U.S. GOVERNMENT PUBLISHING OFFICE

35–901 PDF WASHINGTON : 2019

S. HRG. 116–26 

SMALL BUSINESS AND THE AMERICAN WORKER 

HEARING 

BEFORE THE

COMMITTEE ON SMALL BUSINESS 

AND ENTREPRENEURSHIP 

UNITED STATES SENATE 

ONE HUNDRED SIXTEENTH CONGRESS 

FIRST SESSION 

MARCH 6, 2019 

Printed for the Committee on Small Business and Entrepreneurship 

( 

Available via the World Wide Web: http://www.govinfo.gov 

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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP 

ONE HUNDRED SIXTEENTH CONGRESS 

MARCO RUBIO, Florida, Chairman 

BENJAMIN L. CARDIN, Maryland, Ranking Member 

JAMES E. RISCH, Idaho 

RAND PAUL, Kentucky 

TIM SCOTT, South Carolina 

JONI ERNST, Iowa 

JAMES M. INHOFE, Oklahoma 

TODD YOUNG, Indiana 

JOHN KENNEDY, Louisiana 

MITT ROMNEY, Utah 

JOSH HAWLEY, Missouri 

MARIA CANTWELL, Washington 

JEANNE SHAHEEN, NEW HAMPSHIRE 

EDWARD J. MARKEY, Massachusetts 

CORY A. BOOKER, New Jersey 

CHRISTOPHER A. COONS, Delaware 

MAZIE K. HIRONO, Hawaii 

TAMMY DUCKWORTH, Illinois 

JACKY ROSEN, Nevada 

MICHAEL A. NEEDHAM, Republican Staff Director 

SEAN MOORE, Democratic Staff Director 

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C O N T E N T S 

OPENING STATEMENTS

Page 

Rubio, Hon. Marco, Chairman, a U.S. Senator from Florida ............................... 1 

Cardin, Hon. Benjamin L., Ranking Member, a U.S. Senator from Maryland .. 3 

WITNESSES

Cass, Mr. Oren, Senior Fellow, Manhattan Institute, New York, NY ................ 5 

Stevenson, Dr. Betsey, Associate Professor of Economics and Public Policy, 

Gerald R. Ford School of Public Policy, Ann Arbor, MI .................................... 40 

Lettieri, Mr. John, President and CEO, Economic Innovation Group (EIG), 

Washington, DC ................................................................................................... 25 

York, Ms. Caryn, Executive Director, Job Opportunities Task Force, Baltimore, MD .............................................................................................................. 47 

ALPHABETICAL LISTING

Cardin, Hon. Benjamin L. 

Opening statement ........................................................................................... 3 

Cass, Mr. Oren 

Testimony .......................................................................................................... 5 

Prepared statement .......................................................................................... 8 

Lettieri, Mr. John 

Testimony .......................................................................................................... 25 

Prepared statement .......................................................................................... 28 

Responses to questions submitted by Senator Hirono ................................... 80 

Rubio, Hon. Marco 

Opening statement ........................................................................................... 1 

Stevenson, Dr. Betsey 

Testimony .......................................................................................................... 40 

Prepared statement .......................................................................................... 42 

Responses to questions submitted by Senator Hirono ................................... 82 

York, Ms. Caryn 

Testimony .......................................................................................................... 47 

Prepared statement .......................................................................................... 50 

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SMALL BUSINESS AND THE AMERICAN 

WORKER 

WEDNESDAY, MARCH 6, 2019 

UNITED STATES SENATE, COMMITTEE ON SMALL BUSINESS

AND ENTREPRENEURSHIP, Washington, DC. 

The Committee met, pursuant to notice, at 2:33 p.m., in Room 

428A, Russell Senate Office Building, Hon. Marco Rubio, Chairman 

of the Committee, presiding. 

Present: Senators Rubio, Risch, Scott, Ernst, Young, Romney, 

Hawley, Cardin, Cantwell, Shaheen, and Rosen. 

OPENING STATEMENT OF HON. MARCO RUBIO, CHAIRMAN, A 

U.S. SENATOR FROM FLORIDA 

Chairman RUBIO. Today’s hearing of the Committee on Small 

Business and Entrepreneurship will come to order. 

I want thank all of you for being here. I extend a welcome to our 

witnesses. We will introduce them in a moment. 

I am very happy that we are holding today’s hearing titled 

‘‘Small Business and the American Worker,’’ and the hope is to explore the ties between the health and dynamism of small business 

and the well-being of American workers. 

For far too long, in my opinion, policymakers have focused almost 

exclusively on consumer welfare. We pay very little attention in 

public policy to the welfare of workers. The idea that any type of 

economic efficiency is beneficial, so long as those left behind can 

rely on some sort of government safety net, overlooks the fundamental role of the dignity of work. It is through dignified labor and 

dignified pay for that labor that American workers create the stability and the vitality of families, communities, and country. 

Yes, of course, we want to see strong economic growth, but we 

want strong economic growth that creates good and dignified jobs, 

not just good statistics. You need both. 

It is instructive to note that as GDP has risen from roughly $2.6 

trillion in 1979 to almost $21 trillion in the last quarter of last 

year, the percentage of means-tested government transfers to middle-income recipients has more than doubled according to a study 

by the Brookings Institution. It tells us that a broad swath of 

Americans, despite all this growth, have been left behind. 

This is evident in our stagnant labor force participation rates 

and falling annual incomes of high school-educated workers. It is 

evident in the precipitous decline in community life and engagement with the institutions that are critical to a thriving society. 

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Americans now find themselves feeling more disconnected and 

alone than ever before. We are not powerless to act. It is incumbent 

upon us to find innovative policy solutions that empower a broad 

range of American workers and place the vitality of the labor market at the forefront of our decision-making. In doing so, we must 

not disregard the power of free markets and competition as an engine of economic growth. It is the most powerful engine of economic 

growth man has ever known. 

But as this Committee heard from a panel of witnesses last 

week, our failure to respond to Made in China 2025 and other foreign industrial policies diminishes our core productive capabilities 

and eliminated the livelihoods of thousands of small business manufacturers and millions of American workers. 

There was once a notion in this country that if you work hard 

and you put your mind to it, you could support a family, buy a car 

and a home, and live the American dream. It is unrealistic to believe that this social contract can be replaced by a check from the 

government. Our country cannot have the sustained benefits of economic growth without a strong productive sector which increases 

social mobility, advances small business dynamism, and strengthens our Nation’s overall productive capacity. 

At the core of this reorientation must be a policy framework that 

encourages businesses to invest in physical capital, as well as their 

workers’ skills and their workers’ productivity. 

Long-term growth also requires investment from government in 

infrastructure, education, and research and development as well as 

a commitment to aligning regulation with labor market needs. 

Such investment should take the form of a national innovation 

strategy, which will enable small businesses to modernize and compete on a global scale, as the Committee discussed last week. 

In working toward this strategy, this Committee will focus on 

orienting the programs within the Small Business Administration 

to foster greater innovation and small business growth. 

Strengthening America’s labor markets also entails a focused effort to improve the conditions under which this market operates. 

Harmful artificial restrictions, such as burdensome occupational 

licensing and one-sided non-compete agreements for low-skill and 

entry-level employment, those things impede worker mobility and 

choice. These obstructions to work are most acutely felt by Americans with fewer job opportunities, and they must be removed. 

In addition, policymakers have often overlooked the fundamental 

role of the family and nongovernmental social institutions in the vitality of our labor market and country as a whole. 

I fought personally to reduce the tax burden on middle-income 

families and foster an economic environment conducive to family 

formation and prosperity through efforts such as increasing the 

Child Tax Credit. 

We need to consider policies which allow for flexibility in training 

and work. One such idea is a Federal program to enable parental 

leave, such as the one I have introduced last Congress and ideas 

that others, including members of this Committee, are working on 

separate bills that would do the same. 

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Under this plan, workers would be empowered to engage in family life without sacrificing their ability to make ends meet in a way 

that balances fiscal priorities and the needs of employers. 

Ultimately, for the sake of our Nation’s long-term success, it is 

the responsibility of our government to emphasize dignified work 

in a production-focused economy. 

And so I look forward to today’s discussion that will explore policy solutions to America’s labor market challenges, in particular, as 

it relates to small businesses in this country. 

And now I turn it over to Ranking Member Cardin. 

OPENING STATEMENT OF HON. BENJAMIN L. CARDIN, 

RANKING MEMBER, A U.S. SENATOR FROM MARYLAND 

Senator CARDIN. Well, thank you, Mr. Chairman, and thank you 

very much for convening this hearing dealing with small business 

and the American worker. To me, it is a critically important topic. 

