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26–720 2018

EXAMINING THE SMALL BUSINESS LABOR MARKET 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC GROWTH, 

TAX, AND CAPITAL ACCESS 

OF THE

COMMITTEE ON SMALL BUSINESS 

UNITED STATES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

SEPTEMBER 7, 2017 

Small Business Committee Document Number 115–034 

Available via the GPO Website: www.fdsys.gov 

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Congress.#13
(II) 

HOUSE COMMITTEE ON SMALL BUSINESS 

STEVE CHABOT, Ohio, Chairman 

STEVE KING, Iowa 

BLAINE LUETKEMEYER, Missouri 

DAVE BRAT, Virginia 

AUMUA AMATA COLEMAN RADEWAGEN, American Samoa 

STEVE KNIGHT, California 

TRENT KELLY, Mississippi 

ROD BLUM, Iowa 

JAMES COMER, Kentucky 

JENNIFFER GONZA ́ LEZ-COLO ́ N, Puerto Rico 

DON BACON, Nebraska 

BRIAN FITZPATRICK, Pennsylvania 

ROGER MARSHALL, Kansas 

RALPH NORMAN, South Carolina 

NYDIA VELA ́ ZQUEZ, New York, Ranking Member 

DWIGHT EVANS, Pennsylvania 

STEPHANIE MURPHY, Florida 

AL LAWSON, JR., Florida 

YVETTE CLARK, New York 

JUDY CHU, California 

ALMA ADAMS, North Carolina 

ADRIANO ESPAILLAT, New York 

BRAD SCHNEIDER, Illinois 

VACANT 

KEVIN FITZPATRICK, Majority Staff Director 

JAN OLIVER, Majority Deputy Staff Director and Chief Counsel 

ADAM MINEHARDT, Staff Director 

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(III) 

C O N T E N T S 

OPENING STATEMENTS 

Page 

Hon. Dave Brat ........................................................................................................ 1 

Hon. Dwight Evans ................................................................................................. 2 

WITNESSES 

Dr. Michael Farren, Research Fellow, Mercatus Center, George Mason University, Arlington, VA .......................................................................................... 4 

Mr. Bruce Seilhammer, Electrical Construction Group Manager, SECCO, Inc., 

Camp Hill, PA, testifying on behalf of the Independent Electrical Contractors, Inc. (IEC) ...................................................................................................... 6 

Mr. Carlos Castro, President, Todos, Inc., Woodbridge, VA, testifying on behalf of the National Grocers Association ............................................................ 8 

Mr. Gardner Carrick, Vice President of Strategic Initiatives, The Manufacturing Institute, Washington, DC ....................................................................... 9 

APPENDIX 

Prepared Statements: 

Dr. Michael Farren, Research Fellow, Mercatus Center, George Mason 

University, Arlington, VA ............................................................................ 21 

Mr. Bruce Seilhammer, Electrical Construction Group Manager, SECCO, 

Inc., Camp Hill, PA, testifying on behalf of the Independent Electrical 

Contractors, Inc. (IEC) ................................................................................. 26 

Mr. Carlos Castro, President, Todos, Inc., Woodbridge, VA, testifying 

on behalf of the National Grocers Association ........................................... 31 

Mr. Gardner Carrick, Vice President of Strategic Initiatives, The Manufacturing Institute, Washington, DC ........................................................... 36 

Questions for the Record: 

None. 

Answers for the Record: 

None. 

Additional Material for the Record: 

None. 

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SBREP-219A with DISTILLER

(1) 

EXAMINING THE SMALL BUSINESS LABOR 

MARKET 

WEDNESDAY, SEPTEMBER 7, 2017 

HOUSE OF REPRESENTATIVES, COMMITTEE ON SMALL BUSINESS, SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS, Washington, DC. 

The Subcommittee met, pursuant to call, at 10:04 a.m., in Room 

2360, Rayburn House Office Building, Hon. Dave Brat [chairman 

of the Subcommittee] presiding. 

Present: Representatives Brat, Kelly, Evans, and Murphy. 

Chairman BRAT. Thank you all for showing up and being 

prompt and more on time on than us Members of Congress. Glad 

to have you all with us. I looked at all your backgrounds and resumes, and it is going to be a great panel. And so I am looking forward to discussing the issue and having a great conversation. 

And so with that, I will call this hearing to order and get us 

started. Thank you all for being here. 

Today the labor market is facing significant challenges. The labor 

force participation rate is at 40-year lows not seen since the Jimmy 

Carter era. Many are calling for the Federal Government to allow 

mass immigration of foreign workers. However, displacing American workers is counterproductive and misses the point. 

The problem is much deeper and more fundamental. Our K-12 

education system fares poorly in some respects compared to other 

industrialized countries. I taught Econ 101 for 20 years in Virginia. 

Kids are coming out of high school not knowing what a business 

is. They don’t know what an entrepreneur is. They don’t know a 

price from a profit from a cost. And we have to change that. That 

is adding to the skills mismatch that I think we are all probably 

going to be discussing today. 

We also have vast a welfare state that disincentives individuals 

to work. Taxes remain high and complex. I think people are currently eligible for about $50,000 in just Federal welfare benefits. 

Combine that with State and local, if you have got two kids in 

school, that is 26 grand. If you work under the table, that is 25 

grand. Add all that together, you are doing $100,000 worth of benefit to you and your family and it is hard for the labor market to 

compete with that at 10 bucks an hour. So you see we have got— 

it is kind of a triple bank shot. 

And then some people want to use immigration to solve those 

complexities complex, right? And so I always start off that we have 

always been a country of immigrants, we welcome all immigrants. 

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2 

Most immigrants that come in south of the border, predominantly 

Catholic, fine people. That is not the debate at all. The issue coming in is people make about 20 grand, pay some income tax, a little 

bit of Federal income tax, FICA. If you have got two kids in school, 

it is 26 grand, and you are upside down. 

And so we have got labor market problems we have got to solve, 

K to 12 skills mismatch, welfare system issues. It is tied to immigration. That is in the news. Many businesses are struggling to 

find and hire qualified employees. That is true I think across the 

country in every district. 

Last month I heard this in person when I traveled around my 

district, met with dozens of business leaders. They told me all too 

often they cannot find a qualified skilled workforce to fill job vacancies and this hinders their ability to grow their business. And that 

is why we have been growing at about 1 to 2 instead of 2 to 3, and 

if you get tax cuts, maybe shooting for 4. 

In just the past year, the number of job vacancies grew from 5.5 

to 6.2 million. Job vacancies, 6 million, which is the highest in this 

century. Although large businesses may have the resources to staff 

recruiting departments and offer better wages and benefits, resource-strapped small businesses are left at a significant disadvantage. And that is our job in this Committee, is to pay attention to 

small business. 

For example, according to a recent survey by the National Federation of Independent Businesses, NFIB, 87 percent of small businesses looking to hire workers reported few to no qualified applicants. 

Next to tax and regulatory burdens, finding qualified workers 

has become one of the top concerns for small business owners, if 

not the top. 

This morning we will hear from a distinguished panel of witnesses who will give their perspective on small business labor market issues and hopefully solutions. We will dive deeper into how 

the labor market affects economic growth, how we can help Americans acquire in-demand skills, and how to get disenfranchised 

workers participating in the labor market. 

I appreciate the witnesses being here today. I look forward to 

your testimony. 

I now yield to the ranking member and my good friend for his 

opening remarks. 

Mr. EVANS. Thank you, Mr. Chairman. 

America’s economy has improved since the economic downturn 8 

years ago and most signs of economic gain are promising. Yet significant labor market challenges still exist for small business owners. Even though the United States is experiencing lower unemployment, small employers widely report difficultly finding qualified and skilled workers. 

The gap between the employer needs and worker skills, the imperative to close it has been recognized as an important challenge 

by many business leaders, educators, and policymakers. However, 

the solutions are not simple. 

This gap between the employer needs and the worker skills, 

known as the skills gap, is a particular challenge for small firms. 

They face greater barriers to developing a skilled workforce than 

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3 

their larger counterparts, including fewer financial resources to assist in hiring, retraining, and developing advanced skills. 

For businesses, this reality has dire consequences. Unfilled positions mean they cannot take on more customers and risk losing 

business to competitors who can fill those positions. The manufacturing and the construction sector, in particular, is facing challenging obstacles due to this deficiency. If we aren’t able to meet 

the demands for trained workers, our country will not be able to 

compete globally. 

This troubling trend lacks the attention it deserves, and small 

businesses deserve a better deal. Part of that plan requires targeted postsecondary education, such as skill certificate systems 

which can help small firms secure qualified employees to help them 

grow. Novel partnerships among industry, educators, and policymakers are also playing a role by preparing the workforce and 

incentivizing school completion. Such direct career paths between 

students and employers are vital. 

Too many American workers in small businesses have been left 

behind. That is why creating incentives for training certification 

and apprenticeship programs lead to a better America. We should 

leverage the tools available to us in order to help small businesses’ 

owners thrive with a strong workforce. 

Today’s hearing offers us the opportunity to discuss the challenges and solutions to help our Nation’s job creators prosper. Prudent investments in training and education will also lead to higher 

consumer confidence and demand. 

I look forward to hearing from our witnesses on how we can ensure America’s small businesses are prepared to move our economy 

forward. I look forward to hearing and thanking the witnesses for 

being here. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

Chairman BRAT. Thank you. 

If Committee members have an opening statement prepared, I 

ask they be submitted for the record. 

I would like to take a moment to explain the timing lights for 

you. You will each have 5 minutes to deliver your testimony. The 

light will start out green. When you have 1 minute remaining, the 

light will turn yellow. Finally, at the end of your 5 minutes, it will 

turn red. I ask you try to adhere somewhat to that time limit. We 

are going to probably run an informal shop here today and just 

have a nice conversation. But if your opening remarks can stay in 

that ballpark, that would be great. 

Our first witness is Dr. Michael Farren, a research fellow at the 

Mercatus Center at George Mason University. Dr. Farren’s research focuses include labor and economic development issues. He 

received his bachelor’s, master’s, and doctorate from the Ohio State 

University. I am from Michigan, footnote. 

Thank you for being here this morning, and you are recognized 

for 5 minutes. Thank you. 

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STATEMENTS OF DR. MICHAEL FARREN, RESEARCH FELLOW, 

MERCATUS CENTER, GEORGE MASON UNIVERSITY, ARLINGTON, VA; MR. BRUCE SEILHAMMER, ELECTRICAL CONSTRUCTION GROUP MANAGER, SECCO, INC.; CAMP HILL, PA, 

TESTIFYING ON BEHALF OF THE INDEPENDENT ELECTRICAL CONTRACTORS, INC. (IEC); MR. CARLOS CASTRO, 

PRESIDENT, TODOS, INC., WOODBRIDGE, VA, TESTIFYING ON 

BEHALF OF THE NATIONAL GROCERS ASSOCIATION; MR. 

GARDNER CARRICK, VICE PRESIDENT OF STRATEGIC INITIATIVES, THE MANUFACTURING INSTITUTE, WASHINGTON, 

DC 

STATEMENT OF MICHAEL FARREN 

Mr. FARREN. Thank you very much, Chairman Brat, Ranking 

Member Evans. And thank you for allowing a Buckeye to address 

you today. 

I appreciate the opportunity to discuss the skills gap with you. 

And what I would like, if possible, for you to take away from this, 

my presentation today, is the economic perspective in addressing 

social problems in that the best way to address social problems 

from an economic perspective is to either reduce the cost of the social problem—or the social value—or to increase the cost of the social problem. 

So in the case of training, if we have a skills gap and job applicants applying to businesses, then what we should do is reduce the 

cost or find ways to reduce the cost of acquiring new skills. 

What this does is it allows for a bottom-up approach for individual people to figure out the exact way to solve the individual 

problems facing them and the individual problems facing businesses rather than a targeted mandated approach that says, okay, 

I think we need specifically more science and math, so we are going 

to fund more science and math in particular. But businesses know 

what they need better than we here in Washington. So we should 

give them the ability to figure out what that is particularly. 

So along these lines, I have two policy proposals that might help 

address the skills gap problem. The first is to reform the Tax Code, 

and that is to allow for tax deductions in training investments to 

be counted exactly the same way that tax deductions for factory investments or machinery investments are done. So I am saying that 

to treat human capital investments the same way that we treat 

physical capital investments. 

