    [Senate Hearing 117-327]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-327

                    THE SMALL BUSINESS WORKFORCE CHALLENGE:
                         CAUSES, IMPACTS, AND SOLUTIONS

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

                                    HEARING

                                   BEFORE THE

                          COMMITTEE ON SMALL BUSINESS
                              AND ENTREPRENEURSHIP

                                     OF THE

                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                  JUNE 8, 2022

                                   __________

        Printed for the Committee on Small Business and Entrepreneurship

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                      Available on: http://www.govinfo.gov

                                  __________

                        U.S. GOVERNMENT PUBLISHING OFFICE
    48-247                    WASHINGTON : 2022

    -----------------------------------------------------------------------------------

                COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                  ----------

                     BENJAMIN L. CARDIN, Maryland, Chairman
                      RAND PAUL, Kentucky, Ranking Member
    MARIA CANTWELL, Washington           MARCO RUBIO, Florida
    JEANNE SHAHEEN, New Hampshire        JAMES E. RISCH, Idaho
    EDWARD J. MARKEY, Massachusetts      TIM SCOTT, South Carolina
    CORY A. BOOKER, New Jersey           JONI ERNST, Iowa
    CHRISTOPHER A. COONS, Delaware       JAMES M. INHOFE, Oklahoma
    MAZIE HIRONO, Hawaii                 TODD YOUNG, Indiana
    TAMMY DUCKWORTH, Illinois            JOHN KENNEDY, Louisiana
    JACKY ROSEN, Nevada                  JOSH HAWLEY, Missouri
    JOHN HICKENLOOPER, Colorado          ROGER MARSHALL, Kansas
                     Sean Moore, Democratic Staff Director
                  William Henderson, Republican Staff Director

                                C O N T E N T S

                                  ----------

                               Opening Statements

                                                                       Page

    Cardin, Hon. Benjamin L., Chairman, a U.S. Senator from Maryland.     1
    Paul, Hon. Rand, Ranking Member, a U.S. Senator from Kentucky....     3

                                   Witnesses

    Goger, Dr. Annelies, Ph.D., Fellow, The Brookings Institution,
      Washington, DC.................................................     4
    Greszler, Ms. Rachel, Senior Research Fellow, The Heritage
      Foundation, Washington, DC.....................................    14
    Arensmeyer, Mr. John, Founder and CEO, Small Business Majority,
      Washington, DC.................................................    34
    Faulkender, Hon. Michael, Ph.D., Dean's Professor of Finance,
      University of Maryland, Visting Fellow, America First Policy
      Institute, College Park, MD....................................    42

              Alphabetical Listing and Appendix Material Submitted

    Arensmeyer, Mr. John
        Testimony....................................................    34
        Prepared statement...........................................    36
        Responses to questions submitted by Senator Hirono...........    69
    Cardin, Hon. Benjamin L.
        Opening statement............................................     1
    Crosby, Mr. Phillip, CEO, Dan-O's Seasonings
        Statement dated June 8, 2022.................................    65
    Faulkender, Hon. Michael
        Testimony....................................................    42
        Prepared statement...........................................    45
    Goger, Dr. Annelies
        Testimony....................................................     4
        Prepared statement...........................................     7
    Greszler, Ms. Rachel
        Testimony....................................................    14
        Prepared statement...........................................    16
        Response to question submitted by Senator Risch..............    67
    Paul, Hon. Rand
        Opening statement............................................     3
    Risch, Senator James
        Statement dated June 8, 2022.................................    64

                               THE SMALL BUSINESS
                              WORKFORCE CHALLENGE:
                         CAUSES, IMPACTS, AND SOLUTIONS

                                  ----------

                            WEDNESDAY, JUNE 8, 2022

                          United States Senate,
                            Committee on Small Business
                                          and Entrepreneurship,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 2:29 p.m., in
    Room 428A, Russell Senate Office Building, Hon. Benjamin L.
    Cardin, Chairman of the Committee, presiding.
        Present: Senators Cardin, Cantwell, Booker, Coons, Hirono,
    Rosen, Hickenlooper, Paul, Ernst, Inhofe, Hawley, and Marshall.

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

        Chairman Cardin. The Senate Small Business and
    Entrepreneurship Committee will come to order.
        I want to welcome our witnesses today and thank you for
    your participation. As is the custom of our Committee, your
    entire statements will be made part of the record and when you
    are recognized you may proceed. We ask that you try to
    summarize your statements in about five minutes.
        Today's hearing will examine the workforce challenge that
    our Nation is facing, especially with regards to how it is
    holding back the prosperity and growth of America's small
    businesses. Small businesses employ nearly half of America's
    private sector workforce, and they are the driving force of
    innovation and growth in our economy. However, the deck is
    stacked against them in the competition for strong workers
    because they lack the resources and capital to offer wages and
    benefits that compete with larger companies, they have limited
    access to training and apprenticeship programs, and they often
    require in-person work at a time when many workers want
    flexibility.
        These historical challenges have been made worse by what
    economists are calling the Great Reshuffle. In February of this
    year, for example, 4.4 million workers quit their jobs, but
    more than half of those workers went on to find better jobs or
    an entirely different field of work.
        Small businesses are not only facing difficulties in
    attracting workers, but they also struggle to keep them, which
    is a further draw on the finite amount of time and capital that
    small business owners have. A study conducted by the U.S.
    Chamber Foundation found that high employee turnover cost small
    businesses as much as $3 billion per year. Those are resources
    that could be put into growth and innovation to boost our
    economy. If small businesses cannot find the workers they need,
    they cannot grow. According to Goldman Sachs' 10,000 Small
    Businesses Voices report, 97 percent of survey respondents
    reported that the difficulty hiring was affecting their bottom
    line, a 17-point increase from September 2021.
        Congress has a duty to our small businesses to support them
    as they confront these challenges because our economy can only
    go as far as our small businesses can take us. So our goal
    today is to explore the causes of these workforce challenges,
    the effects of these challenges, and solutions such as
    investing in workforce training, leveling the playing field
    between larger companies and small businesses regarding
    benefits employees receive, and increasing the size of our
    workforce.
        Unlocking the potential of the current workforce through
    job training is one way to help meet the needs of small
    businesses. As we know, a four-year degree is not a requirement
    for every career path and there are many highly skilled
    occupations that are better served by an apprenticeship or
    similar model. There is already a model for these kinds of
    partnerships, and many community colleges in Maryland,
    including Prince Georges Community College, have earned a
    national reputation for their apprenticeship programs. However,
    these programs can be difficult for small businesses to access,
    so we must take a hard look at how to connect these programs to
    small businesses.
        President Biden's American Rescue Plan also provides a
    model for how the Federal Government can work with state and
    local governments to deliver job training resources to the
    communities that need it the most. In Baltimore, for example,
    the city will invest $3.8 million in ARPA funds to provide
    critical workforce development training to residents, including
    summer jobs for young people and occupational training in high
    demand fields.
        For a small business to grow, we must level the playing
    field between larger companies and small businesses regarding
    benefits offered such as paid leave. In Maryland, Democrats in
    the Maryland General Assembly recently passed legislation to
    provide 12 weeks of job-protected paid leave to the employees
    of any organization with more than 15 employees. The law
    requires the State to establish an insurance program funded by
    contributions from employers and employees, including sole
    proprietors. The program will allow workers to take 12 weeks of
    paid leave for any family or medical emergency and could help
    small businesses compete with larger companies for employees.
        As a former Speaker of the House in Maryland, I know that
    our statehouses nationwide are the laboratories of democracy. I
    will be following the implementation of this law closely, and I
    am hopeful that it could serve as a model for how the Federal
    Government can assist small businesses to combat these
    workforce challenges.
        We must also assess how we can increase the overall size of
    our workforce through innovative policies. Unfortunately, due
    to the Trump administration's immigration policies, we now have
    some catching up to do. Between 2016 and 2020, annual
    immigration to the United States was cut in half, which robbed
    our economy of more than 2 million additional workers today had
    immigration kept pace with the 2016 levels.
        The effects of our immigration labor shortages are acutely
    felt on Maryland's Eastern Shore, which is reliant on workers
    for the H-2B visa programs during busy crabbing season. The
    prolonged H-2B visa shortage does not only threaten individual
    businesses but entire communities in my home state. By
    evaluating how to empower immigrants to participate in the
    workforce, Congress can make it easier for small businesses to
    find workers and easier for workers to immigrate to America.
        We can also increase the size of our workforce by investing
    in returning citizens. Nearly 600,000 Americans are released
    from prison annually, and despite evidence showing that they
    make excellent, loyal employees, they are often not included in
    the workforce development policies and programs that can equip
    them with the skills they need to succeed in the workforce.
    Investing in training returning citizens would not only help
    provide stable employment opportunities for them but also help
    small businesses looking for workers.
        If the COVID-19 pandemic has taught us anything, it is
    this: The problems that small businesses face are difficult but
    not intractable. And addressing them will take focused,
    intentional, and concerted effort, but they are not
    insurmountable. The pandemic also confirmed that solving these
    challenges requires a multifaceted approach because there is no
    single solution.
        So I am looking forward to hearing more from our witnesses
    about steps Congress can take to address all aspects of our
    Nation's workforce challenges to unleash the growth potential
    of small businesses and the immediate and long-term needs.
        With that, I recognize my distinguished Ranking Member for
    his opening comments, Senator Paul.