I listened very carefully to your opening statements, and I am very 

encouraged that I think we will be able to work together to advance the interests of our workforce as it relates to small business 

and helping our economy. 

As we begin the new Congress, wages and employment will once 

again be center stage, and rightly so. The story of the American 

worker over the past three decades has been bleak. Between 1980 

and 2014, the top 1 percent saw their pretax incomes grow 204 percent, while incomes for the bottom 50 percent remained virtually 

flat. And the gap between those at the top and everyone else is 

widening. The top 1 percent takes home more than a fifth of all income in the United States, about double their share in 1980. 

If we do not take swift action in Washington to address income 

inequality, we run the risk losing the promise of upward mobility 

at the heart of the American dream. 

Small businesses play a vital role in keeping that dream alive. 

We all know the numbers. Small businesses employ nearly half of 

our Nation’s workforce and create two out of every three new jobs. 

They incubate breakthrough innovations, contribute to the health 

and dynamism of local communities, and provide the economic 

foundation for millions of American families. 

But we know that small businesses cannot survive without highquality talent. Small firms face a unique set of workforce challenges. During the periods of low unemployment, they struggle to 

compete with larger businesses that have more resources to attract 

talent. We know that they cannot provide small businesses the 

same type of complete benefit package. We know they do not have 

a human resources department. They start with a disadvantage. 

The National Federation of Independent Businesses in an April 

study of last year showed that 88 percent of small businesses on 

job openings have few or no qualified applicants. The number of 

unfilled positions have more than doubled since 2012. We need the 

right workforce development system, and that, I hope, will be part 

of the work of this Committee. 

In my own State of Maryland, we are taking our industry-driven 

approach to workforce issues. I think that can help us a great deal. 

The governor has established a Skilled Immigrant Task Force. I 

think that is a step in the right direction, and we will hear from 

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Caryn York about the Job Opportunity Task Force that advocates 

on behalf of low-wage workers. 

We have opportunities in this Congress. We will be considering 

the Workforce Innovation and Opportunity Act. It will not come 

through this Committee, but it will come through the United States 

Senate, and I hope this Committee will be active in how that bill 

is tailored. We want to have strong small business input into workforce plans. 

We also can look at innovative approaches to help small businesses; for example, ensuring apprenticeship programs are tailored 

for small businesses, recognizing that there is a source of opportunity here and returning citizens and how can we help small businesses in dealing with a larger labor pool. 

Workforce issues give us an opportunity to close the gap that I 

referred to in the opening of my statement. We will have opportunities during this Congress to deal with related issues—the Higher 

Education Authorization Act, which we will take up in this Congress. Education to me is the great equalizer. The Chairman mentioned it in his opening comments. Higher education is key because 

those who participated in higher education have a wage premium. 

We all know that. They make more money. We should be doubling 

down to make access to higher education available to more of our 

citizens who today cannot afford it because of tuition costs. 

We need a balance between those that go on to higher education 

and those that need career and technical education for vocational 

pathways, but that has to be done in a balanced way because if you 

come from a disadvantaged community, you should have equal opportunity as to what is best in your future, and I would suggest 

that is not necessarily the case today. 

We should not ignore the immigrant population. The immigrant 

population is critically important to small businesses; 27.5 percent 

of our Nation’s entrepreneurs are immigrants. One out of every 

four tech and engineering companies has at least one immigrant as 

a cofounder. 

We also need, as the Chairman pointed out, to look at the tools 

within the Small Business Administration to see if they are finetuned in order to meet these needs. I hope as we do that, we recognize that one way to close this gap is to make sure that these tools 

are focused and helping minority- and woman-owned businesses because they have not gotten a fair share of these tools in the past. 

I think these are all ways that we can help deal with these critical 

problems. 

So I welcome our panel. We have four distinguished witnesses 

that can help us through this to better serve small businesses, to 

raise wages, to narrow the opportunity gaps in our community, and 

meet the challenges of the 21st century. 

Chairman RUBIO. Thank you. 

I want to welcome our panel of witnesses. Oren Cass is a Senior 

Fellow at the Manhattan Institute, where he focuses on strengthening the labor market. He previously served as domestic policy director for Mitt Romney’s presidential campaign in 2012, as an editor of the Harvard Law Review, and as management consultant at 

Bain & Company. 

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John Lettieri is the president and CEO of the Economic Innovation Group, a bipartisan public policy organization focused on fostering economic dynamism throughout the country. He has testified 

before this Committee a number of times, most recently on opportunity zones in the tax reform bill. Before joining the Economic Innovation Group, he was the vice president of Public Policy and 

Government Affairs for the Organization for International Investment, and he served as foreign policy aide to former U.S. Senator 

Chuck Hagel. 

Betsey Stevenson is an associate professor of Public Policy at the 

University of Michigan, Ford School of Public Policy. Previously, 

she served as a member of the White House Council of Economic 

Advisers and as the chief economist at the U.S. Department of 

Labor. 

Caryn York is the executive director of the Job Opportunities 

Task Force, a statewide nonprofit organization in Maryland that 

promotes policies and programs to help low-wage workers advance 

to high-wage jobs. 

We thank all four of you for being here today, and let us just 

begin from left to right. Mr. Cass, thank you for being here. 

STATEMENT OF OREN CASS, SENIOR FELLOW, MANHATTAN 

INSTITUTE 

Mr. CASS. Well, good afternoon, Chairman Rubio, Ranking Member Cardin, and members of the Committee. Thank you very much 

for the opportunity to testify today. 

My name is Oren Cass. I am a senior fellow at the Manhattan 

Institute, where my work focuses on strengthening the labor market. 

My written testimony focused on three topics. The first was the 

limitations of consumer welfare as the relevant measure of economic policy and the importance of focusing instead on production 

and people’s capacity as workers as we understand the effects of 

policy; second, a concept that I call ‘‘productive pluralism,’’ which 

is the idea that the conditions we should be striving for in this society are ones where people of all aptitudes in all places have the opportunity to find work that will allow them to support their families and their communities; and then, third, the central role of 

labor markets and particularly as it pertains to small businesses 

and entrepreneurs in creating those conditions. 

My central message for the Committee is that a labor market 

that facilitates those conditions and allows people to work in ways 

that support their families and communities is the central determinant of long-term prosperity for this country and so should be 

the central focus of our public policy. 

I will summarize these points briefly here with an emphasis on 

the implication for policymakers. 

So, first and foremost, why do we care so much about labor markets? In my view, the answer is because work matters. We understand that on an intuitive level, but we do not actually credit it 

very much in our economic policy. We do not appreciate the extent 

to which work is critical to individuals, their self-esteem, their 

mental health, their life satisfaction, and their own economic opportunity over time. 

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I think even more importantly, work is incredibly important to 

families and communities, the foundation of our society. Work is incredibly important, and here, especially for men, work is an incredibly important driver of family formation and family stability. Work 

is an incredibly important driver of outcomes for children. Children 

have better outcomes in households where adults are working and 

even just in communities where adults are working. 

And thinking more broadly about these communities, work is a 

nexus of community, and conversely, where people lack work, we 

see incredible erosion in community, higher levels of crime, higher 

levels of addiction, far less investment in social capital. 

So if we want a flourishing society and the dynamic economy 

that it produces, it is not sufficient to simply grow GDP to do what 

we call ‘‘growing the economic pie’’ by whatever means necessary 

and then giving everybody a big enough slice. We actually need everyone to be involved in the process of producing that pie and, importantly, to be able to be involved in that from the places they are 

with the aptitudes that they have. 

This is not something that will happen on its own. It is incredibly important to recognize that nothing in economic theory says 

that just allowing the markets to run, just achieving the efficient 

outcome, just maximizing how much cheap stuff we can buy is 

going to leave us with a labor market that gives these opportunities to everybody. 

And so I think this is a challenge for policymakers across the political spectrum. It is a challenge for those on the right whose tendency is to trust markets because, in fact, the market outcome is not 

necessarily going to be the socially desirable one, but it is also a 

challenge for policy makers on the left whose tendency is more 

often to command an outcome where the market is not producing 

the desired one. 

As Senator Cardin noted in his opening statement, small businesses in particular are limited in many cases in the types of 

wages and benefits and so forth they can provide to workers, and 

so if we want better jobs and a healthier labor market, it is not sufficient to mandate one. We actually need to create the economic 

conditions in which small businesses, in which entrepreneurs can 

create attractive jobs and greater economic value throughout the 

economy. 

I would like to highlight a few ways in which the standard policy 

responses that we have been emphasizing I think are insufficient. 