Currently, businesses can take a tax deduction on improvements 

in machinery or tools or additional training for workers in their 

current job. However, they can’t take tax deductions specifically for 

to train workers into a brand-new job. And so removing that will 

lower the cost of training someone exactly into the exact job the 

company needs and, as a result, should go a long way to actually 

addressing the skills gap, because companies won’t have to wait for 

the exact right worker to come along. They can find a high quality 

applicant and then train then directly into position. 

It also makes training investments less risky for workers, because you are never quite certain if you are going to get a job when 

you engage in training prior to the fact. But if you already have 

a job and the workplace, the company is training you exactly in the 

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5 

way that you need to be trained for the job, you are pretty certain 

that your training is going to be valuable to the company. 

Secondly, something that I think is a good idea is to take a new 

look at disability aid programs and potentially redesign them. The 

important thing that we should do is to keep their valuable safety 

net for people who are unable to work, but look at whether they 

may be causing unintended consequences and inspiring people to 

stay out of the labor market longer than they otherwise would. 

So recent research by Scott Winship with the Mercatus Center 

and my own research going forward looks at this and finds that the 

level of inactivity in the labor market has increased over time. So 

that is the number of people not working and who are not even 

looking for work. 

In particular, over the last 50 years, the rate of inactivity in 

prime-age men, men between the age of 25 and 54, people who you 

would expect to be working, has more than tripled. Today we have 

over 7 million men who are not working and not even looking for 

work. And the major part of this increase has come because of men 

saying that they are disabled and physically unable to work, which 

is surprising given that the health of the general society and the 

number of workplace injuries has declined over time. 

So to the extent that programs are not giving people an incentive 

to rejoin the labor force after they have healed and they could potentially is a problem, might be part of the skills gap problem. And 

importantly, a lot of these workers are in the later half of their career and so they have built up skills and experience that they could 

be teaching to younger workers. So if we address the problem this 

way, we might be able to address the future skills gap problem at 

the same time. 

So in conclusion, I would advise hopefully an economic approach 

to solving problems, looking at the costs of a problem, but also addressing the potential mismatch of allowing for training programs 

to be treated the same way as physical capital investments in factory machinery and redesigning disability aid programs. 

Thank you very much. 

Chairman BRAT. All right. Thank you very much, Dr. Farren. I 

appreciate the testimony. 

I remember after the financial crisis the inactivity piece. Greenspan and Bernanke were asked: What do you think the greatest 

harm from the financial crisis was? And they didn’t say the trillions lost in equity. They said loss of skills. 

Mr. FARREN. Yes. 

Chairman BRAT. Right? Folks being out of the labor market for 

a while, and then reentry is going to be a problem. And so your 

testimony is right on the mark. 

Our next witness is Bruce Seilhammer, Electrical Construction 

Group manager at SECCO, Inc., in Camp Hill, Pennsylvania. This 

morning, Mr. Seilhammer will be testifying on behalf of the Independent Electrical Contractors. At SECCO, Mr. Seilhammer oversees electrical construction projects for the company. He is also a 

preparation instructor for the Master Electrician’s Exam. 

Thank you for being here this morning to share your perspective 

on skills, workforce training. And you may begin your testimony. 

Thank you. 

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6 

STATEMENT OF BRUCE SEILHAMMER 

Mr. SEILHAMMER. Thank you, Chairman Brat and Ranking 

Member Evans and the members of the Subcommittee. I am honored for the opportunity to testify before you today at this important hearing. And as you said, my name is Bruce Seilhammer. I 

am the Electrical Construction Group manager for SECCO in 

Camp Hill, Pennsylvania. And I am here in behalf of the IEC, the 

Independent Electrical Contractors, which I am currently serving 

as the national president, and I am also here on behalf of our chapter in Pennsylvania. 

Based in Alexandria, our IEC association has over 50 affiliates, 

training centers, representing over 2,300 electrical and systems 

contractors nationwide. And our membership consists primarily of 

small businesses, with the average contractors having around 30 

employees, 20 of which are typically the electricians in the field. 

And our purpose really is to establish a competitive environment 

for the merit shop, a philosophy that promotes free enterprise, open 

competition, and economic opportunity. 

Before getting into the workforce challenges faced by the industry, I thought I would give you a little bit of my background. I am 

currently a licensed master electrician, and I am also a veteran of 

the United States Air Force. And I give credit to the Air Force’s 

electrical apprentice program for the skills that have contributed to 

my successful career that I have today. 

I have been with my current company, SECCO, for 24 years, and 

I have risen up through the ranks and become part of the senior 

team where I oversee about 40 of our 90 employees in the construction management position. 

And for decades, IEC has been on the forefront of providing highly trained electricians in the industry, and we are known for our 

registered apprentice program. And it is an earn-while-they-learn, 

and they incur little to no debt and then enter into a job at a median salary of almost $53,000. 

And, again, the IEC’s apprentice program is certified by the Department of Labor, the Office the Apprenticeship and State Apprenticeship Councils. And in addition, the American Council on 

Education has recommended our students that graduate from IEC 

are eligible for 40 semester hours, 40 credit hours for college credits. And so collectively, IEC will train over 10,000 electrical apprentices in 2017. 

As you are probably aware, electrical contractors, like the rest of 

the construction industry, continue to struggle to find qualified 

candidates to fill openings. According to recent research from the 

Associated General Contractors, among the trades, electrician was 

the second hardest position for their members to fill. And this challenge is expected to continue for the coming years, estimating there 

will be about a 14 percent increased demand for electricians 

through 2024. 

Construction employers as a whole are experiencing trouble hiring new workers, with an estimated 500,000 skilled construction 

jobs currently vacant. A number of those different factors have contributed to the workforce shortages. 

One of those is what we talked about, is a lot of the folks have, 

in fact, left during the recession. In addition, much of the skilled 

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workforce is planning to retire in about the next 10 years. Three 

million of the current 14.5 million construction workers are looking 

to retire and leave the industry. And I think the average age right 

now of the construction worker is 54. That is a high average, right? 

So, unfortunately, our industry can’t keep up with the demand. 

The cultural shift in our country over the past few decades has 

definitely had an impact on this. A significant emphasis has been 

placed on young people to attend a traditional 4-year university, 

and a career in the trades is rarely discussed as an option. And 

parents have grown to believe that the primary pathway to a successful career and the American Dream is through a traditional college education. 

Not helping matters is that many jurisdictions judge the success 

of their high schools on the number of students that attend college. 

So these guidance counselors and school officials have less incentive to suggest students consider entering an apprentice program 

like the IEC has to offer. 

This, along with enormous subsidies by the government in the 

form of student loans, has made it easier for students to pay for 

college without fully understanding the massive debt they are incurring and no guarantee of a job that is going to pay off. 

Another factor contributing to the construction industry worker 

shortage is the lack of exposure of young people to skilled trades 

early as a viable career path. Across the country, we are seeing less 

investment in vocational or career technical education, CTE programs in high schools. These programs offer students the opportunity to work with their hands early on. 

And every day, the IEC chapters and contractor members aggressively search for people interested in entering our apprentice program. I can tell you at my company we work with local high school 

Vo-Tech programs and promote the opportunities that come with 

being an electrician. I personally sit on both of the occupational advisory committees for both of our Vo-Techs locally, and we are able 

to hire those folks and bring them on board. 

I know I am running out of time. But, you know, to really address some of the labor shortages in the short term, some of the 

things that we will do as IEC members is we will share labor back 

and forth with our competitors and those kind of things and bring 

on temporary help. And there is a lot to do. And since all of the 

trades work together typically have some impact on each other. 

So I can give you a prime example. We are on a project currently 

that is 2 months behind because the concrete guys didn’t have 

enough help. And you can’t put the rest of the building up without 

the foundation. And those are the things that we are constantly 

running into. 

So I won’t drone on too long. But in closing, I just want to express our willingness to work with this Subcommittee and Congress and the ability to find practical solutions to address the workforce shortage. So I thank you for the opportunity today. 

Chairman BRAT. Thank you very much, Mr. Seilhammer. We 

appreciate your testimony. And I have a couple of questions that 

you provoked some interesting issues for us. 

Our third witness is Carlos Castro, president of Todos, Inc., in 

Woodbridge, Virginia. 

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Thank you for being with us. 

This morning, Mr. Castro will be testifying on behalf of the National Grocers Association. Founded in 1990, Todos Supermarkets 

now has two locations in Virginia which employ roughly 170 people. 

Thank you for being here this morning, and you may begin your 

testimony. Thank you. 

STATEMENT OF CARLOS CASTRO 

Mr. CASTRO. Good morning, Chairman Brat, Ranking Member 

Evans, and members of the Subcommittee. My name is Carlos Castro, and I am the owner of Todos Supermarkets, located in 

Woodbridge, Virginia. I have been asked to testify by the National 

Grocers Association on behalf of the independent supermarket community. The National Grocer Association is the national association 

representing the retailers and wholesalers that comprise the independent sector of the supermarket industry, including full service 

supermarkets, such as Todos, and multistate regional chains. 

Todos Supermarkets was created in 1990 and aims to fulfill the 

needs of an increasingly diverse community. To help better serve 

our customers, we have expanded our offerings beyond groceries 

and offer money transfer services, notary, insurance, and tax preparation services. We even have a U.S. post office in house. 

As the saying goes, good help is hard to find. But at Todos, we 

have a placed an added emphasis on youth hiring practices that 

allow us to train workers and create an inclusive culture that allows us to retain our employees for the long run. Our various offerings have also allowed us to attract a diverse array of talent and 

keep our employees on their toes as our business continues to expand and change. 

But costly regulations often take up too much of our time and resources and have served as a serious barrier to hiring. According 

to National Grocers Association survey data, the average grocer 

can expect to spend between $40,000 and $50,000 a year in regulatory compliance per store per year. In an industry with 1 to 2 

percent profit margin, that is a significant amount of resources to 

be taken away from store improvements, additional staff, or expanded offerings. 

The Affordable Care Act mandate on small business serves as a 

perfect example of regulations with good intentions that have created an additional burden for our businesses. Todos Supermarkets 

was committed to offering healthcare to employees before the 

healthcare law was implemented. We were not only proud that we 

could cover our employees with affordable healthcare, but it was a 

hiring incentive that improved both recruitment and efforts to retain hardworking employees. 

Now that all businesses of our size must offer healthcare plans 

under the ACA, we can no longer use our healthcare program to 

differentiate our company, and our expenses have gone through the 

roof. If Todos had not diversified our offerings, we would certainly 

have been forced to close our doors due to the increasing financial 

strains regulations have caused. 

Congress and the regulatory agencies have taken steps recently 

to lighten the burden on small businesses like mine. The recent 

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Federal District Court order overturning the Department of Labor 

overtime rule, as well as the decision by OMB not to implement the 

EEO-1 pay reporting regulation, have been a step in the right direction. While there is no one single regulation dragging the heaviest on small businesses, the sheer volume of regulation that require compliance is what is holding us back. 

Finally, with a workforce and customer base that is heavily comprised of the Latino population, I feel compelled to address President Trump’s decision to end the Deferred Action for Childhood Arrival, DACA, program. Immigrants who come here children as part 

of families seeking a better life should not be punished for the decision of their parents. Some members of our team utilize the DACA 

program, and they are some of our hardest workers. 

While I understand there is a good argument on both sides as 

to whether DACA passes constitutional muster, it is clear that the 

fate of 800,000 young Latinos is now in the hands of the legislature. I urge Congress to act swiftly to find a solution to this issue 

and to consider the potential harm that could come from failure to 

act, not only to our businesses but communities and families as 

well. 

At Todos, we often say, if you have a positive attitude and work 

hard there is no limit to how high you can rise. With business, it 

should be the same. 

I would ask our representatives to continue to look for opportunities to unshackle businesses from their heavy regulatory burden 

and let businesses like mine see how high we can go. 

Thank you. 

Chairman BRAT. Thank you, Mr. Castro. And your testimony 

shows how all these issues are interlinked, especially with the regulatory examples you gave. We appreciate your testimony. 

And now I will yield to our ranking member for introduction of 

our final witness. 

Mr. EVANS. Thank you, Mr. Chairman. 