       OPENING STATEMENT OF HON. RAND PAUL, A U.S. SENATOR FROM
                                KENTUCKY

        Senator Paul. Small businesses are struggling under the
    heavy burden of regulation and taxes. For the last several
    years, government policies at the Federal, state, and local
    levels have subjected our Main Street businesses to restriction
    after restriction. These onerous regulations, coupled with $6
    trillion in government spending, have thrown the economy into a
    freefall.
        First, it was the lockdowns. Government forced small
    businesses to close indefinitely. Then, when they were finally
    allowed to reopen, they were saddled with capacity
    restrictions, mask mandates, and vaccine requirements for
    customers. While these government dictates did nothing to
    change the trajectory of the virus, they forcibly closed nearly
    10 million small businesses, many permanently.
        The government's so-called solutions did not stop at public
    health. Congress doled out trillions of dollars in taxpayer
    money, the Fed ran the printer 24-7, and government paid people
    who decided they did not want to work nearly $800 billion from
    March 2020 to July 2021. It should be no surprise to anybody
    that labor force participation is at its lowest point since the
    Carter administration.
        Despite countless warnings, government, Congress, poured
    even more gasoline on the fire. Even economists like Larry
    Summers and Jason Furman, who worked for Democrat
    administrations, agree President Biden's $1.9 trillion so--
    called Rescue Plan was too large and has caused the rampant
    inflation we are now encountering.
        Only now, Treasury Secretary Janet Yellen, who refuses to
    testify before this Committee, admits she was wrong in calling
    inflation a small and manageable problem. If she had not been
    deliberately blind to the predictable result of unrestrained,
    reckless spending, we might have avoided the economic pain the
    Biden administration inflicted on every American family.
        And to add insult to injury, President Biden's anti-
    domestic energy policies have created five to seven dollars per
    gallon gas prices, which have roughly doubled since he took
    office.
        No matter how many times the Biden administration blames
    the War in Ukraine or so-called greedy corporations, the truth
    remains; inflation comes from the Federal Reserve creating
    money to buy the exploding U.S. debt.
        One would think, in the face of such profound failure,
    politicians in Washington would show some humility. One would
    think they would consider the possibility they do not know
    economics better than economists or business better than the
    small business owners of America. Maybe, just maybe, problems
    created by excessive government spending and intervention
    cannot be solved by more government spending and intervention.
    We cannot look to the same people who created this problem for
    a solution.
        Those who think small businesses are telling us they want
    more government spending on ineffective Federal job training
    programs are not paying attention. What small businesses need
    is freedom. The free enterprise system has created more wealth
    and prosperity than any government program ever could. Let us
    let small business owners do what they do best without
    government getting in the way.
        Chairman Cardin. Thank you, Senator Paul.
        We will now go to our witnesses. We will start with Dr.
    Annelies Goger, who is a fellow at the Brookings Metropolitan
    Policy Program at Brookings Institution. Her work as a fellow
    involves researching and developing policy solutions to
    increase economic opportunities and decrease work inequality.
    Since 2019, Dr. Goger has focused heavily on researching ways
    to reform unemployment.
        I am informed that you are a recent new resident of
    Maryland, and that is the reason you are going first.

     STATEMENT OF DR. ANNELIES GOGER, Ph.D., FELLOW, THE BROOKINGS
                      INSTITUTION, WASHINGTON, DC

        Dr. Goger. Thank you, Chairman Senator Cardin and Ranking
    Member Senator Paul and members of the Committee.
        It is an honor to testify before you today about the
    challenges facing small businesses. My name is Annelies Goger,
    and I am a fellow at Brookings Metro, and my specialty is in
    U.S. workforce policy, inclusive economic development, and
    global supply chains.
        This is also a personal topic for me because my father is a
    small business owner. He owns a lightning rod installation
    company with two or three employees, and he has consistently
    struggled to find and retain quality talent. I believe my
    father could have really benefited from more management
    training on how to more effectively manage his teams and reach
    out to pools of talent that he could not find.
        But for the last 30 or 40 years we have had a very lean
    approach to supporting small business ecosystems. And this, in
    a normal time, looks like a Darwinian survival of the fittest,
    but in the pandemic it quickly devolved into a Squid Games
    scenario. And the carnage was all around us.
        The temporary relief that was provided helped avoid some of
    the worst effects of this carnage and helped to prevent this
    from cascading into the rest of the economy. But today, small
    businesses, as you have both noted, really face major
    challenges with workforce as a massive pain point, and I
    believe we need to do more to think about how we can support a
    vital ecosystem.
        So what is causing this pain? I would argue that it is
    actually a complex perfect storm of factors, some of which were
    pandemic-related, but some are actually longer-term trends. The
    pandemic trends including immigration, lack of child care--
    actually, 256,000 Americans of prime working age passed away
    from COVID, so there are those workers that we unfortunately no
    longer have. Also, the reallocation that happened as things
    like hospitality completely collapsed and then there was
    massive growth in things like warehousing, that reallocation of
    workers and matching employers, there is a lot of friction
    there, and it takes a lot of time to resolve.
        But there are also much more long-term shifts which include
    demographic shifts such as an aging workforce. The pandemic
    actually accelerated the retirement of many Baby Boomers, and
    the younger generation of workers is not only a smaller pool,
    but it is a much more diverse pool. Historically, we have
    underinvested in Black and Latino or Hispanic talent, and they
    have had less access to quality jobs and higher education.
        In addition, the Digital Age is going to create an ongoing
    need to keep people fresh, not just workers but also managers
    and manager training, and this is really costly for employers
    to bear as well.
        So what should we do about this? I think in the short term
    expanding immigration and including work visas, but also
    helping employers understand like extension services, to help
    them understand how they can reach talent that is on the
    sidelines, like the long-term unemployed, people with
    disabilities, people who were formerly incarcerated. That is
    something we can do.
        But I think in the long run we need to think about three
    things. One, employers in the Digital Age need to shift from
    being just consumers of talent to also co-producers of talent.
    So we have done some studies in my previous job on incentives
    to small and medium-size and large businesses to train their
    workers where they would be reimbursed for their training. What
    we found was that there is a sweet spot for medium-size in
    particular, 18 to 100, where investing in their training and
    subsidizing that leads to greater revenue and greater
    employment, but for small businesses they were actually harmed
    by these subsidies.
        And so I believe we also need to think about things like
    pooling costs and sharing training costs, which happens in some
    of the most mature systems where you have applied training.
    Finally, I think we really do need to expand that management
    and supervisory training and manufacturing extension to many
    more industries, such as the service sector.
        Number two, we need to rethink our talent model from
    programs--we have 43 across 9 Federal agencies, often
    duplicating efforts--to more of a systems approach. A systems
    approach is what small businesses can participate and act part
    of. They cannot create their own bespoke training programs.
    They just cannot afford it. Things like apprenticeships happen
    in a system in countries that do it the best.
        And finally, diversity inclusion is not about charity. If
    we fail to engage the talent, our diverse talent that makes up
    not just workers but also entrepreneurs, if we fail to get them
    off the sidelines and into our economy, we will fail to
    innovate, we will fail to have regions that are vital, and
    moreover, we will fail to really have an ``American Dream'' in
    this country anymore, where there is a level playing field for
    people that do not have wealth to access it.
        My father is approaching 70, next fall, and he has confided
    in me that he does not think he can retire fully. He has never
    had--for most of his adult life, he has not had health
    insurance even though he stands on roofs all day.
        I think really if we are going to think about creating the
    vibrant ecosystem that we need in this country to compete with
    China and other countries we need to think more about creating
    that level playing field and investing in our diverse talent.
        Thank you very much.
        [The prepared statement of Dr. Goger follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Cardin. Thank you for your testimony.
        Our next witness is Rachel Greszler. She is a senior
    research fellow at Heritage Foundation, focusing on retirement
    and labor policies such as Social Security, disability
    insurance, pensions, and worker's compensation. Her work
    focuses on policies that promote economic growth, individual
    freedom, and well-being.
        Before joining Heritage in 2013, Ms. Greszler was a senior
    economist on the staff of the Joint Economic Committee of the
    Congress. That is a good pedigree, coming from Congress.
        Glad to hear from you.