One is that almost by definition, redistribution is not a solution. 

We cannot redistribute productive capacity and good jobs from winners to losers in our economy. 

Second, education and training I think are wonderful goals and 

things we should continue to invest in, but we also need to recognize that we have made very limited progress in decades now in, 

for instance, increasing the share of the population that achieves 

a bachelor’s degree. And it is going to be important to build a labor 

market that meets people where they are and supports them in the 

jobs they are prepared to take rather than simply hoping they 

achieve something better. 

And then, third, relocation is not a response. We need to meet 

people where they are literally as well as figuratively. We need to 

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pursue a national economy with broad-based prosperity in which 

people in wherever they live in the country have these opportunities. So I think small business and firm formation are especially 

important in this respect in ensuring the economy is not one that 

flourishes only in isolated coastal hubs. 

There are a number of policy responses we should consider. I will 

mention them briefly here, and I hope we can speak about them 

more. I think we need to focus on a regulatory environment that 

encourages job creation. I think we need to build an education system and focus much more heavily on those not pursuing college. 

I think we need a trade policy that focuses on balance and ensuring that we are exporting and creating opportunities for workers as 

much as we are importing and providing cheap stuff to consumers. 

I think we need a labor policy appropriate to the 21st century 

that allows workers to collaborate amongst themselves and with 

employers. 

And I think we need a safety net that includes a wage subsidy 

and encourages workers to work and supports them in doing so instead of just supporting them, regardless of work and in their conditions of poverty. 

Thank you very much. 

[The prepared statement of Mr. Cass follows:] 

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Testimony of Oren M. Cass 

Senior Fellow, Manhattan Institute for Policy Research 

before the U.S. Senate Committee on Small Business and Entrepreneurship 

March 6, 20!9 

Good afternoon Chairman Rubio, Ranking Member Cardin, and Members of the Committee. 

Thank you for inviting me to participate in today's hearing. 

My name is Oren Cass. I am a senior fellow at the Manhattan Institute for Policy Research where 

my work on strengthening the labor market addresses issues ranging from the social safety net 

and environmental regulation to trade and immigration to education and organized labor. 1 

My primary message to the committee is this: A labor market in which workers can 

support strong families and communities is the central determinant of long-term prosperity 

and should be the central focus of public policy. Alongside stable political institutions that 

protect basic freedoms, family and community provide the social structures necessary to a 

thriving society and a growing economy. Those institutions in turn rely on a foundation of 

productive work through which people find purpose and satisfaction in providing for themselves 

and helping others. The durable growth that produces long-term prosperity is the emergent 

property of a virtuous cycle in which people who are able to support their families and 

communities improve their O\Nn productivity and raise a subsequent generation able to 

accomplish even more. Conversely, without access to work that can support them, families 

struggle to remain intact or to form in the first place, and communities cannot help but dissolve; 

without stable families and communities, economic opportunity vanishes. 

American policymakers have erred in their single-minded focus on maximizing consumer 

welfare, which they pursue by growing and redistributing the so-called ''economic pie." 

Economic growth and rising material living standards arc laudable goals, but they by no means 

guarantee the health of a labor market that will meet society's long-term needs. If we pursue 

growth in ways that erode the labor market's health, and then redistribute income from the 

winners to the losers, we can produce impressive-looking economic statistics-for a while. But 

we will not generate the genuine and sustainable prosperity that we want. Growth that conswnes 

its own prerequisites leads inevitably to stagnation. 

My testimony proceeds in three parts: First, I explain the limitations of consumer welfare as the 

organizing principle for our economic policy and the reasons why an emphasis on work-that is, 

people's role as productive contributors to society--offers a better formula for long-term 

prosperity. Second, I describe the goal of "productive pluralism," rather than economic growth 

for its own sake, as the appropriate target for policymakers and emphasize the importance of 

small business and entrepreneurship in pursuing this goal. Third, I highlight the central role that 

labor markets play in productive pluralism and suggest opportunities for policy reforms to 

strengthen those markets. 

A recurrent theme will be the need to acknowledge trade-offs. Much pessimism about the future 

of work for the typical American begins from the assumption that we cannot possibly make 
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concessions on any of our other priorities. And yes, if the preferences of the typical urban 

professional are always the most valid and important, if the maximization of economic efficiency 

and material consumption is inviolable, if businesses retain the incentive to find the cheapest 

possible workers anywhere in the world, then the future of the American labor market indeed 

looks grim. But all this merely begs the question, what should our priorities be? In the past, our 

society was much less affluent, and yet the typical worker could support a family. How could it 

be that, as we have grown wealthier as a society, we have lost the ability to make that kind of 

arrangement work? Or do we just not want to? 

t. Production vs. Consumption 

That GDP offers a reliable proxy for prosperity and that each individual's satisfaction depends 

on the share ofGDP she can consume are the key components in the concept of the economic 

pie. When serving a pie, each portion's size depends on both the size of the dish and the share 

allocated to each slice. Likewise, the thinking goes, each person's consumption depends on the 

size of the overall economy and the share he receives. Fighting over shares is a zero-sum game, 

but if we concentrate on baking an ever-larger pie, then everyone's slice can grow. And who 

doesn't like pie? 

Enthusiasm for the tenets of this "economic piety" is ncar universal. The phrase economic pie 

first appeared in the presidential lexicon in 1952, when Harry Truman quoted from a Business 

Week article that used the term. John F. Kennedy used it when addressing the U.S. Chamber of 

Commerce. Presidents Lyndon Johnson, Gerald Ford, Ronald Reagan, George H. W. Bush, Bill 

Clinton, and Barack Obama used it too.2 The media and think tanks across the political spectrum 

bandy it about with ease. Republicans tend to promote free markets that will grow the pie 

rapidly, while grudgingly accepting a role for government in apportionment. Democrats focus 

more on the role of government in guaranteeing big enough portions for all but generally 

recognize that more growth will mean more to go around. 

On its own terms, this approach has delivered. The overall economy has grown enormously: 

from 1975 to 2015, the nation's GDP increased threcfold. 3 Redistribution has widened the 

smaller slices: during the same period, spending on programs targeting lower-income households 

increased fourfold4 Federal regulators' budgets expanded faster still,5 yet the American 

economy remained the dynamic and innovative envy of the world. For Americans of all 

socioeconomic strata, material living standards, access to technology, and consumer variety all 

marched steadily higher. 

The problem is not so much that public policy has failed as that it has succeeded at the wrong 

things. America is like the classic romantic-comedy heroine who, as the trailer intones, "had it 

all, or so she thought." She has the prestigious job and the elegant apartment, yet she is not 

happy. She has pursued the vvTong goals, she discovers, and to reach them, she sacrificed the 

things that mattered most. We got exactly what we thought we wanted: strong overall economic 

growth and a large GDP, rising material living standards, a generous safety net, rapid 

improvements in environmental quality, extraordinarily affordable flat-screen televisions and 

landscaping services. Yet we gave up something we took for granted: a labor market in which 

the nation's diverse array of families and communities could support themselves. 
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In making GDP growth and rising consumption the central objectives of public policy, economic 

piety represents a truncated and ultimately self-undermining concept of prosperity. Workers have 

no standing, in this view of the economy; neither do their families or communities. Households 

that see their economic prospects plummet or their livelihoods vanish should ask for a 

government check and be placated when they get one. Towns that can no longer sustain 

themselves become places that people should just leave. Politicians will pay lip service to the 

importance of education and retraining, but they will not hold themselves accountable for such 

programs actually working. The economic pie's expansion, regardless of what or who gets left 

behind, is the goal; maintaining a healthy, inclusive society is a hoped-for by-product, not an end 

in itself. 

This isn't to say that economic growth isn't important; of course it is. Growth is a prerequisite to 

improved living standards, which we should want to achieve. But while growth is necessary to a 

prosperous society, it is not sufficient. Not all growth is equally beneficial, and the policy 

choices that yield the most immediate short-term growth don't necessarily prepare the ground for 

sustained economic and social progress. To the contrary, policies that target gr01vth without 

concern for the economy's longer-term trajectory, or for the well-being of the society within 

which that economy operates, will tend to erode the capacity for growth. Politicians who equate 

GDP growth and rising consumption with prosperity pursue agendas that often bear little 

resemblance to what their constituents want or need. 

Superficially, consumption seems a sensible focus. In popular culture, consumption is an obvious 

good. The toil of production, by contrast, is only a necessary means to that end-and if one 

manages to consume more while producing less, all the better. "The interest of the producer 

ought to be attended to, only so far as it may be necessary for promoting that of the consumer," 

as Adam Smith put it6 But allowing the consumption tail to wag the production dog distorts our 

understanding of prosperity. Only through production does the ability to consume exist. 