I am pleased to introduce Mr. Gardner Carrick. Mr. Carrick is 

the vice president of strategic initiatives at the Manufacturing Institute, a research and policy institute in Washington. He leads the 

institute’s research activities and the development of a national 

education data center to deliver outcome information on education 

programs. 

He previously worked at the U.S. Department of Labor, where he 

worked to integrate the workforce development, economic development, and education strategies of a region to create a talent base 

for economic growth. He attended Carnegie Mellon University, 

which is in the great city of Pittsburgh. He received a degree in 

policy and management. 

Welcome. 

STATEMENT OF GARDNER CARRICK 

Mr. CARRICK. Thank you. Chairman Brat, Ranking Member 

Evans, and members of the Subcommittee, thank you for the opportunity to testify today about the workforce challenges facing our 

small manufacturers. 

As you said, my name is Gardner Carrick, and I am the vice 

president of strategic initiatives at the Manufacturing Institute. 

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We are affiliated with the National Association of Manufacturers, 

which is the largest industrial trade association and voice for over 

12 million men and women that make things in America. 

It is mission of the institute to attract, train, and develop the 

world class talent that manufacturers need to compete in a global 

economy. There are over 250,000 manufacturing companies in the 

U.S. today, and over 90 percent of them have fewer than 100 employees. They provide good jobs in every city, town, and community 

in the country. And today, manufacturing is enjoying a renaissance 

in the U.S. 

Since the end of the last recession, manufacturing companies 

have added over 1 million jobs. And this year alone, companies 

have added nearly 140,000 new jobs. Those are really good numbers for manufacturing in the last 25 years. 

While times are good for manufacturing in the U.S., there is a 

present and growing challenge for manufacturing companies: They 

are unable to find people with the skills for their open positions. 

According to the U.S. Department of Labor, there are nearly 

400,000 open jobs in manufacturing. And a study done by Deloitte 

and the Manufacturing Institute estimated that there could be as 

many as 2 million unfilled positions by 2025. 

So I thought I would use the reminder of my time today to talk 

a little bit about what manufacturers are doing to try to address 

this problem. 

In Tucson, Arizona, a group of 20 small manufacturers formed an 

organization called the Southern Arizona Manufacturing Partners. 

Working with the local high school district, Pima Community College, and the workforce system, they created a 20-month apprenticeship-style program. This innovative program has enabled small 

companies to aggregate their skill demands and hiring requirements, and several dozen students are now participating in the 

program. 

In another example, across 9 states and 20 community colleges 

there is a manufacturing-led program called the Federation for Advanced Manufacturing Education. Originally started by Toyota in 

Kentucky, hundreds of small companies now participate in a fivesemester apprenticeship-style program where students spend 3 

days a week at work and 2 days a week in school learning the 

skills to be an advanced manufacturing technician. This is an excellent example of how larger companies support and partner with 

smaller companies to create the benefits for the entire industry. 

And, Congressman Kelly, Itawamba Community College is one of 

those participants. 

There is also a long-term concern, though, and that is the number of young people willing to consider and pursue a career in manufacturing. This has been a multi-decade challenge for manufacturers, and the Manufacturing Institute is supporting programs that 

help students experience today’s manufacturing in hopes that they 

will pursue careers in the industry. 

Five years ago, the institute and NAM helped create a new nationwide showcase for our industry called Manufacturing Day. 

Companies would open their doors on the first Friday of October 

and invite the community in to see what manufacturing is really 

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all about today. That showcase has now grown to nearly 3,000 

events and over half a million participants last year. 

In southern California, a small aerospace part supplier called 

ACE Clearwater has made Manufacturing Day a really big deal for 

them. Last year, ACE had over 500 parents, teachers, and students 

participate. They brought out exhibits in 3-D printing, virtual reality headsets, and welding simulations and let the students really 

experience what state-of-the-art manufacturing is about. 

And finally, in Pennsylvania there is a competition that pairs a 

team of eighth-grade students with a local manufacturer where 

they interview employees and executives and film the operations of 

the plant. The students then create and narrate a video about what 

is so cool about manufacturing. 

The results in Lehigh Valley have really been stunning. This is 

where the program started. Last year, over 800 people attended an 

awards banquet where they gave awards to the best videos created. 

But most importantly, the manufacturing programs at the local 

technical high school have seen a 60 percent increase in enrollment 

since this program started 5 years ago. 

The video competition has now gone Commonwealth-wide, with 

200 middle schools partnering with 200 manufacturing companies 

to create videos in eight different competitions. A very, very interesting program to gain experience and interest in manufacturing 

for people just as they are starting to decide what career to pursue. 

So, Mr. Chairman, the manufacturing sector has struggled to 

find the right workers, and it is really impacting our ability to 

grow. But companies large and small are creating and participating 

in programs that will solve this challenge. 

Manufacturing Day is on October 6 this year. That is less than 

a month away. And I encourage all of you to try to attend an event 

that day and see what manufacturing is like in your district. 

So thank you for the opportunity to testify this morning on behalf of U.S. manufacturers. 

Chairman BRAT. Thank you very much, Mr. Carrick. We appreciate your testimony. 

And so I will just lead off with a general question. This issue can 

get a little contentious, because there are always two sides, right? 

On the one hand, you are giving me just example, example, after 

example of $50,000 jobs which can’t be filled, right, in great career 

vocations, whatever. You mentioned there is a cultural shift. And 

on the other hand, there are plenty of examples. People say, ‘‘Hey, 

here is this job offer,’’ and people are lined up around the block, 

right? People can’t find jobs, right? 

And so I taught college for a while, and I don’t know right, about 

the culture shift piece, or whatever. I am still kind of a free market 

guy at heart. There is something going wrong when you have got 

$50,000 jobs that aren’t getting filled. 

I just want you to all kind of—what would you do if you are in 

our spot? Is it a cultural piece? Is it a skills piece. The schools— 

the programs you mentioned are great. I applaud all the folks who 

are doing it. And in our K-12 system we all do these little programs, but they are kind of Band-Aids, instead of just a whole systemic change in K-12. 

SBREP-219A with DISTILLER

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Back when I went to K-12, the teachers, no matter what class 

you were in, if you are in English class, they would tell you about 

writing a business memo. But now everyone is just—the only metric that you are measured on is the SOL test score. And like you 

said, the measurement is getting kids to college. I think Mr. 

Seilhammer mentioned that. 

And so if you were us or if you could wave a wand and change 

the cultural component, I mean, what is the big solution that has 

to happen? And think big. I mean, President Trump, he has got a 

bully pulpit, right? He ran a show called ‘‘The Apprentice,’’ right? 

I have I told his people, get out at that bully pulpit, right, and do 

the apprenticeship thing, right? I mean, this is huge. 

But what would you do if you had carte blanche? Where is the 

biggest issue you see? If you all just want to kind of go quickly, 

starting with Dr. Farren and then just go right down the queue. 

Mr. FARREN. Thank you, Chairman Brat. 

I guess the way that I would look at is kind of what you have 

already framed. Steering culture—and I think culture is a part of 

this, because 50, 75 years ago going out and getting a manufacturing job was the ideal—and so steering culture in new directions 

and updating people’s information takes time. The ship doesn’t 

turn on a dime. 

And so I think initiatives like what has been described here 

today, to let people know that new manufacturing isn’t simply 

working with grease and grime and dirt, but it is working with 

computers and it is doing a lot of really skill-intensive work and 

that it is highly lucrative and you don’t have to spend 4 years in 

a university or other—even longer—to get that kind of job is something that we should really emphasize to young people and to raise 

the—Mike Rowe has done a lot of work kind of raising the cultural 

consciousness of manufacturing jobs and dirty—quote, unquote— 

dirty jobs. So I think that it is probably a cultural issue. 

Chairman BRAT. Mr. Seilhammer. 

Mr. SEILHAMMER. Yes. Thank you. 

So a couple of things there. First of all, it is getting involved with 

your schools. As I mentioned, I am involved with both of our VoTechs. 

And I guess one of the fortunate things for me is I get to share 

my story. When I was done with high school, I graduated with honors. I did okay in school. I had no problems. I was tired of the formal classroom, and I went in the military, and I became an electrician there. And that set me up the rest of my life. 

And I can tell you, I get to stand up in front of these kids, and 

I have gone to graduations as the national president and done commencement speeches all over the country this year, and it is pretty 

awesome to see how proud they are to be graduating from a program like this. 

And what is really kind of neat for them to see me is I started 

in those same seats, right? Look where I am today. I am standing 

here on—or sitting here on this panel in front of Congress and giving this testimony. Anything is possible if you get involved. 

And they need to know that you don’t have to go to that 4-year 

college to do something great. It is a matter of being involved and 

paying attention and doing your best and all those things. And 

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13 

those programs that Mr. Carrick talked about, things like that 

matter. Getting involved with the high schools matters. 

And the other side of it, as Mr. Castro talked about, is getting 

rid of some of the regulatory stuff. I can tell you, in Pennsylvania, 

just locally, we are hamstrung by the ratios. We have to have three 

journeymen for one apprentice on a job site. That is three supervisors for one guy. 

Well, let’s face it, the bottom is, when you have three people in 

charge, nobody is in charge, right? When everybody is responsible, 

nobody is responsible. So get rid of some of those regulatory things 

that are making us hamstrung. 

Think about it. If it was a 1-1 ratio—or in Colorado, it is the 

other way, it is 3-1. One supervisor, three apprentices. Holy cow. 

We could put a whole bunch more people to work, couldn’t we? 

Chairman BRAT. Right. Very good. My time has expired. I will 

now yield to the ranking member, Mr. Evans, for 5 minutes. 

Mr. EVANS. Thank you, Mr. Chairman. 

Mr. Carrick, are you familiar with a book called ‘‘Other Ways to 

Win’’? 

Mr. CARRICK. I am not. 

Mr. EVANS. Okay. It was written by a gentleman by the name 

of Dr. Gray in Pennsylvania. I am going to piggyback a little bit 

on what the chairman raised on this larger issue. When he talked 

about other ways to win, he talked about we have sort of like a tradition thinking the way we approach. 

And I am a strong advocate in the area of manufacturing, because in Pennsylvania, as you know, tool and die makers, and we 

are at that critical age of transition in population and how we 

make that particular transition. 

So you point out an example. And I am familiar with Lehigh Valley and what has taken place there. The Delaware Valley Industrial Resource Center, is that a model that you think that could be 

used? 

Mr. CARRICK. I do. I think they have done a lot of good work. 

The Pennsylvania MEP programs, including the Manufacturers Resource Center in Lehigh Valley and DVIRC in the Philadelphia region, both do a very good job. 

Mr. EVANS. Right. Right. Right. 

But do you see—because what I see is sometime taking examples 

and building on those type of examples. So can you speak to a little 

bit about the examples? Because we talk about looking at it from 

a national perspective. 

Mr. CARRICK. Sure. 

Mr. EVANS. And obviously the culture is different State by 

State, location by location. Can you speak little bit to that? 

Mr. CARRICK. Sure. 

So, unfortunately, the examples that I gave are the exception, 

not the norm. There are not enough of these across the country. I 

mean, that includes the apprenticeship approach, whether it is a 

formal register apprenticeship or a more informal system, or the 

ability to aggregate that demand in a region for small manufacturers so that instead of needing 2 jobs, the 10 companies combined 

need 20 or 25, and that gets a lot more attention. 

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14 

So groups like DVIRC and Manufacturers Resource Center are 

there to actually play that sort of coordinator or hub role where 

they can speak for and aggregate the voice of manufacturers in a 

region. 

Unfortunately, there are too few organizations like that across 

the country that are able to successfully aggregate those voices or 

help to navigate the education system. And, frankly, the manufacturers sometimes are unwilling or unable to navigate the educational bureaucracy to successfully set up apprenticeship programs. So groups like DVIRC are important for that. 

Mr. EVANS. But my understanding, in Japan and in Germany 

they used teaching factories. Are you familiar with that? 

Mr. CARRICK. I am. Unfortunately, those systems are different 

from the bottom up. And Chairman Brat mentioned waving a 

magic wand, right? So you would have to really change everything 

from the bottom up to recreate a German or a Japanese style program. 

I think there is an opportunity for us to take what is great about 

America in terms of individual choice and the ability to pursue 

your dreams but still set up the right system such that individuals 

can actually achieve a skill set that enables them to live those 

dreams. 

