[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                     
          
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            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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