Production without consumption creates options; consumption without production creates 

dependence and debt. As Senator Sasse has written: 'There is almost nothing more important we 

can do for our young than convince them that production is more satisfying than consumption."7 

Most of the activities and achievements that give life purpose and meaning are, whether in the 

economic sphere or not, fundamentally acts of production. Yes, material living standards 

contribute to prosperity, but accomplishments like fulfilling traditional obligations, building 

strong personal relationships, succeeding at work, supporting a family, and raising children 

capable of doing all these things themselves are far more important to life satisfaction. What 

these things have in common is their productive nature not as boosts to GDP but as ways that 

people invest effort on behalf of others. Our social norms recognize productive activities as 

essential to a functioning and prosperous society, and so we award respect, dignity, and gratitude 

to those who perform them. 

The Importance of Work for the Individual 

For the individual, work imposes structure on each day and on life in general. It offers the 

mundane but essential disciplines of timeliness and reliability and hygiene as well as the more 
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complex socialization of collaboration and paying attention to others. It requires people to 

interact and forges shared experiences and bonds. It promotes goal setting and long -term 

planning. True, other pursuits can provide these kinds of benefits-for example, raising children, 

keeping a home, or volunteering in the community. But sleeping, couch surfing, or playing video 

games does not. And for out-of-work men in particular, such idle activities tend to fill up their 

time. 8 

Without work-the quintessential productive activity-self-esteem declines and a sense of 

helplessness increases.9 People become depressed-unemployed Americans are twice as likely 

as full-time workers to receive treatment for depression; the long-term unemployed are three 

times as likely. 10 In empirical "happiness" studies, life satisfaction drops ten times more from 

unemployment than from a substantial loss of income. 11 And while people return to their 

previously self-reported levels of happiness several years after marrying, divorcing, becoming 

widowed, or welcoming a first child into the world, they never get used to joblessness. 12 

The Importance o(Work.for Families 

Work (especially for men) helps establish and preserve families. Where fewer men work, fewer 

marriages form. 13 Unemployment doubles the risk of divorce, and male joblessness appears the 

primary culprit. 14 These outcomes likely result from the damage to both economic prospects and 

individual well-being associated with being out of work, which strain existing marriages and 

make men less attractive as marriage partners. The so-called marriageable-men hypothesis 

associated with sociologist William Julius Wilson, which suggests that a lack of job 

opportunities contributed to the collapse of two-parent families in the African American 

community, remains controversial. 15 But that debate is largely about whether lack of economic 

opportunity was the underlying cause of male idleness. Few would question that such idleness 

would tend to reduce the likelihood and the stability of marriage. 

Current economic conditions do appear to play a role in harming marriage formation. MIT 

professor David Autor and his colleagues found that U.S. regions facing greater competition 

from China experience lower rates of marriage and higher shares of children born to single 

mothers and that this effect appeared only when the economic disruption affected male 

employment. 16 Johns Hopkins professor Andrew Cherlin and his colleagues sought to study the 

"relationship between economic inequality and sociodemographic outcomes such as family 

formation," for which they noted a lack of"satisfaetory evidence on the mechanisms by which 

inequality may have an effect." 17 When they accounted for a region's availability of"middleskilled jobs," accessible to high school graduates and paying above-poverty wages, they found 

that the labor market, not the inequality, was influencing family formation. The issue was less 

who earns how much more than whom and more who has a chance to earn a living at all. 

The Importance of Work .for Communities 

Work is both a nexus of community and a prerequisite for it. Work relationships represent a 

crucial source of social capital, establishing a base from which people can engage in the broader 

community-whether it's playing on a softball team, organizing a fund-raising drive, or hosting 

a field trip for the local preschool. This dimension of employment is especially relevant outside 
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of urban centers; in such settings, the workplace can become a central meeting point. 

Community, in turn, provides the social foundation on which the economy is built. Measures of 

social trust, for instance, are highly correlated with GDP across countries and entrepreneurship 

across individuals. 18 Communities that lack work, meanwhile, suffer maladies that degrade social 

capital and lead to persistent poverty. Crime and addiction increase, their participants in turn 

becoming ever less employable; 19 investments in housing and communal assets decline; a 

downward spiral is set in motion. 

The role of family and community in transmitting opportunity to the next generation also 

depends on work. When parents lose their jobs, their children tend to do worse in school, 

graduate at lower rates, and have less success as adults. 20 While productive activity provides 

direct benefits to workers, its worth also derives from the dignity and respect that society confers 

on self-reliance and productive contributions. In a community where dependency is widespread, 

illegality a viable career path, and idleness an acceptable lifestyle, the full-time worker begins to 

look less admirable-and more like a chump. 

This is consistent with what our intuitions tell us. Former Senator John Edwards, in his famous 

··Two Americas" speech at the 2004 Democratic National Convention, described the "dignity 

and honor in a hard day's work" as among the most impmiant values instilled by his parents?1 "I 

still remember vividly the men and women who worked in that mill with [my father]," Edwards 

observed. ''I can see them. Some of them had lint in their hair; some of them had grease on their 

faces. They worked hard, and they tried to put a little money away so that their kids and their 

grand-kids could have a better life." No one should be surprised if children raised in households 

and communities that lack the dignity and honor of work show less inclination or ability to climb 

onto the economic ladder themselves. 

The Importance ofWorkjor the Economy 

Economic piety trusts GDP growth to produce widely shared prosperity and the thriving society 

that is our ultimate objective. But this places the cart in front of the horse. It is the healthy 

society that produces the requisite human and social capital from which true economic prosperity 

emerges-and toward which policy should orient itself. Conversely, when opportunity declines, 

a downward spiral is set in motion, in which the next generation, beginning from a worse point, 

can likely offer even less to the one that follows. When ways of life vanish or towns crumble or 

industries flee overseas, they are not easily replaced. When self-sufficiency gives way to 

dependence, cultural norms shatter. Families that fail to form leave both adults and children 

adrift. It should not be shocking if: under these conditions, growth stalls. 

At the national level, whereas traditional economic theory suggests that specialization is key to 

prosperity, MIT professor Cesar Hidalgo and Harvard professor Ricardo Hausmann have shown 

the opposite to be true. The more diverse is the array of knowledge and capabilities within an 

economy, the stronger is its long-term health22 This would suggest that when economic growth 

undermines pluralism, it may eventually undermine itself as well. Emphasizing consumption 

allows productive capacity to atrophy, but that capacity is not something that we can scale down 

and back up at will. Experience must accumulate; supply chains must develop; productivity must 

grow percentage point by percentage point, year by year. Where capacity and know-how are lost 
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or not built, it becomes necessary to start over from behind those who moved more steadily 

forward. Where poor investments--or no investments-are made at one point, negative effects 

ripple outward for years. 

The Failure of Economic Piety 

The data that describe the worsening condition of American workers and their families are by 

now well known: decades of wage stagnation;23 shrinking shares of prime-age males working 

full-time, 24 of households with even one full-time worker,25 and of children raised in stable, twoparent families; 26 skyrocketing rates of substance abuse 27 and suicide,28 culminating in a 

stunning three straight years of declining life expectancy-which last occurred a century ago in 

the face of a global pandemic and a world war29 

It bears mentioning, too, that our pursuit of growth is now failing even on its own terms. Without 

the stable foundation of a labor market that allowed for self-sufficiency, social structures 

buckled, social capital drained away, and the national economy struggled. Broken families and 

collapsing communities are not, it turns out, effective incubators of a productive workforce. 

Economic grovvth during 2000-2016 averaged 1.8 percent, half the rate recorded during 1950-

2000. The best growth rate of the past decade, 2. 9 percent in 2015, fell below two-thirds of the 

years in the prior century's second half30 

Underlying this trend is a collapse in the genuine economic dynamism that produces prosperity. 

Productivity growth turned in a seventh straight year below 1.5 percent in 2017 (since 1948, the 

nation had never experienced more than a three-year run so anemic)31 As the Economic 

Innovation Group has shown, both the rate of new firm formation and the share of employment 

in new firms has been declining for decades and has become concentrated in an ever narrower 

geography. Just five metro areas accounted for ha1fthe net increase in businesses during 

recovery from the Great Recession; two-thirds of metros saw a net decline. 32 

Having forsaken the healthy society that makes economic growth possible, Americans now find 

that they have neither. 