Mr. EVANS. But would you not agree, if we are going to—you 

know, the President talks about economic growth in the ballpark 

of 3, 4 percent. And, obviously, we haven’t been able to get there. 

Mr. CARRICK. Yes. 

Mr. EVANS. So if we are going to get there, we are at a point 

where we do have to do something radical. Would you not agree? 

Mr. CARRICK. I do. 

Mr. EVANS. Okay. So that is kind of why I talk about Germany, 

I talk about Japan, and what they have done. I mean, clearly, some 

rethinking, redesigning in our thinking. Because if we don’t, you 

know, we can kind of hodgepodge or we can kind of—do we kind 

of go for the gusto is the issue I am really trying to push and raise 

with you. 

Mr. CARRICK. I would love to go for the gusto in terms of the 

intersection or the integration of companies with the education system. But we need to properly incentivize the companies to do so. 

And how that happens is up to you all. But companies take on a 

great deal of risk when they are training individuals, oftentimes 

only to see those individuals leave for other jobs. 

Mr. EVANS. But that sort of fits back to what Dr. Farren talked 

about, is using the Tax Code as an example to make that structure 

change. I assume that is what you are referring to, right? 

Mr. FARREN. Yes, Ranking Member Evans, that is exactly what 

I was referring to, allowing companies to do their own training and 

treating training as if it were investments in factory machines. 

Mr. EVANS. Right. I mean, if we are going to change, and using 

the Tax Code, what I am understanding, using the Tax Code. I 

talked about Germany and Japan. But if you want to make that 

kind of change, you are going to have to do something if you are 

going to get the growth numbers that we talk about as a country. 

Mr. CARRICK. Yes, sir. 

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15 

Mr. EVANS. I thank you and yield back the balance of my time. 

Thank you, Mr. Chairman. 

Chairman BRAT. Thank you very much. 

I would like to recognize the gentleman from Mississippi, my 

good friend, Mr. Trent Kelly. 

Mr. KELLY. And hopefully we won’t need an interpreter for 

these guys, Chairman. Thank you, Mr. Chairman, and our ranking 

member. 

This is a very important issue to me. And I come from an area 

that is booming right now. But we have still got a long way to go 

as far as creating workforce. And Itawamba Community College is 

a huge part of that, as are Northeast and Northwest Community 

Colleges in different areas of my district. But we have a great community college system in Mississippi, which I am a product of and 

a graduate from the educational side. But there are two sides to 

it, and both of them are very, very valuable. 

I grew up in a world where I often heard, ‘‘I am the first member 

of my family to graduate from college.’’ I grew up in a world where 

men were ashamed not to have calluses on their hands to a world 

now where men are ashamed to have calluses on their hands. That 

shows that they have to work hard for a living. But in the world 

that I grew up in, men were embarrassed not to have calluses on 

their hands. 

So it is a traditional shift in what we think is important, and it 

should always be about a ways to an end. Whether you get a college degree or a trade and skill or an apprenticeship, it should be 

about what do I want to do, and it should be about earning power. 

And we have lost that and turned that where people just think 

they need a college education and that college are now just the end. 

It is like, if I get a college education, I am successful. No, you are 

not. That is a ways to an end. 

And so how do we shift that—and I want each of you—to shift 

that where we as Americans now put the earning power and the 

skills that that person brings to the table and we put that on a 

higher plain than we have a college education where everyone 

thinks they need one and deserve one today? 

And we will start with Mr. Carrick and come back the other way, 

since we have left out other folks going the other way. 

Mr. CARRICK. Sure. I think that that is based on some 50- 

years-ago thinking, which was that—and it was only a very small, 

single-digit percentage of the population that earned a college degree. So that really was the ticket to a good job and steady wages 

and a successful life. 

These days there are many different pathways, and it does not 

specifically include a bachelor’s degree. I mean, it includes an associate’s degree, it includes industry-based credentials, it includes an 

apprenticeship. 

So understanding that the educational credential or the path 

does not—there is no single educational path that leads to success 

is the best way, I believe, to ensure respect for all educational 

pathways that can lead to good jobs. 

Mr. KELLY. Mr. Castro. 

Mr. CASTRO. Thank you, Mr. Kelly. 

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16 

We have a gentleman that came to us 7 years ago through a program where I was reimbursed for the wages that I paid the gentleman that came along with another three workers that I acquired 

at that time through that program. He is the only one that stayed. 

Immediately we noticed he started to succeed in his ability to think 

and to thrive. So we pay a lot of attention to him like we do with 

anybody else. But I am happy to tell you that he is making over $100,000 in 

our company. He doesn’t have not even half of an associate degree. 

And I parade him—not just him, but the rest of the people that 

work with me that are in management, that I brought them from 

the ground up—because we are in an industry that people doesn’t 

look up to when they are looking for a career or a job. People my 

age, they will say, ‘‘Oh, I used to bag groceries here and there.’’ You 

don’t hear that anymore on younger people, you know, we have 

made it so easy. 

But my point, when I go to talk to, whether they are elementary 

school students or high school students or grown up, it is all about 

your attitude and how to work that will get you wherever you are. 

And, of course, not to toot my own horn, I just tell them, this is 

what we have achieved as a family, and you can do so, too. 

So we need to change that, and it has been said here all along, 

we need to change that culture. It is hard work that gets you wherever you want to succeed. 

Mr. KELLY. I agree. 

And that is my whole point, Chairman, is my dad had a high 

school education. He was plant manager and very regional in the 

furniture industry because he learned how to work every machine 

in that factory and he got the best at his job and he was a visionary. And he understood the engineering parts of it. He had an engineering mind better than some of the other people who had engineering degrees, even master’s and further degrees. 

We need to get back where it is not what kind of education, it 

is where you want to go and what best gets me that, and it is being 

a visionary and a leader and being the best at your job, whatever 

that trade or skill is, whether it is a college education or welding. 

And I thank you, Mr. Chairman. I yield back. 

Chairman BRAT. Thank you very much. 

At this time, I would like to recognize the gentlewoman from 

Florida and my good friend, Stephanie Murphy. 

Mrs. MURPHY. Thank you, Mr. Chairman. 

And thank you all for your testimony. 

You know, when I go out in my district and I talk to the employers in a wide cross section of businesses, whether it is construction, 

manufacturing, tech, healthcare, even call centers, the number one 

challenge that they tell me they have is recruitment and retention 

of qualified employees. And so I am particularly grateful for your 

perspectives. 

I find it interesting that I am hearing that from employers in my 

district, because I have a district that has probably one of the most 

diverse and robust postsecondary education systems. We have the 

Nation’s largest university, the University of Central Florida, with 

over 65,000 students. We have a couple of community college institutions, Seminole State and Valencia College, and we have a great 

SBREP-219A with DISTILLER

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liberal arts, Rollins College, and then a handful of career and technical education and private institutions. So a really diverse and robust education system. And yet still, when it comes to our labor 

force in the area, the number one issue is recruitment and retention of qualified workers. 

So in Dr. Farren’s testimony, you identified the two possible 

causes of this skills gap that could be related to our education system. And the first is the idea that the schools might not be teaching students the exact skills necessary for the work that the employers need. And the second is the guessing game that students 

have to play when choosing to invest in higher education, because 

they are unable to forecast what skills that will be needed by their 

employers in the future. 

And in a 2012 McKinsey report, it found that 72 percent of higher education institutions believe that graduates are fully prepared 

for the workforce while only 42 percent of the employers agree. So 

that seems to indicate that there is a communications gap between 

higher education institutions and the industries for which the 

schools are ostensibly preparing the students. 

I am working on a piece of legislation now to implement an employer needs survey in which we would collect voluntary feedback 

from employers across industries on workforce needs. And then this 

publicly available feedback would be provided to colleges and universities so that they can make adjustments to their curricula to 

ensure that the graduating students are ready to join the workforce 

on day one. 

Could you all provide your thoughts on whether you think such 

a feedback loop would be valuable in closing that skills gap? And 

then do you think that higher education institutions would be willing to incorporate that kind of feedback into their curricula? And 

then, more generally, have you all had any experience working 

with institutions of higher education to help convey skills needs 

suggestions? 

Thank you. 

Mr. FARREN. Thank you, Representative Murphy. 

So, yes, your idea dovetails very closely with my idea that we 

need to address the costs of acquiring new training. And I think 

that the survey that you propose could be very valuable. But perhaps, going back to my initial suggestion of simply allowing employers to take a tax deduction for training, it wouldn’t have to be 

in-house training. It might be outsourced training. Essentially 

what you would be doing is creating markets for training new 

workers in the same way that has kind of already been discussed 

here, but more official markets for it. 

And what that would do is create a price signal for the local secondary institutions to say, ‘‘Oh, we really need to respond to this 

new demand because there is profit in it for us to respond to that 

demand rather,’’ than them saying, ‘‘Okay, well, we think that our 

employers in our district need more math and science or welding,’’ 

or what have you, and trying to create programs for that, which is 

kind of a roundabout way of solving the skills gap rather than the 

direct way of say what you need and then go out and purchase 

what you need. 

Mrs. MURPHY. Great. Thank you. 

SBREP-219A with DISTILLER

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Any of the others witnesses have comments on that? 

Mr. SEILHAMMER. Sure. I will comment about it a little bit. 

You know, one of the things you asked about is, you know, you 

mentioned that the universities and so on, and then the career 

fields they go into, do they have the skills that they need. And 

what was that, 42 percent said no. 

Well, I can give you a personal experience on that. My son, who, 

sorry to say, graduated from Penn State—actually, I am not sorry 

to say—but he graduated with an electrical engineering degree. At 

the same time he was going to school, he worked for our company 

for 9-1/2 years in the electrical field. And so he has now got a great 

opportunity. He has moved down to Nashville. He is working with 

a $30 billion global company. But he is in a group with 24 new engineers. 

And I have asked him. I said, ‘‘So, you know, in the time that 

you are down there and you are going through this 3-months training program with the new engineers,’’ I said, ‘‘how many times did 

you reference the work that you did in college?’’ 

‘‘Zero.’’ 

I said, ‘‘How many times did you reference the work that you 

have done in the field for the last 9-1/2 years?’’ 

He said, ‘‘Daily.’’ 

So there is a huge gap in what they think they need and what 

they really do need. And that is one of the great things about going 

to the Vo-Tech programs, is some of these folks that are already 

in the electrical program or the mechanics program, whatever they 

are doing, and getting in there and getting them—you know, we 

have got a—we had a young man that co-op’d with us. So while he 

is going through his senior year in high school last year, half a day 

he is coming to our shop and working in our prefabrication shop. 

He is getting experience with tools, terminology, the understanding 

of how things go to together. 

So we are doing our best. I mean, we are a small company. And 

kind of like Mr. Carrick said, you know, jeez, it would be nice if 

everybody was doing this. And then if you want to talk a little bit 

about where could the help be, well, we are a small company, we 

are footing the bill for this. And we pay for all of our apprentice 

classes and everything they go to, and their books. Holy cow, it 

would be nice to have a little help to do that for sure. I mean, fortunately, our company owner is huge on education, and he believes 

in growing people. And so there is a lot to be said for that. 

Mrs. MURPHY. Great. Thank you. Thank you for sharing your 

personal story. 

And I am out of time, so I will yield back. 

Chairman BRAT. I think we can run an informal shop. If you 

want to—did you have any—— 

Mrs. MURPHY. Just if anybody else had any other comments, 

but other than that, yeah. 

Chairman BRAT. Sure. Mr. Castro. 

Mr. CASTRO. I have a comment. I was majoring in industrial engineering when I had to leave El Salvador due to a civil war. So 

I found myself here in D.C., actually in Georgetown, doing dishes 

and toilet cleaning and other kind of stuff. But it was fun, you 

know, make a buck. 

SBREP-219A with DISTILLER

19 

But after I learned English and was able to enter Northern Virginia Community College, which I proudly serve on the foundation 

board nowadays, I didn’t know what to do. So I took some classes. 

One of the classes was called Career Awareness, if I remember it 

well, it was like a century ago. 

But at the end of the class, I was so pleased that, you know, anything that I thought, it was completely wrong. The teacher told me, 

‘‘You have a background in construction, you have a background in 

engineering. Construction is good here in the Washington area. I 

think your easiest way to progress is construction.’’ 