       STATEMENT OF RACHEL GRESZLER, SENIOR RESEARCH FELLOW, THE
                  HERITAGE FOUNDATION, WASHINGTON, DC

        Ms. Greszler. Thank you. Thank you for the opportunity to
    be here today.
        Small businesses continue to struggle to find workers who
    are willing to work and who have the skills that they need. In
    fact, employers listed labor quality as their single most
    important problem every month between 2018 and 2021, with the
    exception of March and April 2020 with the COVID shutdowns.
    These struggles have gotten worse since the labor shortage. The
    current 11.4 million job openings equates to 1.9 jobs available
    for everyone that is looking for work.
        And yet, small businesses now say that inflation has become
    an even bigger problem than their workforce struggles, with 32
    percent of small business owners reporting inflation is their
    single biggest problem. That compares to 3 percent in January
    2021. Forty-year high inflation has created many struggles for
    businesses. Surging input costs means that contracts come in
    over budget, sometimes even at a loss. Employers have to
    increase workers' pay to keep up with rising consumer costs and
    to compete in a labor force that is now 3.2 million below its
    pre-pandemic rate.
        But this creates an inflationary cycle. When businesses
    have to pay workers more to do the exact same thing, they have
    to raise their prices. In April alone, 70 percent of businesses
    said that they increased their pay or they plan to increase it
    at the same time that 63 percent of businesses increased their
    prices. Higher wages have not made workers better off, though.
        The median worker has experienced a $3,300 wage increase
    over the past year, but inflation has eaten away that entire
    gain and actually left them $1,600 poorer.
        So what is driving inflation? The Federal Government's
    policies. Inflation is too many dollars chasing too few goods,
    and the Federal Government has simultaneously pumped trillions
    of dollars into the economy while restricting the supply of
    goods and services through policies that discourage or outright
    prohibit work. The Federal Government spent 45 percent more in
    both 2020 and 2021 than it did in 2019, and all of this is
    deficit-financed. About half of it came from the Federal
    Reserve printing money.
        The money supply has increased more over the past two years
    than it did over the prior ten.
        Most problematic was the $1.9 trillion American Rescue
    Plan, and it was enacted well after the recovery was underway
    and which included less than 10 percent going toward actual
    public health. The bulk of the American Rescue Plan was welfare
    expansions that exacerbated the labor shortage, private union
    bailouts that incentivized reckless behavior, giveaways to
    state and local governments that were already abundant in
    revenues, and $1,400 stimulus checks that fueled the inflation
    that has since eaten away their entire value.
        The Administration's proposed solutions to spend more and
    produce less are backward. Things like forgiving college loan
    debts owed by the most affluent Americans, enacting a child
    care entitlement that would drive up costs and crowd out
    providers, and taxing away the output and the innovation of the
    most productive parts of our economy will lead to something
    that is even worse than inflation; we will have stagflation.
        Moreover, when it comes to the unprecedented worker
    shortage and the workforce skill gaps, the government is the
    problem and not the solution. The government has effectively
    put up road blocks on all of the most efficient roadways to a
    more productive and robust economy and, instead, is directing
    traffic onto a congested toll road.
        Ongoing welfare without work benefits, including Obamacare
    expansions and SNAP expansions, are continuing to discourage
    work, particularly among young people.
        And, Federal COVID-19 vaccine mandates have made the health
    care workforce shortage especially pronounced, even life
    threatening, with health care employment lagging total
    employment by 263,000 jobs just since the mandates went into
    effect.
        Higher education subsidies and the Administration's
    cancellation of thriving new apprenticeship programs are
    preventing people from pursuing lower cost and higher quality
    education, and Federal job training programs have been
    failures. The WIA program is supposed to provide training for
    in-demand careers, but a gold-standard study found that only
    one out of three participants found jobs in their field of
    training.
        Politicians and bureaucrats cannot know businesses' needs
    better than employers themselves, so they should stop diverting
    people into programs that waste their time and taxpayers' money
    when private sector employers can, and are, providing more
    effective education and training.
        While the temptation for policymakers is always to do
    something, the best solution to fighting inflation and
    improving the workforce is to interfere less. Instead of
    building an expensive new highway, policymakers should simply
    remove the road blocks that are preventing people from getting
    where they need to go in the shortest time and at the lowest
    cost.
        Thank you.
        [The prepared statement of Ms. Greszler follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Cardin. Thank you very much for your testimony.
        Our next witness is John Arensmeyer, who is well known in
    our Committee, a frequent visitor. He is the founder and CEO of
    the Small Business Majority, a national organization focused on
    uplifting small businesses across the country while ensuring a
    diverse and inclusive economy. He works with the Small Business
    Administration and has led to the organization providing
    resources to 30 million small businesses and entrepreneurs. He
    previously testified in front of Congress and has worked
    alongside the White House to solve issues facing small
    businesses and the economy.
        Glad to hear from you.

     STATEMENT OF JOHN ARENSMEYER, FOUNDER AND CEO, SMALL BUSINESS
                        MAJORITY, WASHINGTON, DC

        Mr. Arensmeyer. Thank you, Chairman Cardin, Ranking Member
    Paul, and members of the Committee.
        I founded the Small Business Majority 16 years ago to
    empower America's diverse entrepreneurs to build a thriving and
    equitable economy. We have a network of over 85,000 small
    businesses and 1,500 partners or partner organizations we work
    with. Before founding the Small Business Majority, I was the
    founder and CEO of ACI Interactive, an award-winning
    interactive communications company. So I have had a front row
    seat for challenges and workforce challenges faced by small
    businesses.
        The ``Great Resignation'' has spawned record numbers of new
    businesses, which is great. However, it has exacerbated
    workforce challenges. Small business owners have overwhelmingly
    cited labor shortages as one of the most significant challenges
    they face. According to a recent survey from Goldman Sachs, 87
    percent of small firms report difficulties filling open
    positions. Our own polling has revealed that more than half of
    small business owners reported being negatively impacted by
    workforce shortages.
        Small businesses are doing what they can to address these
    problems. According to our polling, small businesses have taken
    measures to create more incentives for workers, such as
    increasing pay, increasing benefits, creating more part-time
    positions, and hiring younger staff. However, as emergency
    financial assistance has expired and additional support remains
    stymied by partisan politics, small firms await the resources
    they need to sustain a long-term recovery.
        A leading workforce barrier faced by small businesses is
    the ability to offer quality, affordable benefits commensurate
    with those offered by large firms. Since 2014, the Affordable
    Care Act has been an essential component of the small business
    ecosystem. Indeed, more than half of the ACA market
    participants are small business owners, small business
    employees, and self-employed Americans.
        The American Rescue Plan has helped to fill the coverage
    gap by expanded tax credits. However, if Congress fails to
    extend these benefits, those who work in small businesses will
    find it difficult to maintain health care coverage commensurate
    with that offered by large firms.
        Similarly, many small businesses do not have the resources
    to offer paid leave benefits the way large companies do and are
    looking to the Federal Government to step in with the kind of
    paid leave programs that exist in every other developed country
    in the world.
        Likewise, access to quality, affordable child care is
    essential if we are to address workforce instability. Women, in
    particular, have been forced out of the labor pool due to lack
    of access to affordable child care during the pandemic. More
    than one-third of small business owners with children reported
    that a lack of access to affordable, high quality child care
    was a barrier to starting their businesses and hiring
    employees. Congress must expand tax credits for child care
    expenses that would allow working parents to receive a
    percentage of child care expenses as a tax refund.
        The pandemic has highlighted the importance of wealth
    building including saving for retirement. Unfortunately, many
    small businesses do not have the resources or the
    administrative capability to offer retirement benefits. We must
    expand State Secure Choice Savings Programs that provide an
    easy on-ramp for employees to save for retirement while
    ensuring that self-employed individuals have access.
        I also want to touch on two essential workforce pools that
    are underutilized. The first is immigrants. Immigrants are
    highly entrepreneurial, launching small businesses at over
    twice the rate of native-born Americans. Moreover, throughout
    our history, immigrants have filled essential labor needs. We
    must pass comprehensive immigration reform. Alongside that, we
    must expand H-1B visa programs to allow more visas for skilled
    and low-skilled foreign workers while decreasing the waiting
    period for rejected applicants.
        Also, justice-impacted individuals that the Chairman
    referenced, second-chance hiring opens an enormous untapped
    talent pool for small employers. Research has shown, and
    anecdotal evidence in our own network, that most employers
    hiring justice-impacted individuals have positive experiences
    and notably lower turnover rates. Some of the tools and
    resources needed include occupation licensing reform,
    implementing clean slate procedures, and creating materials
    that will educate small businesses on the benefits of second-
    chance hiring.
        Finally, as has been discussed here, we must invest more in
    helping small businesses access the resources they need to
    train a skilled workforce. An example of this is the Lifelong
    Learning and Training Account Act that was reintroduced earlier
    this year.
        To conclude, more than two years into the pandemic, small
    businesses are slowly rebuilding, but they need a vibrant,
    stable workforce to fully recover.
        I look forward to your comments and questions.
        [The prepared statement of Mr. Arensmeyer follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Cardin. Thank you very much for your testimony.
        Our final witness is Dr. Michael Faulkender, who is the
    Dean's Professor of Finance at the Robert H. Smith School of
    Business. He joined the University of Maryland in 2008.
        And I am sure everybody here knows University of Maryland
    is the home of the national champion men's lacrosse undefeated
    season. You all knew that.
        Senator Hirono. Hanging on the edge of my seat.
        Chairman Cardin. It was never in doubt.
        Dr. Faulkender left that role at the beginning of 2019 to
    serve as the Assistant Secretary of Economic Policy at the U.S.
    Department of Treasury. During the COVID-19 pandemic, he
    assisted in negotiating the CARES Act and was the senior
    Treasury official who led to the implementation of the Paycheck
    Protection Program, and I remember being in rooms with our
    witness as we were trying to implement this program.