2. Productive Pluralism 

As an alternative to economic piety and its GOP-based definition of prosperity, I suggest what I 

call productive pluralism: the economic and social conditions in which people of diverse 

abilities, priorities, and geographies, pursuing varied life paths, can form self-sufficient families 

and become contributors to their communities. This definition begins from the insight that 

productive pursuits-whether in the market, the community, or the family-give people purpose, 

enable meaningful and fulfilling lives, and provide the basis for the strong families and 

communities that foster economic success too. 

As the term productive pluralism suggests, a critical corollary of a focus on production is a 

recognition that different people will build productive lives in different ways, so for this 

prosperity to be inclusive, it will also need to accommodate numerous pathways, even at the 

expense of some efficiency. Measures like GOP create the convenient illusion of a homogenous 
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population benefiting (or suffering) in lockstep. Money being fungible, everyone is presumed to 

have access to whatever she might choose to buy. Production is not so simple. 

People have different priorities, excel in different ways, and find meaning in different places, so 

a production-oriented prosperity that extends across society must offer numerous paths to its 

achievement. Cities may be more economically productive, for example, but not everyone wants 

to live in a city. A traditional college degree may correlate with higher earnings, but most people 

will not attain one. Having two parents work while the children attend daycare may be more 

efficient, understood in a narrowly economic sense, but a community consisting entirely of such 

households is one that many families would rather not live in. Growth may be fastest if we 

channel everyone to wherever his economic output is greatest, but pluralism will improve real 

prosperity if the options it leaves available more closely match people's abilities and the range of 

life choices they wish to make. 

A goal of productive pluralism demands that policymakers move beyond the standard policy 

prescriptions of redistribution, retraining, and relocation. It rejects monetary redistribution as a 

solution. An emphasis on consumption offers what looks like a get-out-of-jail-free card: 

government spending. Connecting people to productive activity is a complex challenge that 

requires a healthy civil society and labor market. Public policies can support or hinder that 

process in myriad ways, but if preserving it is a priority, then sacriJ1ces will inevitably be 

required elsewhere. When the goal is consumption, conversely, those challenges and trade-offs 

vanish. Like a medieval indulgence, a promise of redistribution cures all. And if replacing lost 

income with a government benefit solves little or makes a bad problem worse, this merely drives 

the indulgence's price higher next time around. Emphasizing consumption leads policymakers to 

ignore the actual experience of society's struggling segments and point to statistics that depict an 

alternate reality. 

Productive pluralism also rejects the possibility of waiting for rescue to arrive from an education 

system or training program that can transform those left behind into those getting ahead. If this 

were readily available, it would indeed help ease the growing crisis-and, for that matter, solve 

any number of society's problems-but no such miracle appears imminent. Despite the nation 

doubling per-pupil spending and attempting countless education reforms, 33 test scores look no 

better than they did forty years ago 34 Most young Americans still do not achieve even a 

community college degree35 Participants in training programs often achieve worse results than 

those in control groups left to their OV\TI devices36 We should of course continue to strive for 

better outcomes, but we can no longer pretend that reshaping people to fit our economy offers a 

plausible substitute for ensuring that our economy's shape fits our people. 

Of particular importance to this Committee, productive pluralism demands that we meet people 

where they are not only conceptually, but also literally-in the communities where they live. 

Residential mobility is the issue that best captures policymakcrs' misunderstanding of prosperity, 

the social endowments that foster it, and thus what should be their own objectives. The 

willingness to pack up and move in pursuit of opportunity is part and parcel of the American 

Dream and a key element of the nation's economic vitality. Yet, as hardship has increased in 

recent decades, the share of the population that relocates has declined37 If things are so terrible, 
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some economists grumble, why won't anyone move? They have built elaborate models to show 

how much higher GDP would be if only people lived where their productivity would be 

highest. 38 

This gets things backward. Strong families and communities launch people into the world to seek 

their fortune. Relocation requires deep stores of social capital. Without the skills and habits to 

access opportunity, failure is likely. Lacking a strong support base, it can be hard to get started. 

If someone is already dependent on government benefits and a move places those benefits at risk, 

staying put can seem the better bet. Geographic mobility can't rescue America from the 

consequences of its socially unsustainable growth-because lower geographic mobility is one of 

those consequences. 

Certainly genuine pluralism requires the opportunity to relocate. But in most circumstances, it 

should also include the opportunity to stay, a choice that has always been and remains the 

norm-and one we should applaud, not lament. The median American adult lives only 18 miles 

from his mother and 37 percent of Americans have never left their hometown.39 Even when 

mobility was much higher, it rarely amounted to the abandonment of existing communities. The 

migration of "Okies" from the "Dust Bowl" of the 1930s may be the iconic American image of 

relocation in search of opportunity, but Oklahoma's population declined only 2 percent during 

that decade. In Kansas and Nebraska, the declines were less than 5 percent. As technology 

obliterated agricultural employment, the population of Iowa held steady or increased in every 

decade from 1880 to 1980.40 

Relocation tears people away from their communities. If a critical mass relocates, it can decimate 

the community left behind. The idea that struggling communities should disband themselves is 

not a return to "how things used to be"; it is an admission of catastrophic failure and a 

prescription tor further disaster. To be sure, the track record is not good for "place-based 

policies" seeking to revitalize particular industries in particular cities. But a commitment to 

returning restoring broad-based prosperity that reaches across the nation must be the nonnegotiable starting point for debates about economic reform. 

Small business and entrepreneurship will be central to meaningful progress. Economic piety has 

led economists to celebrate the idea oflarge multinational corporations centering their 

"knowledge" operations in coastal American cities while o!Tshoring their "lower value-add" 

operations, including manufacturing. This model may generate economic growth and yield cheap 

consumer goods, but it is not a sustainable one. Every local market must have the opportunity to 

engage meaningfully in the broader national economy; this will require much higher levels of 

firm formation and a business environmental in which small- and medium-sized businesses can 

thrive. 

Manufacturing ecosystems are of particular importance, for two reasons. First, manufacturing 

remains among the most productive economic activities tor Jess-skilled workers. As a share of 

overall employment, manufacturing has fallen below 1 0 percent, but in 2016, the industry still 

accounted for more than 20 percent of private-sector jobs in traditionally blue-collar occupations 

with a median wage of more than $15 per hour. The manufacturing, construction, and resource-
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extraction industries combined to provide almost 40 percent of such well-paying, blue-collar 

jobs.41 For men, that share is far higher. 

Take Pittsburgh, sometimes cited as a poster child for postindustrial transformation from heavy 

industry to health care. From 1990 to 2016, the Pittsburgh area lost forty-six thousand 

manufacturing jobs while gaining sixty-seven thousand health care and social assistance jobs. 

But while "production" jobs in the area paid a median hourly wage of$18 in 2016, in line with 

the area's median for all occupations, "health care support workers" earn $14 and "personal care 

and service workers" earn $11.42 Over the period, the area's median household income rose at an 

annual rate of only 0.3 percent43 

Second, "tradeables''-goods and services that can be consumed far from where they're 

produced-are the keystones of local economies. Americans take for granted that they can buy 

what products they want from around the world. But how can someone whose work consists 

entirely of serving others in his community expect a firm halfway around the world to make 

something for him? 

Consider the local physician who provides care only to those in his town. He may be well 

compensated, but he can't sell his work to the makers of cars or phones halfway around the 

world or even to the medical equipment supplier in the next state. He must trust instead that 

some of his patients produce goods or services that can be sent to those places and, in purchasing 

his medical services, give him the resources to acquire the goods that he needs. Or consider the 

plight of a local economy as a whole. It wishes to receive from elsewhere almost all of its food, 

medicine, vehicles, electronics, energy, and more. It must send tradeables of equal value. Not 

every individual must do so; most may work in the local services economy-but they cannot all 

cut one another's hair. 

Tradeables can take many forms. Wall Street provides its financial services around the country 

and the world, Hollywood exports its movies, and Orlando sells the Disney World experience to 

tourists. Call-center workers are exporters too. But manufactured products represent by far the 

largest category oftradeables and are, along with agriculture and natural resources, the ones in 

which less-skilled workers and less urban locations are best suited to excel. The strength of the 

industrial economy dictates the fortunes of workers with a comparative advantage in physical 

activity and regions with a comparative advantage in open spaces and raw materials. 