And I did follow their advice, and I worked in construction for 

about 15 years, made my money there, and then we went into the 

supermarket business. 

So I thought that. And everything I always, you know, trying to 

do whatever I can to help Northern Virginia Community College 

because they played a big role in finding my direction. So maybe 

we can do the same for other young adult people to help them find 

the right direction. 

Mrs. MURPHY. Thank you. 

Mr. CASTRO. Thank you. 

Mr. CARRICK. So, Congresswoman, we have thought about what 

you are describing, and we think of it as a signaling problem. 

Essentially, the way the market is set up is that employers indicate the skill set that they need through what amount to want ads, 

right? So I need a welder. Well, you need to unpack what it is that 

you need in that welder in order to actually tell the education system what skill set to train. 

And then you need to aggregate those signals within a given regional economy so that it isn’t just 1 company or 2 companies, but 

it is 40 or 50 or 100 companies whose skill requirements and job 

demands are aggregated, such that they can then properly signal 

both the high schools and the community colleges and the universities and other private training providers that collectively we have 

a demand for 200 welders, 50 percent of whom require this skill 

set, 40 percent of whom require this skill set. 

So I would say there is a need for better clarity in signaling. How 

we actually get there, I think, is the big question. So I am happy 

to discuss further as your bill proceeds. 

Mrs. MURPHY. Great. Thank you. 

Thank you, Mr. Chairman. 

Chairman BRAT. Thank you, Stephanie. 

Thank you, Dwight. 

I want to thank the witnesses for your participation today. Up 

here it is kind of you have got to make some noise. And so I think 

it is valuable to schedule these hearings to remind us of the most 

important issues and just to keep it on our radar. And so don’t go 

away and be quiet. Keep making noise, spreading the new culture 

that we have got to gets to the kids. 

That is the mystery, right? I mean, there is a $50,000 signal 

being sent out in economics land, right? And young people aren’t 

hearing that one. 

And I will just close on a joke. When I taught the kids, I would 

always say, ‘‘What are your plans there, Ms. Johnson or Mr. Smith, 

SBREP-219A with DISTILLER

20 

whoever, and what are you going to do when you are done with college?’’ 

‘‘Well, I am going to go skiing in Colorado for a year or something.’’ 

I am like, ‘‘Okay,’’ right? I get done lecturing on the debt and all 

these issues and they are going to go off. So there is a signal, right, the $50,000 signal is not hitting this 

generation for some reason. So I applaud you for all the good ideas. 

You all gave us very good ideas and input. 

Mr. Seilhammer, quick question. 

Mr. SEILHAMMER. If I could speak to that real quick. I had the 

fortunate ability a couple of years ago, I listened to Bill Bennett, 

who wrote ‘‘The Book of Virtues,’’ and I got to listen to him at Messiah College in Pennsylvania. 

Chairman BRAT. Yeah. 

Mr. SEILHAMMER. And, you know, one of the comments he 

made—you talk about going back to fundamentals, and I share this 

at my commencement speeches that I have done this year—but one 

of the issues is, he says, you know, a lot of people are saying, jeez, 

we need better kids. And the truth and the fact is, no, we need better parents is what we need. So that is as fundamental as it gets. 

Chairman BRAT. Yeah. That might be the signal strengthener 

that we need to put forward. 

So on that note, I mean, help spread the word. Keep us all working together as a team. 

I ask unanimous consent that members have 5 legislative days 

to submit statements and supporting materials for the record. 

Without objection, so ordered. 

Chairman BRAT. This hearing is now adjourned, and thank you 

all very much. And thank you to the staff who always makes this 

possible. 

[Whereupon, at 11:05 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

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Insert offset folio 21 here 26720.001

-~- MERCATUS CENTER 

-~~~George Mason University TESTIMONY 

BRIDGING THE SKILLS GAP 

Michael D. Farren, PhD 

Research Feftow. Study of American Capitalism 

Hearing, House Small Business Committee, Subcommittee on Econornk Growth. Tax, and Capltal Access 

Examining the Sma!! Business Labor Market 

Good morning, Chairman Brat, Ranking Member Evans, and distinguished members of the House Small 

Business Committee's Subcommittee on Economic Growth, Tax, and Capital Access. 

My name is Michael Farren, and I am a research fellow at the Mercatus Center at George Mason 

University. I am grateful for the invitation to discuss issues facing small businesses in the labor market, 

especially the skills gap that some employers encounter. This issue parallels my forthcoming labor 

market research, as well as other research published by the Mercatus Center. 

There is some disagreement among labor market experts over which skills job applicants are lackingor if a skills gap even exists-but the discussion of this issue is a useful opportunity to enhance our 

understanding of the labor market and government policies affecting it. 

I offer two suggestions that may help address the skills gap affecting labor markets for small businesses: 

1. Revise the federal tax code to allow tax deductions for all forms of productivityenhancing investments, including investment in training workers to perform new jobs. 

The federal tax code encourages businesses to increase productivity by allowing tax deductions 

for investments in physical capital.' It also allows tax deductions for improvements to existing 

human capital through education or training. However, it does not allow tax deductions for 

investments that train a worker to do a completely new job. 

2. Revise government aid programs that might be lowering the supply of workers, thereby 

contributing to the lack of skilled workers available. 

There is evidence that participation in state and federal disability benefit programs has grown, 

even as jobs have become safer and the population on average has become healthier. The design 

of such programs may need to be reevaluated to ensure that they are accomplishing their 

important mission without creating unintended consequences. 

1 Or stated more properly, such tax deductions lessen the tax burden discouraging capita! investments. "Capital" in this case 

refers to assets or skills that increase the productive potential of an enterprise. 

For moH" lnfotmation or to meet v:ith the schOI<ir, cont(Kt 

t-1crcatus 

Tile Ideas present eo m tflis docurnt'nt do ,·lot represent offioal posrtio1 :; of the Mercatus Center or George Mason Univen·1ty. 
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IS THERE A SKILLS GAP? 

The first question that needs to be addressed is what is meant by a "skills gap" and whether one actually 

exists in the first place. This is important because the determination of what skills are missing depends 

on whom you talk to. The skills gap is often conceived of as being a lack of technical knowledge, such as 

familiarity with computer software or healthcare training. 2 For example, the National Federation of 

Independent Business reported that 45 percent of small businesses surveyed in early 2017 were unable 

to find qualified job applicants.' In addition, a 2016 survey released by workplace analytics firm 

PayScale and executive development firm Future Workplace found that a majority of hiring managers 

believed that recent college graduates lacked functional skills, such as critical thinking and writing 

proficiency4 Furthermore, much discussion has revolved around a deficit in "soft" skills such as 

teamwork, communication, and work ethic. 5 

Responding to this, some researchers and commentators have suggested that the skills gap is actually an 

"awareness gap," because it is difficult for job applicants to communicate their talents and abilities to 

employers.6 Similarly, others propose the issue is best understood as a coordinati~n problem between 

an employer's specific needs and workers' training? Recent academic research supports this idea, 

finding that the skills gap is confined to a minority of companies needing workers with highly 

specialized skills, rather than a systematic skill deficiency across the entire workforce." 

CAUSES OF THE SKILLS GAP 

It's possible that all these diffL•rent perspectives are accurate. :-.Je\:vly g-raduated workers may have 

focused too much on excelling in their individual schoolwork, to the detriment of learning how to work 

effectively in a team environment. Furthermore, the teen employment rare began a precipitous decline 

around the year 2000, meaning that workers from the "millennia!" generation would tend to have Jess 

work experience than workers from predous generations. The shift toward additional schooling and 

away from early employment could contribute to the observed gap in "soft" skills! 

At the same time, schooling might not be teaching students the exact skills necessary for the work that 

employers need done. This would he especially true if the job requires software expertise that rapidly 

changes every few years10 Some employers' hiring processes may contribute to the problem by being 

overly focused on applicants' technical thereby screening out job candidates who have strengths 

in other areas or better-developed soft skills. 

Furthermore, because the modern economy tends to reward skill specialization rather than broadbased expertise. vvorkers may seek a narrcnvly focused mastery rather than an expansive skill set. This 

\VOt!ld support the argument that manufacturers in particular are having a difficult time finding 

2 Jon Swartz, "Busmesses Say They Just Can't Find the Right Tech Workers," USA Today, March 28, 2017. 3 Rob Kaplan, "America Has to Close the Workforce Skills Gap," Bloomberg, April12, 2017. 4 Jonathan Berr, "Employers: New College Grads Aren't Ready for Workplace," Moneywatch, CBS News, May 17, 2016; Payscale 

and Future Workplace, "2016 Workforce· Skills Preparedness Report," May 17, 2016, http://www.payscale.com/data·packages 

/job-skills. 

s Lydia Dishman, "These Are the Biggest Skills That New Graduates Lack," The Future of Work, Fast Company, May 17, 2016: 

Payscale and Future Workplace, "2016 Workforce-Skills Preparedness Report." 6 Ryan Craig and Troy Markowitz. "The Skills Gap Is Actually an Awareness Gap-- And It's Easier to Fix," Forbes, May 17, 2017. 7 Andrew Weaver, "The Myth of the Skills Gap," Business Impact, MIT Technology Review, August 25, 2017. 8 Andrew Weaver and Paul Osterman. "Skill Demands and Mismatch in U.S. Manufacturing," ILR Review 70, no. 2 (March 1, 

2017): 275-307. 9 ln defense of "millennlals," however, it should be considered whether every generation of managers might generally view the 

generation of youthful workers as being somewhat deficient compared to their own generation. 

James Bessen, "Employers Aren't Just Whining- the 'Skills Gap' Is Real," Harvard Business Review, August 25, 2014. 11 Ryan Craig, "Blame Bad Applicant Tracking for the Soft Skills Shortage at Your Company," TechCrunch, March 5, 2017. 

2 
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workers who have the right combination of skills-.. ·practkal, tO<lH.tstng 

tenrrnvork aptitude-needed to he effective in modern manufacturing. 

IT expertise: and 

Unfortunately. other problems may also be contributing to the existence of a skills gap.llefore workers 

choose to invest in schooling or training to develop new skills. they need to have a reasonable 

expectation that the investment will pay off. Essentially, workers face a guessing game wherein they 

have to forecast what skills will be needed hy employers in the future. In this case, guessing wrong can 

actually be worse than not playing the game at all. It might result in workers' time investment being 

wasted. squandering the earnings and the skills they could have developed at different jobs. Even 

worse, they may have financed the education with loans, leaving them with deht in addition to 

unm<lrketable skills. As a result. workers will tend to avoid investing in skill acquisition that doesn't 

have a high likelihood of paying otl 

There is some evidence that many younger workers have inJeeJ "guessed wrong." Over the past 

decades there has been a rise in 1'underemployment"-highly trained or educateJ persons working in 

johs that do not require the college degrees or training certifications they possess13 This suggests that 

many workers have indeed paid for education investments that, to some degree, were wasted. t

4 

A contributing factor to the skills gap could be the declining labor force participation rate (LFPR). The 

national prime-age male LFPR has declined from around 96 percent in 1970 to 88.5 percent in 2016. 

IVfost of the decrease corresponds to more men reporting problems \vith physical or mental disability 

and a corresponding inability to work. 16 If the men leaving the workforce arc generally older and more 

experienced. especially in jobs that are increasingly technical-skill intensive like mining, 

manufacturing. and construction, then their absence might contribute to a skills gap, especially if they 

\vould have been responsible for training less experienced workers. 

Forthcoming research from the !Vlercatus Center suggests that increased participation in state and 

federal disahi!ity benefit programs is correlated with the number of prime-age men reporting that 

disability prevents them from working, The increased participation in disability benefit progrnms has 

occurred despite falling mortality and injury rates and general improvements in health status for primeage men, 17 If government aid programs have contributed to reduced labor force participation, and if 

those workers leaving the labor force are more likely to be experienced or otherwise higher skilled, 

then such prog.1'ams may bear sonw responsibility for the skills gap that err1ployers face. 