     STATEMENT OF HON. MICHAEL FAULKENDER, Ph.D., DEAN'S PROFESSOR
     OF FINANCE, UNIVERSITY OF MARYLAND, VISITING FELLOW, AMERICA
                FIRST POLICY INSTITUTE, COLLEGE PARK, MD

        Dr. Faulkender. Thank you, Chairman Cardin, Ranking Member
    Paul, and Senators on the Committee. Thank you for the
    opportunity to speak with you today on the challenges America's
    small businesses are confronting as they look to meet their
    workforce needs.
        As the Chairman said, I am a finance professor at the
    University of Maryland. I also serve on the Advisory Board of
    the Maryland Small Business Development Center, and I am a
    visiting fellow at the America First Policy Institute.
        During the Trump administration, I had the honor of serving
    as the Assistant Secretary for Economic Policy at the
    Department of Treasury. In that role, I worked very closely
    with this Committee and the Small Business Administration to
    quickly implement the Paycheck Protection Program. As a result
    of our exceptionally strong partnership, the unemployment rate
    peaked at just 14.7 percent in April 2020. My co-authors and I
    estimate that the first round of PPP likely saved as many as 17
    million Americans from the unemployment rolls.
        The situation today, however, is very different from the
    depths of the pandemic. The current challenges confronting our
    economy are largely the result of overstimulation, particularly
    the American Rescue Plan. Excessive Federal spending has buoyed
    consumer demand, which has resulted in businesses struggling to
    find enough American workers to meet that demand. Absent
    sufficient supply, prices are rising at a pace not seen in 40
    years. According to the National Federation of Independent
    Business' April 2022 report, ``32 percent of small business
    owners report inflation is their single most important problem
    in operating their business, the highest reading since the
    fourth quarter of 1980.'' While the Federal Reserve has
    belatedly started raising interest rates to curb inflation,
    policymakers must also focus on ways that we can increase the
    supply of available workers.
        To be clear, the pace of jobs recovery from the depths of
    the pandemic has been impressive. Largely as a result of
    vaccines generated by the Trump administration's Operation Warp
    Speed, we have already recovered more than 96 percent of the 22
    million jobs lost from the pandemic recession. For context, it
    took more than six years to fully recover the jobs lost during
    the 2008 financial crisis.
        That said, we are still 822,000 jobs short of where
    unemployment was in February 2020 even though our population
    has grown by nearly 4 million. While the unemployment rate is
    low, labor force participation is still more than 1 percent
    below pre-pandemic levels.
        At the same time, households are flush with cash due to the
    $4.6 trillion in total COVID resources authorized by Congress.
    With all of that cash boosting demand, the employment needs of
    our Nation's businesses have expanded.
        The result is more than 11.4 million job openings at the
    end of April, just below the record set in March. Today, there
    are nearly two job openings for every one unemployed person.
        America's small businesses are struggling to fully serve
    their customers' needs. According to data from ADP, while large
    and medium-size enterprise continue to grow, employment at
    firms of fewer than 50 employees has declined this year.
    Looking at the April survey of small business owners, ``59
    percent reported hiring or trying to hire in April'' and ``93
    percent of those reported few or no qualified applicants for
    the positions they were trying to fill.''
        The fundamental problem is that we have a labor shortage.
    Our focus should be on implementing policies that will bolster
    supply, including increasing the size of the domestic labor
    force across the skills distribution.
        First, we must stop providing prime-age, able-bodied adults
    excessive amounts of cash payments and social services detached
    from work requirements. The Biden administration has proposed
    eliminating work requirements from eligibility for child tax
    credits and has opposed recent state-requested Medicaid waivers
    that have work requirements. Recent work authored by
    researchers at the University of Chicago examined the child tax
    credit proposal and estimates that ``this change in policy
    would lead to 1.5 million workers to exit the labor force.''
        Second, we should reduce the regulations associated with
    obtaining the training and experience that workers need. The
    U.S. Chamber of Commerce Foundation estimates that, quote,
    small businesses pay on average $11,700 per year per employee
    in regulatory costs, and the costs of regulation to small
    businesses with 50 employees or less are nearly 20 percent
    higher than for the average firm, end quote.
        Examples to include these--examples to reduce these
    regulations include ensuring that the Department of Labor does
    not micromanage apprenticeship programs and by eliminating the
    excessive occupational licensing requirements that many states
    have imposed. Further interference by the Federal Government is
    not the solution. There are already too many overlapping state
    and Federal job training programs that do not provide the
    skills employers are looking for.
        Third, we should re-examine the work disincentives in
    Social Security. While retirement age has risen over time from
    65 to nearly 67, but early benefits start at age 62, those
    benefits are subject to reduction if people work. For example,
    somebody age 64 who has started taking benefits but makes
    $30,000 from working would see their Social Security benefit
    reduced by more than $5,000. The current Social Security
    structure tends to discourage Americans from continuing to work
    at a time that our labor force is too small.
        Finally, our immigration system should be more skills--and
    merit-based. The current high-skilled visa program needs to be
    reformed so that we are selecting those that possess the
    highest skills needed to grow our economy.
        I look forward to participating in this important
    conversation. Thank you.
        [The prepared statement of Dr. Faulkender follows:]
        [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