The importance oftradeables to a local community also helps to illuminate the vast difference 

between the often-equated phenomena of automation and globalization. For the worker 

dislocated by trade, the facility in which he once worked is likely gone, and the production now 

occurs somewhere else. But for the worker laid off or never hired because of automation, the 

facility is still operating in town, likely producing more output than before. Total demand for 

labor from the firm and its surrounding ecosystem is likely larger, and if capital has replaced 

labor, the remaining workers are likely earning more-and some other highly paid professionals 

may be arriving in the area with new demand for services of their O'Wn. Furthermore, while 

productivity gains occur bit by bit, year by year, a plant that shuts down and moves overseas is 

here today and gone tomorrow. In which situation might it be easier to find a new, well-paying 

job? 
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A reporter telling the story of automation speaks to a laid-off worker at a lunch counter; one 

telling the story of trade reports from the empty parking lot of an abandoned building. There is 

no one left to talk to. 

What happens to a community whose economy does not produce anything that the world wants? 

It has one export that it can always fall back on: need. Every resident enrolled in a program of 

government benefits entitles the community to more goods and services from the outside world. 

For instance, a prominent criticism of recent proposals to cut food stamp benefits has been that it 

would harm not just the individual recipients but also the local economies reliant on the outside 

income. The U.S. Department of Agriculture promotes food stamp enrollment as a "win-win for 

local retailers and communities. Each $5 in new SNAP benefits generates almost twice that 

amount in economic activity for the community."44 Food stamp recipients, in effect, are the 

community's "exporters." 

Some speak oflocal health care systems as bright spots in depressed regions, but these industries 

usually indicate the government's commitment to health care as the surest way to generate hard 

currency for these economies. When the retiree on the front porch laments to a reporter, "When I 

was young we had dances at the community centers. Now they have nothing. No work around 

here unless you are a nurse, or a doctor, or lawyer,"45 the list is not of especially productive 

professions, just those for which some government will pay. A common sight in the most 

dilapidated town is a sparkling occupational therapy office. The people working there are selling 

to the nation's taxpayers their care of the local residents on disability. 

3. The Labor Market 

How do we ensure that our economy creates jobs throughout the country and for people of all 

aptitudes? In an agrarian economy, most people worked on the land, producing directly the 

things their families needed. Capitalism has the labor market, which can seem like an 

abstraction, disconnected from everyday life. In the stock market, people bid on shares, their 

fluctuating prices scrolling across the electronic ticker. The supermarket overflows with produce 

bins and cereal boxes, each displaying a price that the potential buyer can take or leave. But 

finding a job or showing up for work seems different, somehow. After all. what is being bought 

and sold-a person, or his time, or some set of services') And who is doing the buying and the 

selling? We speak colloquially of workers needing jobs and of employers providing them, but 

workers are really the labor market's producers and the employers its customers. 

In fact, like any market, the labor market is a tool for connecting people who wish to exchange 

one thing for another. A "job" is the relationship formed by someone who can perform work and 

someone who wants that work performed. The labor market's conditions-who can perform 

what kind of work and who needs what kind of work performed, what wages will be offered and 

accepted, and which rules govern work relationships-determine how many jobs exist, of what 

types, located where, and at what pay scale. The result aligns buyers and sellers engaged in 

mutually beneficial transactions. 
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It's tempting to conclude, then, that the labor market largely should be left alone to do its thing. 

Let it find equilibrium, just like other markets, and the result will be an efficient allocation of 

resources that maximizes the economy's output. If we're unhappy with the distribution of 

benefits captured by the labor market's winners and losers, then we can equip people to do better 

next time, or we can redistribute after the fact. 

The problem with this conclusion is that, in one critical respect, the labor market is not like other 

markets: people are not products. This is obviously true with respect to the intrinsic worth of 

human beings. But the observation also has two concrete economic implications. 

First, people are not created for the purpose of selling their labor, so the potential supply of 

prospective workers does not always respond to market signals. Perhaps under conditions of 

subsistence agriculture, when resources governed population growth, the available supply of 

labor was directly a function of the work to be done. But one triumph of modern civilization is 

that this relationship no longer holds. The decision to have children depends little on their 

economic value. for instance, and the survival of those children throughout their lives depends 

little on their own productive capacity. 

Not only the quantities of available workers but also the characteristics of workers are 

determined to some degree independent of market demand. This is entirely the case with respect 

to natural endowments, and it is often true with respect to the tiunilial and social environments in 

which children grow up. Among those showing a particular set of physical and mental skills, yes, 

we may have some success in tailoring training--encouraging more computer programmers and 

fewer accountants among analytically inclined college graduates, say, or more plumbers and 

fewer carpenters among tradesmen-but as the market's persistent wage differentials make clear, 

even screamingly loud signals don't automatically induce families to switch their "production 

lines" from cashiers to chemists. When the labor supply does adjust, it does so graduallytypically over the course of a generation. Job switching is common, but career switching, 

especially as people get older, is much harder. Retraining has met with limited success. In sum, 

the nation's population is generally less flexible than the market would optimally desire. 

This becomes a problem when it collides with the second economic implication of people not 

being products: society can't be indifferent to where the price and quantity of work settle. 

Among a typical market's core functions is to discover the price that brings supply and demand 

into alignment and to send that information to other potential buyers and sellers. Whether oil 

costs $50 or $100 per barrel, whether a new car costs $10,000 or $20,000, society wants to know. 

People may drive more or less and companies invest more or less in searching for new oil fields; 

consumers may upgrade to the latest model sooner or later and firms expand or contract 

assembly lines. In each situation, the market translates external conditions and individuals' 

preferences into an efficient result. 

Typical markets can cope with oversupply-but the solutions they reach aren't of the kind that 

we can tolerate if applied to society's members. When a business finds it has overproduced, it 

takes a loss. When economy-wide demand for oil declines, producers provide less. A widget will 

gladly sit on the clearance shelf until it is sold. That's not how people work. An insolvent family 
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can't be acquired and restructured; an oversupply of workers can't be written off like obsolete 

inventory. 

That is what our current policy framework too often does: it writes people off. Labor becomes 

one economic input among many. If capitalists have the ability and the incentive to make the 

most productive use of all the resources available to them, in whatever combinations they see fit, 

they will create the greatest amount of output for consumption. And that output can then be 

shared (redistributed), even among those who did not participate. If the economically efficient 

solution is one that sidelines a sizable segment of the population, so be it. 

This dynamic-society needing the labor market to absorb the available supply of workers at a 

sufficiently high wage, even though that supply remains imperfectly responsive to market 

signals-is at the heart of America's economic challenges. Productive pluralism is not satisfied 

with an efficient labor-market outcome per se. It requires a particular outcome: the provision of 

sufficient meaningful work to sustain families and communities. If the labor market settles on an 

efficient outcome in which large segments of the population lack meaningful work, our response 

can't be to say "thanks, understood" and then to wait for those displaced people suddenly to 

transform themselves into something else, or simply to give them government aid. Our response 

must be "that needs to change." 

The path to strengthening the labor market can start with the observation of Harvard professor 

Edward Glaeser: "Every underemployed American represents a failure of entrepreneurial 

imagination .... Joblessness is not foreordained, because entrepreneurs can always dream up 

new ways of making labor productive."46 Yet saying that entrepreneurs can always dream up 

new ways of making labor productive does not mean that they will. Only so many entrepreneurs 

put their time-and investors their capital-into so many businesses each year. If their most 

attractive opportunities involve the deployment of American workers, they will pursue that 

course. If investing in continual improvement of each American worker's productivity is critical 

to their success, they will do that too. But if other workers are more profitable to employ than 

Americans are, or if business models that rely less on labor present them with lower risks and 

higher rewards, then those entrepreneurs-and the economy-will respond accordingly. 

The answer is not to blame the labor market tor acting like a market. Again, a market is a tool 

that translates underlying conditions into the most efficient outcome. Even when conditions 

bring a bad outcome, the market mechanism itself remains hugely valuable. It preserves liberty 

and fosters choice for individuals, creates incentives via competition for innovation and 

investment, and helps resources flow toward the most productive uses. To observe an inadequate 

result at the macro level, that is, is not to imply that we know the correct result at the micro level. 

Productive pluralism says nothing about who should work for whom or at what wage, and trying 

to outperform a free market in answering such questions would be foolhardy. Instead, public 

policy should focus on those underlying conditions: why is the market settling where it does, and 

under what circumstances would it settle somewhere better? 

The labor market's conditions dictate its behavior along five dimensions-and it can be 

improved along all five, depending on the trade-offs that society chooses to make: 
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Demand 

What work does the economy need done? Consumer preferences and industry economics dictate 

much ofthc answer, but, at the margin, the rules that government puts in place can alter the 

balance. For instance, heavily regulating industrial activity and imposing stringent environmental 

regulation on physical infrastructure, while leaving the digital economy mostly free from 

regulation, will tend to constrict the demand for manufacturing workers, while expanding it for 

software engineers. Targeting taxes at energy-intensive activities, while aggressively subsidizing 

health care and higher education, will have profound effects on which industries stall and which 

thrive. 