"Jeffrey J. Selingo, "Wanted: Factory Workers, Degree Required," New York Times, January 30, 2017, Education Life. 13 Alexia Eleja!de-Ruiz, "Nearly Half of U.S. Workers Consider Themselves Underemployed, Report Says," Chicago Tribune, June 

28, 2016. 14 This situation might simultaneously indicate that employers in general did not need the number of workers with the given 

degrees or training certifications-that the skills were indeed valuable, but job seekers oversupplied the market. However, this 

explanation is essentially equivalent to saying that some workers, though not all, made the wrong education investment On the 

other hand, it should be noted that advanced education, even if it is not relevant to the job in question, may be a signal to the 

employer of a generally higher"qua!ity worker, giving those candidates who invested "wrongly" an advantage over other 

candidates who did not make the "wrong" decision. 15 Prime-age men-those between the ages of 25 and 54-are generally expected to have the highest LFPR. Women's prime~ 

age LFPR peaked in the late 1990s and has slightly declined since that time. Scott Winship, "What's Behind Declining Male 

Labor Force Participation: Fewer Good Jobs or Fewer Men Seeking Them?" (Mercatus Research, Mercatus Center at George 

Mason University, Arlington, VA, forthcoming). 16 It should be noted that some decrease in the prime-age male LFPR has been owing to men retiring early or leaving the 

workforce owing to family responsibilities, but increasing disability by far represents the largest driver of declining LFPR; 

Winship, "What's Behind Declining Male Labor Force Participation?" 11 Winship, "What's Behind Declining Male Labor Force Participation?" 

3 
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SOLUTIONS TO THE SKILLS GAP 

·what, then, can government do to solve tlw skills gap in the labor market? The answer might be "Not 

much." This is because the modern American economy is continuously undergoing (/creative 

destruction" in industries. The constant developn1ent of new technologies and introduction of 

information to established production processes results in a constant churn tov/ard nevv 

methods of production. As a result of this process. workers in many industries must regularly update 

their skills to be able to use the next technological improvement. This kind of economy by its very 

nature creates an ongoing skills gap as producers need workers n·ained for the latest iteration of the 

production process. 

However, this kind of skills gap is actually a very good thing. The degree to which innovation and its 

corresponding technological development are driving the skills gap is an encouraging signal of the 

strength of the American economy. The last thing we should want is an economy which advances so 

slowly that most workers can go their entire careers without upgrading their knowledge and skills. This 

ldnd of economy would have fev,.rer irr1provements in healthcnre) communications, transportation, and 

manufacturing, leading to a country that is unhealthy. energy inefficient, and less environmentally 

sustainable. 

Agricultme represents a good es ample of how the application of increased knowledge and technology 

has revolutionized an industry and benefited the nation. In 1900, 41 percent of the US workforce 

worked in agriculture. Jly 2000 that share had fallen to L9 percent, even while productivity more than 

doubled in just the last 50 years of that time period. 19 And similar to the changes in technology in the 

modern economy, agriculture shifted from using 22 million work animals in 1900 to using 5 million 

tractors in 2000.20 Now farmers are even using information technology to more accurately plant and 

1vater crops, as well us apply pesticide nnd fertilizer in tnore appropriate amounts, resulting· in less 

waste and more sustainable farming practices. All of this has required farmers to be open to 

continuous updates to their kno\vlcdgc and training. 

Ho\.vever, there are several areas in which government policy can indeed help solve the skills gap. As I 

have illustrated, face a risky skills investment problem that inhibits them from investing in 

their "human capital. Reforming existing policy can help reduce the riskiness of this investment in 

several different ways: 

L Current tax law allows employers and employees to deduct the cost of training and education 

that makes workers more productive in their current positions. This is similar to the Jeduction 

allowed for purchases of physical capital that enable higher productivity. However, this 

deduction is specifically prohibited for investments in human capital that prepare a person to 

take on a wholly new type of work." This might help explain the fact that relatively few firms 

budget for employee training progTams.21 

18 The term "creative destruction" was popularized by Joseph Schumpeter: "The opening up of new markets, foreign or 

domestic, and the organizational development from the craft shop to such concerns as US Steel illustrate the same process of 

industria! mutation-if ! may use that biological term-that incessantly revolutionizes the economic structure from within, 

incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact 

about capitalism." Capitalism, Socialism, and Democracy (New York, NY: Harper and Brothers, [1942]1950), 83. 

" US Department of Agriculture, The 20th Century Transformation of US Agriculture and Farm Policy, June 2005. 20 Ibid. 21 US Department of Agriculture, Farm Profits and Adoption of Precision Agriculture, October 2016. 22 Human capital is a general term for investments in education or training that make a person more productive, in much the 

same way that investments in physical capital (e.g., machines) can make a factory more productive. 23 Internal Revenue Service, Publication 970, Chapter 72: Tax Benefits for Education, 2016. 24 Udemy for Business, At the Breaking Point: The State of Corporate Training Programs in America, March 26, 2015. 

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1f tax laws \Vere chang(~d to allov.r either workers or employers to deduct the cost of training to 

perform a new job, then employers ·would have much greater incentlve to offer the specific 

firm requires. rather than expecting the employee to start with all oft he requisite 

2. To the extent that current government aid programs inappropriately reduce the of 

skilled workers. should be reformed to remove the disincentives they create. 

Importantly. the should be to ensure that those who are truly disabled are appropriately 

supported while encouraging those who can work to do so. 

CONCLUSION 

It seems indisputable that a skills gap does exist in the labor market, but importantly, this issue is 

probably best characterized as being unique to each company. And since each individual firm has the 

best information on what particular skills it needs, the best path forward from a government policy 

perspective would be to change tax laws to encourage companies to invest in worker training. 

Importantly, though, any tax code changes should be broadly based and available to all workers and 

employers, rather than favoring some industries or skills over others. Additionally, programs and 

policies that reduce the potential workforce available to employers should be reformed. 

Lastly, policymakers should keep firmly in mind that a skills gap may not be entirely a bad thing, if it is a 

symptom of a robust and innovative economy. Among all economic problems, this is a good one to have. 

25 lmportantly, such training programs, if provided using tax deductions, should not have stipulations attached to the training, 

such as minimum tenure requirements or noncompete contracts. Such conditions would result in a decreased dynamism in the 

labor force, meaning that workers would be inhibited from moving to the companies where they would be the most productive 

(and similarly, companies might inadvertently keep less productive employees). This would result in decreased economic 

growth. Furthermore, disallowing such stipulations for training increases the competitiveness of the labor market by reducing 

the bargaining power of employers. This means that they would have to focus more on keeping employees voluntarily through 

wage Increases, benefits, and healthy working environments. 

Additionally, existing tax law generally requires that deductions for investments in physical capital be taken over time, 

rather than in the year in which the investment is made. This is reasonable for physical capital, which is property owned by the 

firm. However, investments in human capital cannot be owned by the firm and contain an inherent risk of loss if the employee 

leaves the firm, suggesting that human capital investments should be allowed to be fully deducted in the year in which they are 

made. 

26 Scott Winship, "How to Fix Disability Insurance,'' National Affairs, 2015. 
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Testimony 

of 

Bruce L. Seilhammer 

Electrical Construction Group Manager 

SECCO Electrical Construction & Service 

On behalf of the 

Independent Electrical Contractors 

Hearing 

on 

;{Examining the Small Business Labor Market" 

Before The 

Small Business Subcommittee on 

Economic Growth, Tax, and Capital Access 

United States House of Representatives 

September 7, 2017 
27 

Chairman Brat, Ranking Member Evans and Members of the 

Subcommittee, I’m honored for the opportunity to testify before you 

today at this important hearing, ‘‘Examining the Small Business 

Labor Market.’’ My name is Bruce Seilhammer. I am the Electrical 

Construction Group Manager for SECCO Electrical Construction & 

Service, based in Camp Hill, Pennsylvania. I’m here today on behalf of the Independent Electrical Contractors (IEC), of which I’m 

currently serving as president, as well as my chapter, Central 

Pennsylvania IEC, which is located in Mechanicsburg, Pennsylvania. 

Based in Alexandria, Virginia, the Independent Electrical Contractors is an association of over 50 affiliates and training centers, 

representing over 2,300 electrical and systems contractors nationwide. IEC’s membership consists of primarily of small businesses, 

with the average contractor member having around 30 employees, 

20 of which are electricians. IEC’s purpose is to establish a competitive environment for the merit shop—a philosophy that promotes free enterprise, open competition and economic opportunity 

for all. IEC and its training centers conduct apprenticeship training programs under standards approved by the U.S. Department of 

Labor’s (DOL) Office of Apprenticeship. Collectively, in the 2017 

school year, IEC will train more than 10,000 electrical apprentices. 

Before getting into the workforce challenges faced by the electrical contracting industry, I though I’d give you a little bit about 

my background. I am a licensed master electrician and a veteran 

of the United States Air Force. As a young high school graduate, 

I was like many, unsure of my career path. Tired of the traditional 

classroom setting, I took an interest in joining the armed forces 

and ultimately joined the United States Air Force in 1982, entering 

their apprenticeship program for electricians. The on-the-job training (OJT) and related classroom instruction provided me the education and skills necessary to become a journeyman electrician. 

Upon my honorary discharge from the service in 1986, I then 

passed the Connecticut journeyman’s test and received my license. 

I give credit to the Air Force’s apprenticeship program for the 

skills that have contributed to the successful career I have today 

in the private sector. I have been with my current company, 

SECCO, Inc., for 24 years and have risen through the ranks to become a part of its senior team, where I oversee over 40 of the company’s 90 employees in a construction management position. 

For decades, IEC has been on the forefront providing highly 

trained electricians to the industry through its Registered Apprenticeship program. An IEC apprentice is able to earn while they 

learn, incurs little to no debt and enters into a well-paying job 

upon graduation. According to the Bureau of Labor Statistics 

(BLS), the median salary for an electrician in 2016 was $52,720. 

IEC’s apprenticeship program is certified by the U.S. Department 

of Labor’s (DOL) Office of Apprenticeship and State Apprenticeship 

Councils for use in 38 states and the District of Columbia. In addition, the American Council on Education (ACE) has recommended 

that students that graduate IEC be eligible for 40 semester hours 

of college credit. IEC is also a member of DOL’s Registered ApprenSBREP-219A with DISTILLER

28 

ticeship - College Consortium (RACC), a national network of postsecondary institutions, employers, unions and associations working 

to create opportunities for apprentice graduates who may want to 

further enhance their skills by completing an Associate’s or Bachelor’s Degree. RACC members have their programs evaluated by a 

third party organization to determine the college credit value of the 

apprenticeship completion certificate. Given its experience and investment in apprenticeship, IEC continues to work with the federal 

government, as a LEADER (Leaders of Excellence in Apprenticeship, Development, Education, and Research) in DOL’s 

ApprenticeshipUSA program. 

As you are probably aware, electrical contractors, like the rest of 

the construction industry, continue to struggle to find qualified 

candidates to fill openings all across the country. According to recent research from the Associated General Contractors, among all 

the trades, electrician was the second hardest position for their 

members to fill. This challenge is expected to continue in the coming years, with BLS estimating there to be a 14 percent increase 

in demand for electricians through 2024. Construction employers as 

a whole are experiencing trouble hiring new workers with an estimated 500,000 skilled construction jobs currently vacant. 

A number of different factors have contributed to the current 

workforce shortages in the electrical contracting industry. One of 

those is the fact that many left during the recession and never returned. In addition, much of the skilled trades workforce is retiring 

or is approaching retirement. According to former BLS economist 

Joseph Kane, about three million of the current 14.5 million construction workers will retire or leave the industry over the next ten 

years. Unfortunately, our industry cannot keep up with the demand. The cultural shift in our country over the past few decades 

has definitely had an impact on this. A significant emphasis has 

been placed on young people to attend a traditional four-year university, and a career in the trades is rarely discussed as an option. 

Parents have grown to believe that the primary pathway to a successful career and the American dream is through a traditional college education. Not helping matters is that many jurisdictions 

judge the success of their high schools on the number of students 

that attend college. In areas where this is the case, guidance counselors and school officials have less incentive to suggest students 

consider entering an apprenticeship program, like IEC. This, along 

with enormous subsidies by the government in the form of student 

loans, has made it easier for students to pay for college without 

fully understanding the massive debt they are incurring and no 

guarantee of a job to pay it off. 