        Chairman Cardin. Again, we thank all four of our witnesses.
    We will now start five minute rounds.
        Before the pandemic, we had hearings in this Committee, and
    the challenges for small businesses getting trained workers was
    one of the top three issues mentioned as concerns for small
    businesses and growth. So we had a significant challenge for
    small businesses getting quality, trained workers.
        When we created the Paycheck Protection Program, during the
    early parts of COVID-19, one of the main objectives was to
    allow small companies to be able to maintain their workforce
    because we knew if they had to lay them off it would be more
    challenging to bring that workforce back because small
    businesses would be, again, at a disadvantage at getting the
    most trained workers. So we recognized this issue.
        Now the pandemic has made it worse. The labor shortage
    today has made it much worse. I will give you one example,
    though, in regards to government programs.
        We have surveys from the National Restaurant Association
    about the challenges restaurants are having in being able to
    attract workers with the current labor market and the cost of
    labor. And those that received the Restaurant Revitalization
    funds are in a position where they can keep their workforce;
    they can get the workers. Those who did not receive it are
    having a much more difficult time competing, just mentioning
    the fact that there is an affordability issue here in addition
    to finding trained workers.
        But several of you mentioned that small businesses do not
    really have the capacity to be able to have a training program.
    They do not have that. You have to have a shared effort.
        We have lots of training programs at the national level. I
    am familiar with some of the apprenticeship programs, but it is
    difficult for a small business to get engaged in an
    apprenticeship program. If you are a large company, you have a
    much easier time connecting with those that have the
    apprenticeship programs.
        So, Dr. Goger, let me start with you. How can we tailor
    these training programs so that small businesses can really be
    engaged as they partner to be able to get a trained worker to
    meet their needs?
        Dr. Goger. That is a great question, Senator Cardin. The
    issue, like I said, is that we have programs and not systems,
    and so that means if you look at the gold standard places,
    where these earn-and-learn ecosystems work well, you have a
    clear role of the education provider that takes some of that
    training burden off the employer. You have a clear role often
    of an intermediary that helps connect the learner and the
    employer. Right? And then you have employers that have a clear
    role, which is to engage in a longer-term strategy of training
    a professional. Right?
        So we often treat apprenticeships like they are these
    bespoke programs. And the issue with that is like if I ask my
    dad, why don't you start an apprenticeship, which I have, the
    answer is, well, in lightning rods, he does not have a
    curricula for that. He does not have a registration--he cannot
    access that registration process. It is super cumbersome for
    him.
        What if we had a mechanism where all the other lightning
    rod providers could get together and work with educators to
    build that competency-based pathway and then he participates in
    that? On the job, he trains to that structured pathway. They
    all agree, and periodically they reassess that process. It
    takes the burden of creating that whole thing from scratch off
    of his shoulders.
        And in the long run, once it is all set up--you have an up
    front investment, a public sector investment. But in places
    like Switzerland, employers get an 8 to 11 percent return on
    investment, and that is because some of those heavier costs
    around who does the educating and all that, that is not on the
    small business' shoulders.
        So I think that business model is really critical to
    thinking about, and I also think the cumbersome nature of our
    registration process--you know, we do not have connections
    between apprenticeships, CTE, community colleges. These are all
    separate silos instead of a unified system that employers can
    engage in.
        Chairman Cardin. Mr. Arensmeyer, let me ask you, what would
    you like to see Congress do to make it easier for small
    businesses to be able to access training programs to be able to
    get trained workers?
        Mr. Arensmeyer. Well, I think Dr. Goger said, and the
    literature all shows, that these programs, they work well when
    you are dealing with big companies. But like everything else in
    the small business world, small businesses do not have the
    capability to navigate, you know, complicated bureaucracies.
    They do not have the time to independently pursue, whether it
    is connections with community colleges, directly with training
    programs, and they need--we need to consolidate these programs,
    and we need to improve the education and information that is
    provided to small businesses about how to access these
    programs.
        I think sometimes the programs are--you know, if they are
    sort of looking to get the biggest numbers of impact, they are
    going to go to a big business. They are going to be able to
    deal with one HR department, and they are going to be able to
    get those numbers. But that does not solve the problem of the
    many small businesses out there, so I think it is a question of
    streamlining a system and making it accessible to small
    businesses.
        Chairman Cardin. Thank you.
        Senator Paul.
        Senator Paul. I am going to reserve my time and pass it
    down to another member on my side, if I could.
        Chairman Cardin. Certainly. That would be? I think it is
    Senator Inhofe.
        Senator Inhofe. It is. Okay. Thank you, Mr. Chairman.
        There is no state that is more dependent upon the issues
    that are brought in this Committee hearing, and this is the
    reason I got on it in the first place. I hear regularly from
    small businesses in Oklahoma because we have got a lot of them.
    Their margins are shrinking, and I think we can speculate as to
    why, and it is pretty obvious.
        In April, inflation was up 8.3 percent, and the average
    American family is spending an extra $569 every month just to
    buy basic necessities. And on top of this, businesses
    everywhere are raising wages and offering more benefits simply
    to survive in the labor market, but it is still not enough.
        So, Ms. Greszler? Is that right?
        Ms. Greszler. Correct.
        Senator Inhofe. Yes, I would like to have you--right now,
    we are undergoing this multi-trillion-dollar spending spree,
    and the effects that has on small businesses is debatable. You
    touched on this in your opening statement, but I would like to
    have you elaborate as you wish.
        Ms. Greszler. Yes. So the spending spree has resulted in
    one out of every three dollars that is in circulation today
    having been printed by the government. That has massively
    expanded the amount of demand in the economy, and at the same
    time, we had welfare without work benefits that were
    restricting the supply of workers. And so it just created this
    huge gap. As a result of that, businesses cannot get the
    workers, and they are in this inflationary cycle here.
        We have to stop the spending immediately. That is one of
    the first things, and then I think we get toward the longer
    term goals because workforce has been an issue for years and we
    have, in many ways, a broken higher education market.
        Senator Inhofe. Yes. The spending is something I wanted to
    get to because that is something that is not talked about as
    much.
        And I would say to Dr. Faulkender, very similarly--and you
    touched on this in your opening remarks, but . . . how can this
    Administration advocate policies--obviously, they are not doing
    it right now--that would help level the playing field for small
    businesses?
        Dr. Faulkender. Thank you, Senator. I think some of the
    most important things that we can do is reduce, as was stated,
    some of the spending but also some of the regulation that is
    being imposed on small businesses. Organizations that are
    operating at smaller scale, but nevertheless have the same
    regulatory requirements, have fewer workers to spread those
    costs over. It makes it more expensive per worker, and as a
    result, we are seeing that small businesses are struggling more
    than others to retain workers. Likewise, as the Chairman
    mentioned, larger businesses have greater ease in providing
    telework, for instance, for their employees. And so anything we
    can do to make the environment for small businesses more
    competitive by reducing some of the costs that we impose upon
    them and some of the threats of higher taxation that we are
    imposing upon them would be beneficial to assist the small
    businesses.
        More than anything, we need to increase the number of
    workers in the workforce. There just are not enough people that
    are looking for jobs relative to the number of openings right
    now, and so reducing the disincentives of being part of the
    workforce, I think, is the singular most important thing that
    we can do to help fill those employment gaps.
        Senator Inhofe. It is kind of interesting because I am
    older than any of you guys are and I can remember it was not
    that long ago when we thought we would love to have a problem
    like this someday. And now it is here, and we are not so sure
    about it.
        But I think it needs to be said over and over again by
    knowledgeable people, such as we have here today, on this
    overspending, overregulation, the damage that is being done,
    and I appreciate your witnessing.
        Thank you, Mr. Chairman.
        Chairman Cardin. Senator Hickenlooper.
        Senator Hickenlooper. Thank you, Mr. Chair, and I
    appreciate this importance of having someone on the panel who
    has a family experience with lightning rods because I think it
    is fair to say that Senator Paul sometimes acts as a lightning
    rod and has frequently said that I act as a lightning rod. So I
    think it is appropriate in some important way.
        I was in Colorado last week and met with a group of
    students in one of our mountain towns to discuss the success of
    a program I started when I was Governor, called CareerWise,
    which is an apprenticeship program. And one of the students,
    his name was Brandon--and he had worked for the previous three
    years as he was working his way through high school, with a
    construction company, and he had actually decided he was going
    to go to college. He was not going to, but now he was going to
    go to college, but he was going to continue working for the
    construction company. He is a project supervisor at the age of
    19. Anyway, he is going to continue to work for them as he goes
    through a degree in architecture.
        He made a challenge to us. He said, what are you going to
    do to make sure every kid has a chance to get meaningful work
    experience while they are still in school, before they actually
    go out and get a job? So his challenge was: What are you going
    to do to get every kid this opportunity?
        So what more can the Federal Government--Dr. Goger, I will
    start with you. What more can the Federal Government do to pair
    small businesses and younger Americans with these kind of
    experiential learning opportunities?
        Dr. Goger. That is a great question, Senator Hickenlooper,
    and really we need to start much younger. We need to start in
    K-12. We should be taking 11-year-olds to meet mentors because
    information asymmetries about what you can do in your job are
    huge. People do not know.
        Jasmine Hill, a professor at UCLA, she calls it mobility
    knowledge. They do not know what the options are. There are so
    many well-paying jobs that are not being filled purely because
    people do not have someone in their family that works there and
    therefore can tell them how to access it. Right?
        So as the first in my family to go to college, there was a