Over time, these kinds of choices can begin to affect consumer preferences and industry 

economics. Innovation will start to shift to those areas where entrepreneurs anticipate building 

the most successful businesses-whether that's in manufactured goods or high-end services, 

housing renovations or artistic performances. And where greater investment accumulates, the 

efficiencies of scale and expertise and supply chains develop too. A country consistently seen as 

the second-best location for a new factory watches as factories get built in other places, and the 

researchers and suppliers and distributors follow-and soon it isn't even the fifth best location. 

Supply 

What work are people prepared to do? The employer bears significant responsibility for training 

workers to meet its needs and improving their productivity over time. But for this investment to 

make sense, the worker must demonstrate basic capabilities at the outset. The better prepared the 

prospective workforce, the faster an employer can bring workers on board and the higher their 

wages will be. 

The students to whom the education system tailors its efforts will experience the greatest boost in 

their work prospects. This emphasis will also influence demand, as entrepreneurs build 

businesses where they expect to find well-prepared workers. If public schools offer a wide range 

of programs and lavish attention on those connected to the weakest segments of the labor market, 

they can push outcomes in a positive direction. If they adopt an attitude of "college or bust," we 

shouldn't be surprised to find a workforce consisting primarily of college graduates and busts. 

Boundaries 

Who gets to perform work and who gets to purchase it? When trade and immigration policies 

expand the pool of employers and consumers demanding various types of work, the workers able 

to provide it will likely see more opportunities-and higher wages. But when policies 

dramatically expand the supply of workers able to meet existing demand, domestic workers will 

suffer. In establishing a labor market's boundaries, balance is therefore crucial. 

Unfortunately, in a wealthy country like the United States, balance will rarely be achieved for 

less-skilled workers if residents of poorer countries can participate without limit in the same 

labor market. Entrepreneurs gain access to a vastly larger and cheaper supply oflabor, while 

imperatives vanish to build businesses that use the existing domestic labor supply or make 
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investments in improving domestic workers' capabilities. This effect swamps the smaller uptick 

in demand for less-skilled American labor that those workers might see from poorer countries. 

Transactions 

How do workers and employers establish and manage their relationships? The set of negotiable 

terms and conditions and the rules of negotiation have a significant influence on the nature of 

transactions in any market. This is triply true in the labor market, where overlapping regimes of 

contract law, employment law, and labor law govern the efforts of workers and employers to 

reach mutually beneficial agreements. Any contract they wish to sign must grapple with the 

myriad rules that government imposes about hours, wages, conditions, benefits, and much more. 

On top of those rules, the presence of a union may introduce an additional layer of collective 

bargaining, itself controlled by government rules. 

In principle, allowing workers to bargain collectively should give them an opportunity to secure 

better terms than they might each achieve individually. Furthermore, by placing workers and 

employers on equal footing, concerns of unequal power and unfair agreements fall by the 

wayside, reducing the need for government dictates. Why does the Department of Labor need to 

set the standard for overtime pay when the parties can be reasonably expected to work out this 

issue for themselves? But done poorly, a system of organized labor can have the opposite effect, 

creating industry-wide cartels that negotiate agreements in the long-term interest of no one. 

Taxes 

How do the employer's total cost and the worker's take-home pay differ from the agreed-upon 

wage? The term tax is meant here in the broadest sense. Obviously, the direct taxes imposed on 

both employers and workers represent a large wedge inserted between the bargain that the parties 

might like to strike and the costs and benefits that they ultimately experience. But many other 

factors play a similar role, adding to the cost of becoming a worker or hiring one. 

Conversely, government can offer subsidies that off.~et tax burdens or even raise the transaction's 

value to one or both parties beyond what the market offers. If society wants more from the labor 

market, it must consider paying for it. This can take forms ranging from tax credits for the 

employer or worker to direct subsidies that boost wages to better infrastructure that lowers 

transportation costs. Such policies are more expensive than other reforms, though. 

Conclusion 

In each of these areas, America's choices have been misguided. We overtax and undcrinvest in 

less-skilled workers, make them costly and risky to employers, and discourage investment in the 

industries where they could work most productively. At the same time, we free employers from 

the constraints of using the existing domestic workforce, offering them instead an option of using 

much cheaper foreign workers overseas or bringing the cheaper workers here. The immediate 

effects of these policy choices have often appeared beneficial, even to the workers who now find 

themselves disadvantaged. But those policies have. over time, reshaped the economy's contours 

in ways that have left too many people out. 
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1 This testimony is adapted from the witness's recently published book, The Once and Future Worker: A Vision for 

the Renewal of Work in America (New York: Encounter Books, 2018). 

2 This list may not be exhaustive. Remarks including the phrase by all of these presidents are available via the 

American Presidency Project, University of California, Santa Barbara, http://www.presidency.ucsb.edu/. 

3 '"Current-Dollar and 'Real' GDP," U.S. Bureau of Economic Analysis, https:/lbea.gov/national/xls/gdplev.xlsx. 

4 Oren Cass, Over-Medicaid-ed: How Medicaid Distons and Dilutes America ·s Safety Net (New York: Manhattan 

Institute for Policy Research, May 2016), appendix, https:/lwww.manhattan-institutc.org/html/over-mcdicaid-edhow-medicaid-distorts-and-dilutes-americassafety-net-8890.html. 

5 Susan Dudley and Melinda Warren, Regulators' Budget Reflects President Trump's Priorities: An Analysis of the 

U.S. Budget for Fiscal Years I960 through 20I8 (Washington, D.C.: George Washington University Regulatory 

Studies Center, July 2017), table A-5, http://regulatorystudies.columbian.gwu.edu/files/downloads/Final 

Regulators%27 Budgct.pdf. 

6 Adam Smith (1723-90), An Inquiry into the Nature and Causes of the Wealth of Nations, edited by R. H. Campbell 

and A. S. Skinner (Oxford: Oxford University Press, 1976), vol. 2, bk. 4, ch. 8, para. 49. 

7 Ben Sasse, The Vanishing American Adult: Our Coming-of~Age Crisis--and How to Rebuild a Culture of Self~ 

Reliance(NcwYork: St. Martin's Press, 2017), 122. 

8 Josh Katz, "How Nonemployed Americans Spend Their Weekdays: Men vs. Women," New York Times, January 6, 

20 15, https://www.nytimes.com/interactive/20 15/0 1/06/upshotlhow-nonemployed-americans-spend-their-weckdaysmen-vs-womcn.html; Mark Aguiar, Mark Bils. Kerwin Kofi Charles, and Erik Hurst, "Leisure Luxuries and the 

Labor Supply of Young Men" (Working Paper 23552, National Bureau of Economic Research, Cambridge, Mass., 

.June 20 17), http://www.nber.org/papersiw23552. 

9 Arthur Goldsmith and Timothy Diette, "Exploring the Link between Unemployment and Mental Health 

Outcomes" (SES Indicator, American Psychological Association, Washington, D.C., April 20 12), 

http://www .apa.org/pi/ses/resources/ind icator/20 12/04/unemployment.aspx. 

10 Steve Crabtree, "In U.S., Depression Rates Higher for Long-Term Unemployed," Gallup, June 9, 20!4, 

http://www.gallup.com/po1!! 171 044/depression-rates-higher-among-long-term-uncmployed.aspx. Gallup is careful 

to note that its survey identifies only a correlation and does not prove causation, but both intuition and other research 

suggest that the relationship is at least in pmt causal, e.g., Margaret W. Linn, R. Sandifer, and S. Stein, "Effects of 

Unemployment on Mental and Physical Health," American Journal of Public Health 75. no. 5 ( 1985): 502--6, 

https:/ iwww.ncbi.nlm.nih.gov/pmc/articles/PMC 1646287/. 

11 Andrew E. Clark and Andrew J. Oswald, ·'A Simple Statistical Model for Measuring How Life Events Affect 

Happiness," International Journal of Epidemiology 31, no. 6 (2002): 1139-1144, 

https://doi.org/10.1093/ije/31.6.1139; Edward L. Glaeser, "The War on Work----and How to End It," City Journal, 

2017, https://www.city-joumal.org/html/war-work-and-how-end-it-15250.htm1. 

12 Andrew E. Clark, Ed Diener, Yannis Georgellis, and Richard E. Lucas, "Lags and Leads in Life Satisfaction: A 

Test of the Baseline Hypothesis," Economic Journa/118, no. 529 (2008): F222-43, 

http:/iwww.jstor.org/stable/20 1 08833. 