Another factor contributing to the construction industry’s worker 

shortage is the lack of exposure of young people to skilled trades 

early as a viable career path. Across the country, we are seeing less 

investment in vocational or career and technical education (CTE) 

programs in high schools. These programs offer students the opportunity to work with their hands early on. They begin to understand 

what subjects interest them and these hands-on programs could influence their post-secondary education decisions. IEC views this as 

a missed opportunity to expose students to the skilled trades at an 

SBREP-219A with DISTILLER

29 

influential time in their lives, and is why it’s critically important 

that Congress increase funding for CTE programs through mechanisms such as the Carl D. Perkins Act, which the House passed 

earlier this year. 

Every day, IEC chapters and contractor members aggressively 

search for people interested in entering our apprenticeship program 

to become the electricians of the future. At my company, we work 

with local high school Vo-Tech programs to promote the opportunities that come with being an electrician, and I personally sit on the 

occupational advisory committee at both of our local Vo-Tech 

schools. Just this year, we hired four students from these schools 

and we’re looking for more. IEC’s chapters also recruit students by 

reaching out to tech schools, placing ads online, and contacting 

high schools to promote electrical contracting careers. In the past 

year, IEC National launched myelectricalcareer.com, which promotes electrical careers to young people through sites such as 

Facebook and Pandora. 

When recruiting candidates for an electrician apprenticeship, 

IEC members have trouble finding people that are qualified to 

enter the program. Becoming an electrician requires a high school 

diploma or GED. Candidates also must possess solid math skills, 

and members continue to find that many interested in our opportunities do not possess the requisite mathematical ability to advance 

as apprentices. It’s also becoming more common that young people 

interested in an electrical career lack basic ‘‘soft skills’’ and don’t 

understand what it means to be punctual, communicate effectively, 

or act professionally in a work setting. 

To address labor shortages in the short term, IEC members will 

sometimes take steps that are less than ideal. Some members will 

loan electricians to a competitor or will utilize temps, typically as 

a last resort. Regardless, it is currently difficult for IEC members 

to find qualified journeymen electricians. These workforce challenges we face hurt our member companies’ ability to expand and 

provide the services their respective communities need. Currently, 

my company has 28 electricians, but we could easily use five more 

journeymen. But with a limited availability of qualified electricians, we have to grow our own through apprenticeship. Unfortunately, we are hamstrung by the state of Pennsylvania, which requires we maintain a ratio of three journeymen to one apprentice 

on all our projects. Government-mandated ratios vary across the 

country, and serve as artificial restrictions that prevent us from 

training the future electrician and help to close this skills gap. On 

a broader scale, with hundreds of thousands of construction jobs 

going unfilled year after year, this type of restriction on the industry will eventually start to impact our ability to build, repair and 

maintain our country’s infrastructure, schools, businesses, factories 

and more. This inability to hire and train more people will have a 

detrimental effect, not only on the construction industry, but on the 

country as a whole, as repairing the country’s infrastructure will 

take longer and increase the cost to the tax payer. 

Since all the trades work together or typically have some impact 

on each other on construction projects, the skilled worker shortage 

SBREP-219A with DISTILLER

30 

faced by other trades can impact us as well, leading to missed completion dates and increased costs by having to work overtime. One 

project we are currently working on is two months behind schedule 

because the concrete crews were short on labor. One IEC member 

in Florida reports that 80 percent of their projects are delayed due 

to labor shortages. Unfortunately, this kind of delay due to a lack 

of qualified workers in the trades has become all too common in the 

industry. 

By virtue of recent hearings, such as the one here today, IEC is 

optimistic that legislators are becoming more interested in developing public policy that will further assist the skilled trades close 

the skills gap and increase the number of men and women entering 

construction apprenticeships, like IEC’s. We are also excited by the 

Trump administration’s executive order, which seeks to double federal apprenticeship funding to $200 million, with a goal of creating 

5 million apprentices in the next five years. However, we are concerned that language within the executive order will preclude the 

industry from benefitting. IEC believes the EO should cover construction, especially considering the significant labor shortages in 

the industry and the opportunity expanding construction apprenticeships affords to place people into quality, high-paying careers. 

In closing, I want to express IEC’s willingness to work with Congress and the Trump administration to find practical solutions to 

address the workforce shortage faced by merit shop electrical contractors and the construction industry as a whole. Thank you for 

this opportunity today to explain the labor challenges IEC continues to address and I look forward to answering any questions 

you may have. 

SBREP-219A with DISTILLER

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Prepared Testimony and Statement for the Record of 

Carlos Castro, Founder, Todos Supermarkets 

Hearing on 

'·Examining the Small Business Labor Market" 

Before the 

House Small Business Committee 

Subcommittee on Economic Growth, Tax and Capital Access 

September 7, 2017 

2360 Rayburn House Office Building 

Washington, DC 
32 

Good morning Chairman Brat, Ranking Member Evans, and 

Members of the Subcommittee. My name is Carlos Castro, and I 

am the owner of Todos Supermarkets, located in Woodbridge, Virginia. I have been asked to testify today National Grocers Association (NGA) on behalf of the Independent supermarket community. 

The National Grocers Association is the national trade association 

representing the retailers and wholesalers that comprise the independent sector of the supermarket industry, including single fullservice supermarkets such as Todos, and multi-state regional 

chains. 

Todos Supermarkets was created in 1990 and aims to fulfill the 

needs of an increasingly diverse customer base. To help better service our customers, we have reshaped our offerings beyond groceries 

and offer money transfer, notary, and tax preparation services. 

As the saying goes ‘‘good help is hard to find,’’ but at Todos, we 

have placed an added emphasis on youth hiring practices that 

allow us to train workers and create an inclusive culture that allows us to retain our employees for the long-run. Our numerous 

new offerings have also allowed us to attract a diverse array of talent and keep our employees on their toes as our business continues 

to expand and change. To help with difficult hiring and training 

challenges, NGA plays a key role in the supermarket sector by providing resources, educational training programs, and sharing industry best practices with its members that we need to hire, train 

and retain a highly qualified workforce. 

But costly regulations often take up too much of our time and resources, and pose as a serious barrier to hiring new talent. According to NGA survey data, the average grocer can expect to spend between 40 and 50 thousand dollars a year on regulatory compliance 

per store, per year. In an industry with a 1-2 percent profit margin, 

that is a significant amount of resources to be taken away from 

store improvements, additional staff, or expanded offerings. Forty 

to fifty thousand dollars may not sound significant in Washington, 

but for an independent grocer, that can be enough to put a struggling grocer out of business, or prevent a competitive grocer from 

hiring new workers or renovating existing operations in order to 

keep pace with the competition. 

The current regulatory environment has stifled innovation and 

small business growth by forcing us to focus resources on complying with the tidal wave of regulations, instead of our day-to-day 

operations. For the independent supermarket sector, it is often 

hard to keep up with the sheer volume of regulations that have 

been recently finalized, let alone worry about the number of potentially harmful regulations going through the rulemaking process. 

Regulatory agencies should focus on evaluating the rules that are 

currently on the books and ensure that they are necessary and effective, instead of churning out new regulations whose costs outweigh the potential benefits. NGA supports the recent Executive 

Order requiring agencies to cut two existing regulations for every 

new regulation they implement. We believe this directive will require regulators to do their due diligence and determine what rules 

SBREP-219A with DISTILLER

33 

are truly in the public interest, and which ones have either outlived their usefulness or have become a drag on economic growth. 

Obamacare mandates on small business serve as a perfect example of a regulations with good intentions that have created an additional burden for our business. Todos Supermarkets was committed 

to offering health care to employees before the health care law was 

implemented. We were not only proud that we could cover our employees with affordable healthcare, but it was a hiring incentive 

that improved both recruitment and efforts to retain hardworking 

employees. Now that businesses of our size must offer health care 

under the Affordable Care Act, we can no longer use our previous 

health care program to differentiate our company from the competition, and our expenses have gone through the roof. 

The revised joint employer standard from the National Labor Relations Board is another well-intentioned regulation that misses 

the mark. Holding businesses accountable for potential labor infractions committed by businesses with which they contract is taking enforcement too far and creates a dangerous precedent and 

standard that is impossible for businesses to maintain. It is challenging enough for businesses to comply with the mountain of regulations that face us, but penalizing businesses for the infraction of 

their potential contractors creates a precarious environment and 

disincentivizes businesses from contracting with outside operations. 

Until the federal district court in Texas overturned the Department of Labor’s overtime rule, the rule presented a serious challenge to our business. The potential doubling of the salary threshold, and further automatic updates to the exemption threshold 

would have created an untenable situation for small supermarkets. 

At Todos, we believe in a philosophy of creating opportunities for 

our workers and fostering an environment that encourages our 

team members to remain with the company for years. However, we 

believe that the rule would have created a disincentive to working 

efficiently and effectively. It had the potential to have a substantial 

negative effect on morale as some workers would need to be reclassified as hourly employees, after having worked for years to earn 

a salaried status and getting to enjoy the additional flexibility this 

designation brings. We are thankful that the rule has been overturned, and will likely be reevaluated to take into account regional 

differences in average salary before being rewritten. 

Todos was also pleased to see that the Office of Management and 

Budget (OMB) decided not to move forward with a regulation put 

forth by the Equal Employment Opportunity Commission (EEOC) 

regarding pay data. The regulation would have required that employers provide pay data for employees based on gender, race, ethnicity, etc., with the aim of discouraging pay discrimination. While 

Todos is firmly committed to paying our workers a living wage and 

in accordance with all federal pay regulations, the EEOC regulation would have captured data without context and could have 

made it appear as though an employer was participating in discriminatory pay practices despite variances in candidate experience, education level, or other candidate considerations. 

SBREP-219A with DISTILLER

34 

Congress and the regulatory agencies have taken steps recently 

to lighten the burden on small businesses like mine. The recent 

court order to prevent the implementation of the overtime rule, and 

the decision by OMB to not implement the EEO-1 pay reporting 

regulation have been a step in the right direction. While there is 

not one single regulation dragging the heaviest on small business, 

the sheer volume of regulations that require our compliance is 

what holds us back. These burdens both increase the barrier to 

entry for entrepreneurs aspiring to enter the market and prevents 

existing businesses from expanding or improving their current operations. We must change the overall regulatory attitude to one of 

reevaluation instead of continued expansion. 

Additionally, if Congress hopes to improve the current environment for small business, it should continue working towards tax reform. Congress took an important step in 2015, making a number 

of tax provisions permanent, such as Section 179, which provides 

small businesses with the flexibility they need to make large purchases and expense the cost of those purchases in the first year. 

However, Congress kicked the can down the road for many other 

tax provisions that are important to independent supermarkets. 

Unfortunately, Congress has a tendency to pass retroactive fixes 

to the tax code, which hinders our ability to invest in our future 

with any degree of certainty. 

As Congress turns its attention to tax reform this fall, we ask 

that Congress listen to the voice of small business. It is important 

to remember the fact that every period of sustained economic 

growth in our nation’s history can be attributed to the success of 

small businesses. With this in mind, I believe repeal of the estate 

tax is critically important. As my business grows and I approach 

the current threshold, I worry that I am going to have to pay the 

tax. The planning issues that surround this punitive tax draws resources away from hiring employees and investing in our business. 

Congress must also ensure parity between pass-through entities, 

like Todos, and business that file as C-corps. In order to guarantee 

robust competition between businesses of all sizes, Congress should 

tax family-owned businesses fairly and equally, regardless of how 

we decide to file our taxes. Many NGA members also rely on key 

tax provisions such as the Last In, First Out (LIFO) accounting 

method and deductibility of interest expenses. 

Finally, with a workforce and a customer base that is heavily 

comprised of a Latino population, I feel compelled to address President Trump’s decision to end the Deferred Action for Childhood Arrivals (DACA) program. Immigrants that come here as children as 

part of families seeking a better life should not be punished for the 

decisions of their parents. Some members of our team utilize the 

DACA program, and they are some of our hardest workers. While 

I understand there are good arguments on both sides as to whether 

DACA passes constitutional muster, it is clear now that the fate of 

800,000 young Latinos is now in the hands of the legislature. I 

urge Congress to act swiftly in finding a solution to this issue, and 

to consider the potential harm that could come from a failure to 

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35 

act—not only to our businesses, but to communities and families as 

well. 