    lot of that mobility knowledge that I did not have, and I think
    we need to be taking a more proactive role going into schools
    and in K-12 curricula starting early with opportunities to get
    work experience. Right?
        Our average apprenticeship age is 26. We should be thinking
    about 16. That is where our young talent really is.
        And I think one of the things--if you want to get to
    specifics, one of the things that we really need to think about
    is guidance counselors and teachers. What do they know about
    the career opportunities available to young people? A lot of
    times, you know, be a lawyer, be a doctor, go to college. That
    is pretty much all people here, but I think there is a lot more
    options for the two-thirds of Americans that do not end up with
    a college degree.
        Second, we need some permanent funding streams for
    intermediaries that do that connection, like CareerWise,
    between the young person, the employer, and that can provide
    some support. Let us say the young person needs transportation.
    That is the connector that we do not have permanent funding
    for.
        Three, we need funding for related instruction. Right? So
    if you are going to have someone learning that in the class,
    ideally, you have some time in the classroom and some time on
    the job. It is a structured program.
        In the classroom, you learn--you know, if it is an
    electrical program, you learn the theories around like nodes of
    electricity. Right? But on the job you figure out how to
    actually solve the problem. And that is where the soft skills
    get built. That is where someone builds that professional
    network.
        So I think that we need to really make sure that we are
    structuring the incentives in K-12 and community colleges so
    that education itself is creating multiple pathways for people
    and not just a college-for-all solution because you said an
    apprenticeship does not have to be a choice between a degree or
    not. In Alabama, they actually created the nation's first
    master's degree apprenticeship in social work in an HBCU.
        Senator Hickenlooper. Yes. And I agree with that
    completely. There does not have to be that match.
        I think it is also worth looking at how do we keep this
    skills learning going throughout a person's life. Kids of all
    ages are going to have to keep learning things.
        You know, a woman in Colorado started a company called
    Guild Education that now is that interface between--some of her
    customers are Starbucks and Walmart, where every single
    employee, when they want to pick up any packet of learning
    skills, the company will support them, and then Guild is the
    intermediary that allows them to make sure they get the right
    class and they finish it.
        If I can just get 30 seconds, I wanted to ask a little bit
    just about the visa application process, Mr. Arensmeyer, just
    because I see so much of this workforce. I mean, if we had a
    streamlined visa process, I think that could go a long way in a
    lot of these places where we have real workforce--I was a small
    businessperson myself, so I am painfully aware of the
    importance of this.
        Mr. Arensmeyer. That is absolutely true. I mean, some
    industries, like the hospitality industry and the construction
    industry rely on heavily on foreign-born labor.
        And along those lines, it is absolutely true we need to
    increase the H-1B visa program for high-skilled workers, but we
    need to expand it to low-skilled as well. Talking to small
    business owners across the country, they are lacking workers at
    every level.
        Senator Hickenlooper. Right.
        Mr. Arensmeyer. As I said, construction, hospitality, and
    other industries. So you know, we have grown our economy over
    the decades, over the centuries, with foreign-born workers. And
    we have constraints on that right now, and we are hearing from
    businesses across industries that that is a huge problem. So we
    need to, you know, responsibly ease some of those restrictions.
        Senator Hickenlooper. Well, maybe the next thing we will
    have a hearing on comprehensive immigration reform and work
    from that point of view.
        Anyway, thank you. I yield back. Thank you for being
    concise.
        Chairman Cardin. You are ambitious.
        Senator Paul.
        Senator Paul. I just wanted to interject on the immigration
    issue just very quickly.
        Senator Hickenlooper. I told you I was a lightning rod.
        Senator Paul. Well, here is the thing. We never do anything
    on immigration, and the reason is this, is people want the
    whole thing done or nothing. If you would break it into small
    pieces and look at the H-2A program, the H-2B program, or the
    employment-based visa program, there are fixes that both sides
    could come together.
        But the big thing is there are 20 million people here
    illegally. One side wants them to vote; the other side does not
    think immediately voting is a great idea if you came here
    illegally. That is a big bugaboo, and it has stifled us.
        I have a bill that doubles the employment-based visas.
    There is 1 through 5. And there is no reason why we should not
    be able to get bipartisan support on that and pass the bill.
    There are 70,000 employment-based visas, EB-1 through 5. I
    believe we ought to double it. I think a lot of Democrats would
    support that, but it has not gotten anywhere because everybody
    wants everything or nothing.
        I have another bill that takes the H-2A program--and the H-
    2B are another category; they are capped. But H-2A is
    agriculture; it is uncapped. I would take some of the H-2B
    workers, put them in the H-2A, the uncapped, which would give
    us more workers, and they would now be called H-2A. It would be
    mostly like landscape workers, but it would be probably several
    hundred thousand landscape workers. You would move them over.
    And I think there could be bipartisan support for that, too.
        We take the H-2A program and make it work better by making
    the government respond to you within a certain amount of days.
    It is electronic. If you are bringing back the same workers,
    there is less work, and they run through the system much
    easier. We make it year-round. All these things are very
    practical that there is probably no partisan disagreement on.
        Not everybody is going to vote for it, but it is not a
    really, really pitched partisan battle. But we do not get to it
    because the sticking point is do we let 20 million people vote
    or 15 million people vote who came illegally. So I think if we
    got to smaller portions of this we might have a chance.
        And I will go back to the regular order.
        Chairman Cardin. We might differ a little bit the way you
    explained it, but I do agree that we----
        Senator Paul. I am always right.
        [Laughter.]
        Chairman Cardin. But I do agree we need to make progress.
        Senator Ernst.
        Senator Ernst. Thank you very much, Mr. Chair.
        And thank you, Senator Paul. ``Bugaboo,'' that is the word
    for the day, folks.
        But I do want to chime in on some of the thoughts that have
    been expressed by our witnesses today and thank you all so
    much.
        And, Dr. Goger, I am going to agree about a phrase that I
    use all the time. It is: You only know what you know. Right? So
    we experience this throughout our population. You only know
    what you know, and you do need those examples out there.
        I am the first in my family to get a four year degree.
        My sister has a degree from a community college, and my
    brother is--he did not to go to school, and that is probably a
    good thing. But he is doing quite well because he had skilled
    training in heavy equipment, and he went directly into the
    workforce. He works for--he is a union laborer with the
    Burlington Northern Santa Fe rail line, and he operates heavy
    equipment for them. And out of all the three of us kids, he
    probably does the best. So there are just different types of
    opportunities for different individuals out there, but you are
    right; you only know what you know.
        And so to that, Dr. Faulkender, thank you so much for being
    here. I would like to say thank you because I do think we need
    to get more engagement in the workforce, and finding ways to do
    that is extremely important for so many small businesses that
    are really struggling. Some of them are closing their doors
    because they do not have workers. So we really have to do
    something about that.
        And Federal apprenticeship and job training programs are--
    they exist in abundance, as you pointed out. I have actually
    worked for one of those job training programs at a technical
    college in South Carolina, but there are so many of them. So
    how can we put reforms in place, do a better job of maintaining
    those programs, getting the types of skills out there? What
    reforms would you recommend?
        Dr. Faulkender. I think first and foremost we need to make
    them significantly more flexible. You know, one of the things
    that I learned during the pandemic in running the Paycheck
    Protection Program is that we may think of businesses as
    operating a particular way, but when you are then rolling out a
    program nationwide you are exposed to the diversity of
    businesses out there and the different situations they
    confront. And the idea that we can create this one-size-fits-
    all and have it work for everybody just does not work if you
    start putting lots of constraints in place.
        We need to let businesses, states, municipalities have the
    flexibility to do it for themselves. And so for instance, when
    you have the Department of Labor put a lot of conditions on
    apprenticeship programs that then disqualify them from
    participation, that is going to make it more difficult for
    industries and businesses to find ways that work for them and
    their unique circumstances. So let us provide flexibility and
    otherwise get out of the way.
        Senator Ernst. And I agree 100 percent, and I am going to
    tout a program that I visited last week while we were on
    recess. I visited the John V. Hanson Career Center in Forest
    City, Iowa. It is a career center that is sponsored by the
    local community college and four of the high schools and
    obviously a very generous employer in the area. It did not take
    the Federal Government to come up with this career center, and
    it is very focused on the needs of local employers.
        And it allows juniors and seniors to go to the career
    center during their regular K-12 school time, and they are
    learning a trade and earning college credit at the same time
    through the community college. And these young men and women,
    they can either decide to continue on and transfer credits into
    a university, go on to the community college, or some of them
    are even being presented with job opportunities from local
    employers coming directly out of high school, debt-free, great
    paying jobs.
        So you know, I always hesitate to say, ``We are from the
    Federal Government. We are here to help'' because sometimes we
    just need to get out of the way and let those local
    decisionmakers, those local thought providers get in there and
    discover what is necessary and right for their own community
    and drive forward with it, and that is what the John V. Hanson
    Center has done.
        So I appreciate it. This is a really good discussion today,
    so thank you all very much for being here. Thank you.
        Chairman Cardin. Senator Rosen.
        Senator Rosen. Well, thank you, Chairman Cardin, Ranking
    Member Paul. This is a really good hearing.
        Workforce challenges, it is what we--we heard this before
    the pandemic. We are hearing it during. And now, hopefully, as
    we are moving through it, we are going to find some resolve.
        I want to say that I agree 110 percent with everyone here
    who says we have to get down through K-12. We have to excite
    young kids, show them that there is more than three jobs that
    they might see on TV or the internet, how they get there and
    what the path is for them and really empower those career
    counselors and all of those things in each one of our
    communities.
