, and are they the tasks we like to do or the 
tasks we do not like to do?
    In the past, what has happened with technological changes, 
our jobs have gotten better. We have seen an increase in job 
satisfaction. We like the stuff that we are able to do more.
    I certainly know that my job being a university professor 
is something that is much more common today because of all the 
technological change that has come before, and I like my job a 
lot more than I would have liked working in an agricultural 
field.
    So there is a lot of promise that comes from this, but I do 
think it is worth keeping in mind that there is a lot of 
disruption. When I go to conferences on AI, I will tell you 
that I am shocked at how fast the technology is moving.
    I agree very much with Oren Cass that we can only move as 
fast as our workers are ready for us to move. So there is a 
real limit that comes from our workers, but the technology is 
moving quite rapidly. And we need to make sure that our workers 
can keep up. It is one of the reasons why I have such concern 
that in the race between technology and education, technology 
seems to be racing in front of education, and I think we need 
to correct that problem, quite rapidly.
    I do want to emphasize that these kinds of technological 
changes, this AI, is going to allow us to produce services that 
are more tradeable. So the idea that--when we hear services, 
you think cup of coffee. I think that is not the right way to 
think about it. The U.S. is really succeeding with a lot of 
trade and business services that are a really important source 
of not just international trade for us, but, of course, cross-
national boundary trade.
    Remote work is allowing people to live in places that they 
could not have lived having the kind of job that they were 
having before. So technology will create a lot of 
opportunities. We need to make the space for it to happen, not 
try to get in the way of it, and then help make sure that the 
prosperity that comes from it is shared, so that lots of 
workers are able to benefit from this change and not just the 
few owners of--the people who own the technology.
    The anecdote I always like to tell people is I had a long 
conversation once with an Uber driver who told me that he 
thought self-driving cars were the worst thing in the entire 
world, and toward the end of 20 minutes of him railing against 
how terrible self-driving cars are, I asked him, ``What if you 
owned the car? What if you were the one sending it out to do 
your work and you could stay home?'' And, all of a sudden, his 
attitude toward self-driving cars changed a lot.
    So the real question about this technology is not going to 
be that it replaces workers. It is going to be about who owns 
it.
    Ms. York. I have nothing else to add to the remarks of my 
eloquent panel, besides that absolutely for workforce 
advocates, we are looking at how we can use these opportunities 
to turn them into training opportunities for workers, but we 
are also struggling because we also like self-checkouts at the 
grocery store but also know that that is taking real jobs away 
from real people. So how do you balance efficiency and easy 
access and quickness with ensuring that folks are able to still 
be employed and have good jobs?
    Chairman Rubio. Do you have something?
    Senator Cardin. Just two quick observations. One, as you 
point out, innovation is where job growth will take place and 
good jobs will take place, whereas where we started because 
innovation occurs much more frequently among small businesses 
than large businesses. So our tools to preserve a healthy small 
business community very much is part of having the type of 
economy we need and the type of jobs that we want. So I would 
just make that--sort of bring this together.
    The second observation is on these tax credits. We 
recognize that the labor market changes at times. So there are 
different periods in which employers have different incentives.
    But I can tell you as one of the champions of the Work 
Opportunity Tax Credit and having talked to a lot of employers 
who have used the Work Opportunity Tax Credit, there is a 
higher risk factor by those employers, and it has to be 
compensated somehow.
    We can talk about getting good workers, as we all want, but 
we know that our workforce programs are not equitably 
distributed, particularly people coming off of welfare, 
returning citizens, and people who are unemployed. If you are 
an employer and you have a choice between trying to take 
someone who currently has a job or somebody who is unemployed, 
there is a natural bias in favor of someone who is already 
employed. So long-term unemployed individuals have a much more 
difficult time in getting the attention. And the Work 
Opportunity Tax Credit has compensated for that, and it has 
worked very well over time.
    I just really want to put that on the record because there 
was some conversation about the values of tax credits or 
compensation issues, and I certainly understand that 
discussion. And we really need to focus on what is the right 
policy, but I do believe that our current tool of the Work 
Opportunity Tax Credit is one that has worked well and is very 
valuable.
    Chairman Rubio. I want to thank all four of you for being 
here and all the members that attended. This is really 
meaningful to us for two reasons. One is the jurisdiction of 
this Committee, small business and entrepreneurship, and it is 
important to mention those two because they are not always--the 
focus of small business, obviously we have oversight 
responsibility over the Small Business Administration, and we 
are going to be undertaking the task, I hope, of reauthorizing 
it because it gives us the chance to help modernize its 
programs to deal with some of the things we are taking 
testimony on.
    And on the entrepreneurship side, the notion that we want 
to continue to be an economy in a society in which new business 
and new idea are being pursued, and in many ways, technology is 
intimidating to people, but it also has lowered the barrier to 
entry in a lot of fields.
    It used to be that in order to have a business, you had to 
have a big marketing department. You had to have people you 
could send out to find customers. Today, a small business is 
everything from an Uber driver who is an independent contractor 
to someone selling things online, and they do not have a 
massive sales force. So technology has empowered entry into the 
marketplace that would not have been there.
    It has actually, in many ways, opened up entrepreneurship, 
access to markets, but it also has lowered the barriers to 
entry in a business that you would normally need more 
traditional constructs around in order to pursue.
    So these are the kinds of things that we need to be 
thinking about as we not just try to reauthorize and modernize 
SBA, but writ large public policies that help incentivize all 
of this.
    So, again, we are grateful to you for your time, for your 
forward-thinking ideas across the board on strengthening the 
Nation's labor markets, which I think go hand in hand with 
enhancing small business dynamism and entrepreneurship.
    The record for this hearing is going to remain open for 2 
weeks, and if there are any statements or questions for the 
record by any of the members, they should be submitted by 
Wednesday, March 20th, at 5:00 p.m.
    With that, thank you again. This hearing is adjourned.
    [Whereupon, at 4:09 p.m., the Committee was adjourned.]

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