All supermarkets face a challenging landscape. The current market is saturated with competitors that already challenge each other 

to gain a foothold and turn a profit. Now, with goliaths such as 

Amazon, Target, and Walmart in the market, that challenge has 

become even more significant for smaller operators. However, history has shown that independent supermarkets are both resilient 

and flexible in keeping up with competition. I am confident in the 

ability of our company and other independent grocers to adapt and 

innovate in response to changing consumer demands and a fiercely 

competitive marketplace. 

On behalf of Todos, the National Grocers Association, and the 

independent supermarket industry, I would like to reinforce our 

commitment to hiring, training, and retaining the best talent possible. We aim to provide our communities with service and products that are of the highest quality, and we know that this can only 

be achieved by hiring good people, and treating them like family. 

At Todos, we often say ‘‘if you have a good attitude and work 

hard, there is no limit to how high you can rise.’’ With business, 

it should be the same. I would ask our elected representatives to 

continue look for opportunities to unshackle businesses from their 

heavy regulatory burden, and let businesses like mine see how high 

we can go. 

Thank you, 

Carlos Castro 

Founder, Todos Supermarkets 

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36 

TESTIMONY OF GARDNER CARRICK, VICE PRESIDENT, 

STRATEGIC INITIATIVES 

THE MANUFACTURING INSTITUTE 

BEFORE THE 

SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND 

CAPITAL ACCESS 

COMMITTEE ON SMALL BUSINESS 

U.S. HOUSE OF REPRESENTATIVES 

SEPTEMBER 7, 2017 

Chairman Brat, Ranking Member Evans, and members of the 

Subcommittee on Economic Growth, Tax, and Capital Access, 

thank you for the opportunity to testify about the workforce challenges facing small manufacturing companies in the United States. 

My name is Gardner Carrick and I am the Vice President of 

Strategic Initiatives at the Manufacturing Institute. We are affiliated with the National Association of Manufacturers, the nation’s 

largest industrial trade association and voice for more than 12 million men and women who make things in America. 

It is the mission of the Institute to attract, train and develop the 

world-class talent that manufacturers need to compete in the global 

economy. In partnership with some of the country’s leading firms, 

we identify trends and gaps in manufacturing skills and training 

and, working with partners around the country, we develop programs to close those gaps. Among our many initiatives, our Dream 

It. Do It. program has partners in 41 states and regions to develop 

interest in manufacturing skills among youth, and programs with 

educational institutions that cultivate their interest in manufacturing and ensure that the skills being taught are ones that are in 

need by manufacturers. Additionally, the National Association of 

Manufacturers recently launched a nationwide campaign to improve the perception of manufacturing via the recently announced 

‘‘Creators Wanted’’ campaign, to improve the perception of manufacturing as a career path. The Manufacturing Institute will be engaged in this effort to help educate the public about manufacturing 

careers and to direct those who are interested to programs and activities to further their skills and toward high skilled jobs. 

Manufacturing is a critical component of our nation’s economy. 

Companies in manufacturing produce everything you see around 

you. While everyone has heard of the biggest companies in manufacturing, it is small companies that are the backbone of the industry. The vast majority of manufacturing firms in the United States 

are quite small. According to the Top 20 Facts About Manufacturing published by the National Association of Manufacturers, in 

2014, there were 251,901 firms in the manufacturing sector, with 

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37 

all but 3,749 firms considered to be small. In fact, three-quarters 

of these firms have fewer than 20 employees. They provide good 

jobs in every city, town, and community across the country. And 

today, manufacturing is enjoying a renaissance in the United 

States. 

Since the end of the last recession, manufacturing companies 

have added over 1 million jobs and in this year alone, companies 

have added nearly 140,00 new jobs. Companies are choosing to locate new operations in the U.S. and this is having a growth effect 

down the entire supply chain. And companies are optimistic about 

the future as well. According to the most recent Manufacturers’ 

Outlook Survey from the National Association of Manufacturers, 

90% of companies are optimistic about their own company’s outlook. 

While times are good for manufacturing in the U.S., there is a 

present and growing challenge for manufacturing companies—they 

are unable to find people with the skills required to fill their open 

jobs. 

According to the United States Department of Labor, there are 

nearly 400,000 open jobs in manufacturing. This is up 13% from 

the end of last year, and 36% from just two years ago. Looking at 

the longer-term picture, a study done by Deloitte in partnership 

with the Manufacturing Institute estimated that, by 2025, there 

could be as many as 2 million unfilled positions in manufacturing. 

These jobs offer family supporting pay, generous benefits, and 

strong career growth potential. According to the Top 20 Facts 

About Manufacturing published by the National Association of 

Manufacturers, in 2015, the average manufacturing worker in the 

United States earned $81,289 annually, including pay and benefits. 

The average worker in all nonfarm industries earned $63,830. 

Looking specifically at wages, the average manufacturing worker 

earned over $26.00 per hour, according to the latest figures, not including benefits. These jobs need to be filled if the manufacturing 

sector and the U.S. economy is going to remain strong and globally 

competitive. Fortunately, manufacturing companies are stepping 

up to offer solutions to this challenge, in partnership with local 

high schools, community colleges, and technical schools. 

The activities of manufacturers fall into two broad categories: 1) 

filling the immediate needs for skilled workers; and 2) strengthening interest in manufacturing careers to fill the long-term need 

for skilled workers. I would like to highlight a few examples of 

where smaller companies are engaged in these activities. 

In the Tucson, AZ region, a group of twenty small manufacturers 

formed an organization called the Southern Arizona Manufacturing 

Partners. Working with the local high school district, Pima Community College, and the workforce system, the Southern Arizona 

Manufacturing Partners created a 20-month apprenticeship-style 

program. Graduating high school seniors interview with and are 

hired by one of the participating companies. They then enroll at 

Pima Community College in machining, eletromechanical systems, 

or another industrial technologies program where they receive concurrent instruction in their new field of employment. This innovaSBREP-219A with DISTILLER

38 

tive program has enabled small companies to aggregate their skill 

requirements and hiring demands and receive recognition and support from the local educational institutions and workforce services 

agency. The program has grown to where several dozen students 

now participate annually. The Manufacturing Institute has a 

strong partnership with Pima Community College and has supported this apprenticeship-style program from its inception. 

In Tulsa, OK, coalition of workforce, education and industry partners dedicated to raising awareness of manufacturing careers 

joined the Manufacturing Institute’s Dream It Do It program. As 

part of the Dream It Do It activities, a small auto parts manufacturer called APSCO created an internship program for high school 

students who are interested in a manufacturing career. Students 

from three area high schools tour APSCO’s automotive parts fabrication and assembly facility in the fall and interested students 

are interviewed and selected for its Certified Production Technician 

internship program. Interns train as a production technician for 

three hours a day from January to May and are paid $10 an hour. 

45 students participated in this past year’s program and APSCO 

has coordinated with other small manufacturers in the region so 

that those students not hired by APSCO at the completion of the 

program have interview and employment opportunities at other 

local manufacturing companies. 

Across nine states on the Gulf Coast and in the lower Midwest, 

there has a grown a manufacturing-led program called the Federation for Advanced Manufacturing Education. Originally started by 

Toyota Motor Manufacturing in Kentucky, FAME is a five semester 

apprenticeship style degree program where students spend three 

days a week at work and two days a week in school learning the 

technical skills, manufacturing culture, and soft skills necessary to 

be an Advanced Manufacturing Technician. Though Toyota was the 

original sponsor, they opened the program to all companies and 

now hundreds of small manufacturers are participating with the 

twenty partner community colleges, hiring hundreds of new employees annually. And it is a model that is now expanding to include other in-demand positions within manufacturing. This is an 

excellent example of how larger companies support and partner 

with smaller companies to create an education, training, and employment program that benefits the entire manufacturing industry 

and the communities where they are located. 

While these programs are training students and hiring new employees for immediate job openings, there is still a longer-term concern about the number of young people willing to consider and pursue a career in manufacturing. This has been a multi-decade challenge for manufacturers that is now a critical concern as total jobs 

in manufacturing have rebounded and continue to grow. The Manufacturing Institute has partnered on several research studies to 

inform the best strategies for attracting young people to our industry. 

In a nationwide survey of high school students, the Manufacturing Institute, in partnership with the Educational Research 

Center of America, found that the overwhelming majority of them 

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selected their own experiences and interests as the most important 

factor in determining what career to pursue. And in a Public Perception of Manufacturing study, conducted by the Manufacturing 

Institute in partnership with Deloitte, Americans that were familiar with manufacturing were twice as likely to pursue a career in 

manufacturing or encourage their children to do so. These results 

suggest that they best way to encourage more Americans to consider careers in manufacturing is to provide them with experiences 

that increase their familiarity with today’s modern manufacturing 

industry. 

Allow me to highlight a few examples of small manufacturing 

companies that have done just that. 

Five years ago, working with the Founding Partner, the Fabricators and Manufacturers Association, International, the Manufacturing Institute and the National Association of Manufacturers 

helped create a new nationwide showcase of our industry called 

Manufacturing Day. Companies would open their doors on the first 

Friday of October and invite the community to see what modern 

manufacturing looks like in their plant. That showcase has now 

grown to nearly 3,000 events and half a million participants. 

In Southern California, a small aerospace parts manufacturer 

called ACE Clearwater has made Manufacturing Day a really big 

deal. Last year, ACE Clearwater had over 500 parents, teachers, 

and students witness and participate in modern-day manufacturing. Exhibits like 3D printing, laser cutting and water jet demonstrations, hands-free computer interaction, hydro-forming, virtual reality headsets, and welding simulations were provided by 

ACE and sponsor suppliers to give attendees an in-depth understanding of state-of-the-art manufacturing. The event features at 

least 15 work centers where students learn all about the manufacturing process and new technologies that make manufacturing exciting and creative. At the conclusion of last year’s event, nearly 50 

participating community college students immediately applied for 

open positions. 

In Mequon, WI, a small fabrication company called GenMet has 

been extremely active on workforce issues including serving on the 

Manufacturing Institute Board of Advisors. One of its most innovative programs is a teacher externship. Over the past few years, 

GenMet has hired three local high school teachers to work for the 

summer in its facility. As a result, these teachers have a better understanding of concepts they teach in their classroom using what 

they learned at GenMet. Teachers are able to use real-life analogies to explain to their students what they learned from their experience. By hiring teachers, GenMet can reach an entire classroom 

of students and help change the perception of manufacturing showing teachers what modern manufacturing looks like. 

And finally, in Pennsylvania, there is a competition to create the 

best 2-minute video describing What’s so Cool about Manufacturing. Started by the Manufacturers Resource Center in the Lehigh Valley as part of the Manufacturing Institute’s Dream It Do 

It program, the competition pairs a team of eighth grade students 

with a local manufacturer where they interview employees and exSBREP-219A with DISTILLER

40 

ecutives and film the operations of the plant. The students then 

create and narrate a video about why their company best describes 

What’s so Cool about Manufacturing. The community then votes on 

the videos through YouTube and the Manufacturers Resource Center hosts an awards banquet at the conclusion. The results in Lehigh Valley have been stunning, where last year over 100,000 votes 

were cast on YouTube, over 800 students, parents, companies, and 

community leaders attended the awards banquet, and most importantly, the local technical high school manufacturing programs 

have seen a 60% increase in enrollment since the competition 

began 5 years ago. The video competition idea has now spread 

across the Commonwealth and this year, 200 middle schools will 

partner with 200 hundred manufacturing companies in eight different regional competitions. It is an excellent example of how 

small companies can partner with middle schools to make a significant impact on a student’s perception of manufacturing just as he 

or she is deciding what to study in high school. 

Mr. Chairman, the manufacturing sector has struggled to find 

the right workers and it is impacting our ability to successfully 

compete in the global economy and grow our industry. But companies large and small are creating and participating in programs 

that will solve these challenges. I am proud of the work of these 

companies and The Manufacturing Institute and the National Association of Manufacturers will continue to support these efforts in 

regions all across the country. 

Mr. Chairman, Manufacturing Day is on October 6th, less than 

a month from now. I encourage you, the members of this subcommittee, and all the members of Congress to attend one of these 

events. Come see what modern manufacturing looks like and speak 

with some of the 12 million men and women that make American 

manufacturing strong. 

Thank you for the opportunity to testify this morning. 

Æ 

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