        And so we have spoken about training and mentoring for
    young folks, but we also have to talk about upskilling or
    reskilling our returning workforce, our midlife, perhaps,
    workers. And so ``help wanted'' is a sign we have seen in every
    window on the doors of small business over the past year. We
    hear from companies of every size and who are just facing
    unprecedented challenges filling the workforce.
        So in Nevada, even though the unemployment rate has
    continued to go down, only three in five adults are working or
    currently actively seeking work. And so the rest have grown
    discouraged. They have dropped out of the labor market, and
    quite a few have stayed at home to take care of their families,
    maybe children, maybe an aging parent as a caregiver.
        And so I felt that we had to create an on-ramp for those
    who want to join the workforce at that time, so I introduced
    what is called the STEM RESTART Act. It is bipartisan
    legislation to help Americans come back through what I am
    calling--what we are calling ``returnships.''
        So, Dr. Goger and then Dr. Arensmeyer, how do you think we
    can create on-ramps for these mid-career workers so we can get
    them upskilled or reskilled and return to the workforce and
    help them in that way? A little different than our young kids
    K-12.
        Dr. Goger. Sure. I think that most training that happens,
    happens by employers, and we should be incentivizing especially
    mid-size employers to train and onboard workers more. When we
    did a study in California, we found that 18 to 100 was the
    sweet spot, where when you reimburse employers to train, that
    increased their revenue and increased their size.
        For smaller, though--for smaller employers, though, I think
    we need to think about how you can pool training costs, like
    community training centers, incubators, places where people
    know where to go when they are looking for that new job and
    they do not know where to start. Thank you.
        Mr. Arensmeyer. Well, I thank you for your--you know, there
    is a whole panoply of things that are in effect here. For women
    entering the workforce, child care continues to--maybe they
    have stayed home with the kids, the kids are off in school, but
    they still are going to need child care. And we hear constantly
    from employers that they struggle to keep and recruit women
    particularly, caregivers, because of the inability to access
    affordable child care. So the provisions in the Build Back
    Better Act to really reduce the cost of child care are
    absolutely essential.
        You know, we have talked about expanding opportunities for
    foreign-born workers in the system, justice-impacted returning
    citizens in the system. And, quite frankly, if you are
    bringing--if you are recruiting someone back into your small
    business, you have got to be able to pay the same level of
    benefits that a big business will, the competition.
        And so it is--you know, sort of the big four areas that we
    think are important: health care, pay level, child care, I have
    already talked about, and retirement savings. Really
    facilitating small businesses being able to offer commensurate
    benefits has been just a huge disparity across our system. So
    it is really--it is not one thing. It is really putting all of
    these together.
        Senator Rosen. Thank you. I know I have a few seconds left,
    so I just really want to reiterate what we have been talking
    about, about apprenticeships also because in Nevada we have
    over 90 registered apprenticeships where you earn while you
    learn, you graduate debt-free, average salary there about
    $70,000. We are trying to bring more apprenticeships. We have
    large swaths of openings in cybersecurity and technical
    computing, forensics, a lot of those things, trying to bring
    more of that registered apprenticeship capacity because we know
    that that works.
        And I just wanted to, like I said, in the few seconds left
    to say how much I agree with that, and I know that you are
    supportive of that, and I think it is important that we put our
    efforts into this to create a robust workforce.
        Thank you, Mr. Chairman.
        Chairman Cardin. Senator Paul.
        Senator Paul. You know, we have discussed a little bit of
    labor force shortages, and you know, I am a Republican who is
    for more lawful immigration, so I think that can be part of the
    answer.
        I do think there are certain aspects of the labor force
    shortage, though, that are perplexing. The argument has been
    made that the artificial stimulus of government spending and
    creation of new money by the Federal Reserve is part of it. It
    has created this enormous amount of demand, and that is part of
    the labor force shortage. The only problem with that argument
    is we still have not got back to the actual physical number of
    where we were before the pandemic.
        Now the government did really disrupt. We have never had a
    $20 trillion economy just closed and then reopened, so there
    are enormous dislocations. It is not only ours. Most of the
    world closed down and then reopened.
        But the other argument is that maybe it is an underuse or
    that maybe we have deterred people from work and quantifying
    those and making arguments for which is the case, that we have
    so much artificial demand that we cannot keep up with the
    workers because of the artificial demand versus a labor force
    that is not working.
        So we have labor force participation that is about 62
    percent or so, and people say it is going down. The remaining
    38 percent I am interested in. Does that include people that
    are disabled or cannot work? Or, when you do labor force
    participation--we will start with Ms. Greszler--are those
    people able to work, the 38 percent that are not in the labor
    force? 62 percent are participating; 38 are not. Who are the 38
    percent?
        Ms. Greszler. Yes, so it can include those people that are
    not in the labor force. Part of that could be disability. Most
    of them are able to work.
        I have been digging into the numbers and trying to figure
    out who is it that is not coming back to the labor force. A
    particularly troubling part is that it seems to be the 20- to
    24-year-old age group. The drop in employment is actually
    bigger than the net drop in employment for all workers. That is
    when people should be at their greatest opportunity, like they
    have all the potential in the world there. And they are not
    attending college in greater degree either. The college
    enrollment rates have declined. So that is a particularly
    troubling part of it.
        A narrative that is out there is that it is mostly women,
    especially women with younger children, who have been
    disproportionately impacted, and absolutely, child care is a
    struggle. I have six young kids and went through COVID, and it
    was not easy to work with them, all at home many times.
        But there have been some studies, multiple ones, including
    by Jason Furman, President Obama's former CEA chair, Claudia
    Goldin, and they basically found, yes, it was a struggle, but
    women pushed through, and it actually did not cause their
    employment to decline. I have been looking at this, and only 16
    percent of the current gap in employment is parents with
    children. That includes men and women.
        And so I do not think that that is the big part there and
    we do not need to be enacting a big new entitlement that would
    drive up those costs of child care, but there are ways that we
    can help child care become more accessible and affordable and
    also have the types of jobs that work for women, that work for
    caregivers, that work for people at the older end of the age
    spectrum, that are particularly appealing to younger workers,
    and that is the independent contracting, the freelancing. We
    should not be shutting those opportunities out.
        Senator Paul. Did you say you have six young children?
        Ms. Greszler. Well, 4 to 14, so I consider them all young.
        Senator Paul. Six. Yes, my sister has six. She is an OB/
    GYN. So I know what it is like to have a working sister with
    six also, so that is a big deal.
        You know, when you look at this also, one of the things we
    talked about was we were quite concerned, at least on our side,
    of adding the $600 extra in unemployment. And that expired back
    in September, and we thought, well, people will go back to
    work. And the worrisome thing is: Did we change behavior so
    much that some of them did not go back to work or some of them
    are working for cash on the side? Are they taking government
    money and working on the side? And you do hear stories of that,
    the people who are taking a little bit less from the
    government, then they are driving somewhere for cash, you know,
    in another city or something and not being reported.
        Mr. Faulkender or Dr. Faulkender, your response sort of to
    the previous question? Labor shortage in general, getting rid
    of the unemployment add-on, and why we still have a shortage.
        Dr. Faulkender. Right. So the other significant segment of
    missing workers are those in their 60s. So there is an early
    retirement that is going on, and this is why potentially some
    of the penalties of Social Security should perhaps be revisited
    because that is also a significant portion of the missing
    segment of the labor force.
        The technical answer to your question is we can look at
    different segments of the adult population, and prime labor
    force participation has mostly come back. It is still only
    about a half a percentage point below where it was prior to the
    pandemic. It is the older workers. So prime is 25 to 54. It is
    above that where we are seeing not a recovery. And so how much
    of that is extra concern about COVID versus how much of it is
    the savings that they accumulated, the run-up in their
    retirement portfolio facilitated them leaving but also some of
    the penalties associated with Social Security, associated with
    doing--taking Social Security and working at the same time?
        Unfortunately, the high levels of inflation we are seeing
    may push some of those people back into the labor force, but I
    do not think that is what we--I do not think that is why we
    want them back in.
        Ms. Greszler. If I could just add that eliminating the
    retirement earnings test would not cost anything, it is
    actually just kind of misperceived tax. You get the money back
    later on. So it would actually be pro-growth and improve Social
    Security's finances.
        Chairman Cardin. Senator Coons.
        Senator Coons. Thank you, Chairman Cardin and Ranking
    Member Paul. Thank you to our witnesses today.
        I have heard from a number of businesses up and down my
    home state, the small State of Delaware, that they are indeed
    in the middle of a significant labor shortage but also a skill
    shortage in that hiring and retaining and motivating folks who
    have the appropriate skills for the jobs for which there are
    opportunities is a real challenge. So, thank you.
        If I could, Dr. Goger, you said in your testimony that
    apprenticeships should be easier and cheaper for small
    businesses to sponsor. The apprenticeship model is well known
    in the building trades and other well-established industries,
    but my former governor, Jack Markell, launched and ran a
    statewide program to help create registered apprenticeships in
    high-growth, high-potential sectors, really driven by employers
    in partnership with our community college.
        What barriers do small businesses face in managing a
    registered apprenticeship program, and do you think government
    investment in apprenticeships can actually help alleviate this
    issue?
        Dr. Goger. That is a great question. The challenge for a
    lot of small businesses--because, as I said earlier, we have a
    program approach that essentially requires an employer to
    create a bespoke program customized for their business
    themselves. And instead of creating a system whereby--for
    example, in technology, I have done a lot of work on
    apprenticeship in tech. If you could partner with community
    training providers and community colleges to provide some of
    the actual structured education, that takes some of the cost
    burden off; if you have some subsidy also up front for the
    design and training your managers on what is your role here,
    what is expected of you, and how long this is.
        I think one of the challenges that we hear from small
    businesses is that they tend to think about the cost in a short
    term way. You know. And I had an intern. Right? I had her for
    three months. I spent two months trying to train her, and then
    she had two weeks of actually helping me. If I could have kept
    her longer, then I would have seen that real return on
    investment coming out.
        And I think a lot of times there is a mindset issue, where
    employers are seeing these talent investments as a short-term
    cost and not keeping it long enough to actually see the recoup
    of that cost. So I think structuring it longer is better for
    the employer, actually.
        Senator Coons. I do think that government has a role to
    play as an aggregator of demand. Most of the small
    manufacturers, small and medium manufacturers I meet with in
    Delaware need four people with these skills or six people with
    these skills or ten people with these, but not enough to have
    them pay the money up front to design and register and run an
    apprenticeship program long-term.
        I do have a bill, surprise, with Senators Young and Moran
    and Brown, the Apprenticeship Hubs Across America, that would
    expand the registered apprenticeship model, specifically the
    high-growth job market, and increase the availability of
    apprenticeships in a diversity of businesses like high tech,
    like hospitality, like home health care, that do not currently
    have any registered apprenticeship programs.
        Mr. Arensmeyer, in your testimony, you spoke about the need
    to equip small businesses with workforce training resources.
    And I think workers ought to have the ability to advance their
    own skill and small business employers benefit when workers get
    the opportunity to improve their skills. Why should government
    make any investments in skills?
        I have a bill that would create essentially a tax-preferred
    savings account with a match up to a modest amount for those
    who are low- and moderate-income. Why should government make
    investments rather than employers in skills training?
        Mr. Arensmeyer. I presume you are referring to the Lifelong
    Learning and Training Account Act? Yes, I was going to mention
    that actually because it does allow for government to match
    savings that employees can put into a fund and use it for when
    they need to for training.
        I think it is essential that we--you know, there is a
    public policy behind making sure we have got a skilled
    workforce out there and--you know, this is a matching. This is
    a way the government can leverage its money. It is not 100
    percent. It is not covering 100 percent of the need. It is
    matching.
        And, look, we do this across our entire economy with tax
    benefited health care, with tax benefits for retirement
    savings. So this is really no different. This is the
    government, you know, strategically using its resources to step
    in and, you know, in a targeted way have a positive impact.
        Senator Coons. How do you think providing a training
    opportunity like that would help with retention and morale in
    the workforce more broadly?
        Mr. Arensmeyer. The training, specifically, the training
    that is in your bill?
        Senator Coons. Yep.
        Mr. Arensmeyer. Well, it would be--it enables us to have a
    more stable, skilled workforce that--then it enables the people
    who get this training to put themselves into position to do
    that job and then do other jobs and increase their
    responsibilities in the economy, and you know, you end up with
    a much more robust workforce by doing that.
        Senator Coons. Great. Thank you.
        Thank you, Mr. Chairman.
        Chairman Cardin. Senator Hirono.
        Senator Hirono. Just in time, it seems. I apologize if any
    of these questions have been asked, but here we go.
        So, Dr. Goger, am I pronouncing your name correctly?
        Dr. Goger. Yes. Thank you.
        Senator Hirono. So you mentioned the need for child care
    because I think that just as we are having a really hard time
    finding workers, if we are not providing accessible, affordable
    child care that means that there are a lot of women, especially
    those who because of the pandemic left their work--but they
    need child care provisions to get back to work. So can you just
    tell us a little bit more about any stories about women who
    because of lack of child care they are not able to get back to
    the workforce?
        Dr. Goger. Yes, so what we saw is not only were women more
    likely to be laid off in the pandemic because they are
    concentrated in frontline jobs but also, you know, because of
    school disruptions. Even today, my friend last week--she has
    two girls. Her daughters' school was shutdown because there was
    a COVID exposure.
        So this impacts parents generally but predominantly women,
    and I think that it is really challenging for women employed in
    small businesses, like hospitality, because they cannot really
    juggle these uncertainties and keep their job.
        So that is why one of the things that I was talking about
    is how could you pool funds from small businesses, through
    trade associations and so on so, that you can do things like
    share some of the costs for child care or get small businesses
    together to reduce health insurance costs or to be able to
    offer paid sick leave. I think that, structurally, small
    businesses cannot afford a lot of these benefits, and that is
    what is leading them to lose talent to larger companies. And so
    I see that as really essential to being able to help women stay
    and be able to show up in the workplace more regularly even in
    the face of ongoing disruptions.
        Senator Hirono. I agree with you that in spite of the
    testimony that says that government should not be involved--in
    fact, some of our panelists apparently take the position that
    the less government does to try to be of help the worse things
    are, and I do not agree with that position.
        So to the extent that a lot of the women in our workforce
    are more in the frontline positions, we lost a number of them
    to COVID, and so I do think that as a developed country we are
    very much behind in terms of child care support and also paid
    family leave, that those things would help a lot.
        So with regard to the supply chain, the COVID-related
    supply chain disruptions have been driving price increases in
    the U.S., which have disproportionately impacted working and
    middle-class families, and we know these families are paying
    more for everyday household goods like groceries, food, rent,
    utilities, gas. And the Build Back Better included investments
    to address supply chain vulnerabilities, but it has stalled in
    the Senate. What kinds of investments should we consider to
    improve supply chain resiliency in the United States?
        Do you have any thoughts? For you, Dr. Grover.
        Dr. Goger. Doctor--Okay.
        Senator Hirono. Sorry. Goger.
        Dr. Goger. Yes. This is a really long-running challenge
    because for 40 years we have actually incentivized lean supply
    chains that do not have resilience built in, and so we have
    disinvested in our domestic manufacturing capacity----
        Senator Hirono. Yes.
        Dr. Goger.[continuing]. Including small businesses. We do
    not have managerial expertise right now in our supply chains to
    actually respond quickly to changes. And we really need an
    agile workforce that can learn and change and adapt, and that
    is why I think employer-provided training is so critical,
    especially for small- and medium-size businesses that are the
    source of a lot of the innovation that we see. In many cases,
    it was small businesses that adapted the most quickly to some
    of these demand shifts.
        But I worry that the risks and the costs of all these
    disruptions will be with us for a really long time unless we
    can really start to use, you know, really concerted efforts to
    invest back in building that small business ecosystem and
    getting some of our diverse talent, you know, and diverse
    entrepreneurs, their ideas. Some Harvard researchers estimate
    that if we invested more equally in our talent we would
    quadruple innovation in the United States. We do not have a
    lack of people or a lack of ideas or a lack of talent, but we
    are keeping people on the sidelines, so we need to remove some
    of those barriers for innovation.
        Senator Hirono. I think you also mentioned in your
    testimony that we are not investing equally in Black
    communities and Hispanic communities and we are losing out a
    lot on the talent provided in these communities. I agree with
    you.
        Thank you, Mr. Chairman.
        Chairman Cardin. Thank you, Senator Hirono.
        Once again, I want to thank all four of our witnesses. This
    has been a very, very helpful panel, different views, but I
    think we all recognize the fundamental problem for small
    business today is access to trained workers and a stable
    workforce.
        We have had hearings dealing with the challenges small
    businesses have with capital, small businesses have with
    dealing with supply chain disruptions, we had a hearing on
    that, to deal with the regulatory burdens of small business.
        But today, we really are concentrating at this hearing on
    the issues concerning labor force, and there is no simple
    answer to this. I think you all have really given us some
    really good suggestions. We have programs that deal with job
    training and apprenticeship, but it is very difficult for a
    small business to access those programs in a useful way that
    could be relevant to their current needs. So how do we fine-
    tune these programs to make sure they are accessible to small
    businesses?
        There seems to be a growing consensus, as Senator Paul
    indicated, on easing the immigration rules, certainly as it
    relates to worker visas. I would point out that the general
    immigration policies are just as important. The replenishment
    of our workforce through normal immigration is important for us
    to have a supply of workers in this country, not just those
    that come under the worker visas.
        And we do need to deal with returning citizens. That is a
    significant number of people who have been disqualified in so
    many opportunities that are really able to work, want to work,
    and can be very reliable workers for themselves and for our
    economy.
        And then we get to the issues of affordability to work. We
    have mentioned that. Not only child care but health care has
    been mentioned. These are areas that we have to continue to
    make sure we have a level playing field for small businesses so
    that the workers--the businesses are not put at a disadvantage
    with the workers that are available and can provide the
    necessary incentives for them to work.
        One other area that we have not talked about, just put it
    on the table, is resource partners. We have invested a lot in
    our resource partners, and they should be able to help provide
    some of the services to make it easier to connect the dots
    between the services that are available but that small
    businesses do not have the capacity to be able to work through
    how they get to those services.
        So I think there is a lot of good suggestions that have
    come out of this hearing, and I can assure you we will be
    following up on this.
        And once again, we thank you for your being here today, but
    we are not going to let you off the hook. We expect that we
    will be continuing to reach out for your suggestions and your
    help as we try to help the small business infrastructure in
    America.
        With that, if there are no further comments, the Committee
    will stand adjourned. Thanks.
        [Whereupon, at 3:52 p.m., the Committee was adjourned.]

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