13 Claudia Geist, ''Marriage Formation in Context: Four Decades in Comparative Perspective," Social Sciences 6, 

no. 1 (20 17): 9-24, https://doi.org/1 0.3390/socsci60 1 0009; David Autor, David Dom, and Gordon Hanson, "When 

Work Disappears: Manufacturing Decline and the Falling Marriage-Market Value of Young Men" (Working Paper 

23173, National Bureau of Economic Research, Cambridge, Mass., February 20 17), 

http://www.nber.org/paperslw23173. 

14 Stephan Lindner and H. Elizabeth Peters, "How Does Unemployment Affect Family Arrangements for Children?" 

(Low-Income Working Families Paper 29, Urban Institute, Washington, D.C., August 2014), 9, table 3, 

https://www.urban.org/research/publication/how-does-unemploymcnt-affect-family-arrangements-children; Liana C. 

Sayer, Paula England, Paul Allison, and Nicole Kangas, "She Left, He Left: How Employment and Satisfaction 

Affect Men's and Women's Decisions to Leave Marriages," American Journal ofSociology 116, no. 6 (2011): 

1982-2018, https://doi.org/1 0. 1 086/65 8173. 
23 

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15 William Julius Wilson, The Truly Disadvantaged: The Inner City, the Underc/ass, and Public Policy (Chicago: 

University of Chicago Press, 1987). For a contemporary discussion of Wilson's hypothesis, see Isabel Sawhill and 

Joanna Venator, "Is There a Shortage of Marriageable Men"" (Center on Children and Families Brief 56, Brookings 

Institution, Washington, D.C,, September 201 5), https:i/www.brookings.edu/wp-content/uploadsi20 16i06i56-

Shortage-oi~Marriageable-Men.pdf. 

16 Autor ct al., "When Work Disappears.'' 

17 Andrew J. Cherlin, David C. Ribar, and Suzumi Yasutake, "Nonmarital First Births, Marriage, and Income 

Inequality," American Sociological Review 81, no. 4 (2016): 749-70.763, 

hnps://doi.org/1 0.1177/0003122416653112. 

18 Esteban Ortiz-Ospina and Max Roser, "Trust," Our World in Data, 2017, https://ourworldindata.org/trust. 

19 Steven Raphael and Rudolf Winter-Ebmcr, "Identifying the Effect of Unemployment on Crime," Journal of Law 

and Economics 44, no. I (2001): 259-83, http://www.jstor.org/stable/l 0.1086/320275: Alex Hollingsworth, 

Christopher J. Ruhm, and Kosali Simon, "Macroeconomic Conditions and Opioid Abuse" (Working Paper 23192, 

National Bureau of Economic Research, Cambridge, Mass., February 20 17), http://www.nber.org/papers/w23192. 

20 Austin Nichols, Josh Mitchell, and Stephan Lindner, Consequences of' Long-Term Unemployment (Washington, 

D.C.: Urban Institute, 2013), https:i/www.urban.org/research/publication/consequences-long-term-unemployment; 

Joanna Venator and Richard V. Reeves, "Parental Unemployment Hurts Kids' Futures and Social Mobility" (Social 

Mobility Memo, Brookings Institution. Washington, D.C., November 25, 2013), 

https:/ iwww. brookings.eduib log/social-mobi I ity-memos/20 I 3/11/25/parcntal-unemployment -hurts-kids-futures-andsocial-mobility/. 

21 John Edwards, remarks at the Democratic National Convention, Boston, July 28, 2004, 

http://www. washingtonpost.com/wp-d yn/artic les/ A2223 0-2004J u 128.html. 

22 Cesar A. Hidalgo and Ricardo Hausmann, "The Building 131ocks of Economic Complexity," Proceedings of the 

National Academy of Sciences of the United States of America 106, no. 26 (2009): 10570-75, 

https:/idoi.org!l 0.1 073/pnas.09009431 06; "Complexity Matters: A New Atlas Reveals the Building Blocks of 

Economic Growth," The Economist (blog), October 27, 20 II, 

https:i iwww .eeonom ist.comib logs/freeexchange/20 I 1/1 0/bui ld ing -blocks-economic-growth. 

2

' "Labor Force Statistics from the Current Population Survey," U.S. Bureau of Labor Statistics, 

https://www.bls.gov/cps/earnings.htm. 

24 "Labor Force Statistics from the Current Population Survey," U.S. Bureau of Labor Statistics, 

https://www.bls.gov/cps/. 

25 Charles Murray, Coming Apart: The State of' White America, 1960-20 I 0 (New York: Crown Forum, 2012). 

Murray focuses his initial analysis on a white, working-class population but then widens his analysis and shows that 

the story he has told for white America is mirrored in the nation's working class across racial groups (273-81). 

26 Wendy Wang, "The Majority of U.S. Children Still Live in Two-Parent Families:· Institute for family Studies 

(blog), October 4, 2018, https://ifstudies.org/blogithe-majority-of-us-children-still-1 ive-in-two-parent-families; 

Nicholas Zill and W. Bradford Wilcox, "1-in-2: A New Estimate of the Share of Children Being Raised by Married 

Parents," Institute for Family Studies (blog), February 27, 2018, https:/iifstudies.org/blog/1-in-2-a-new-estimate-of~ 

the-share-of-children-being-raised-by-married-parents. 

27 Anne Case and Angus Deaton, "Rising Morbidity and M01tality in Midlife among White Non-Hispanic 

Americans in the 21st Century}'~ Proceedings of the National Academy of Sciences of the United States of America 

112, no. 49 (20 15): 15078-83, https:iidoi.org/1 0.1 073/pnas.l518393!!2. 

28 Sally C. Curtin, Margaret Warner, and Holly Hedegaard. "Increase in Suicide in the United States, 1999-2014" 

(Data Brief241. Centers for Disease Control and Prevention, Atlanta, Ga., April 20 16), 

https:i/www.cdc.gov/nchs/products/databrief:S/db241.htm. 

29 Lenny Bcrustein, "U.S. life expectancy declines again, a dismal trend not seen since World War I," Washington 

Post, November 29,2018, https://www.washingtonpost.eom/nationalihealth-scienee/us-life-expeetaney-dcclinesagain-a-dismal-trend-not-seen-since-world-war-ii20 18/ll /28/ae58bc8c-f28c-l I e8-bc79-68604ed88993 _story.html. 

30 '"Real' GDP." 
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31 "Labor Productivity (Output per Hour): Nonfarm Business," U.S. Bureau of Labor Statistics, 

https://www.bls.gov/lpc/. 

32 Dynamism in Retreat: Consequences for Regions, Markets & Workers (Washington, D.C.: Economic Innovation 

Group, February 20 17), https:l/eig.org/wp-content/uploads/20 17/07/Dynamism-in-Retreat-A.pdf. 

33 Digest of Education Statistics, 2016, February 2018, table 236.55, 

https://nces.ed.gov/programs/digest/d 16/tables/dt 16 _ 236.55.asp. 

34 Digest of Education Statistics, tables 221.85 and 222.85. 

35 Digest of Education Statistics, table 104.20. 

36 Sheena McConnell, Kenneth Fortson, Dana Rotz, Peter Schochet, Paul Burkander, Linda Rosenberg, Annalisa 

Mastri, and Ronald D'Amico, Providing Public Workfi;rce Services to Job Seekers: 15-Month Impact Findings on 

the WJA Adult and Dislocated Worker Programs (Washington, D.C.: Mathematica Policy Research, May 2016), 

xxii, https://www.mathematica-mpr.com/our-publications-and-findings/publications/providingpublic-workforceservices-to-job-seekers-15-month-impact-findings-on-the-wia-adult; Amy Goldstein, Janesville: An American Story 

(New York: Simon and Schuster. 2017). 169-70. 

37 Janet Adamy and Paul Overberg, ''Struggling Americans Once Sought Greener Pastures-Now They're Stuck," 

Wall Street Journal, August 2, 2017, https://www.wsj.com/mticles/struggling-americans-once-sought-greenerpasturesnow-theyre-stuck-150 168680 I. 

38 Chang-Tai Hsieh and Enrico Moretti, "Housing Constraints and Spatial Misallocation" {Working Paper 21154, 

National Bureau of Economic Research, Cambridge, Mass., May 2015), http://www.nber.org/papers/w21154. 

39 https:/ /www. nytimes.eom/interactive/20 15/ l2/24/upshot/24up-family. htm I 

40 ''Population of the States and Counties of the United States: 1790 to 1990,'' U.S. Census Bureau, 

https:l/www.census.gov/population/www/censusdata/pop 1790-1990.html: Jason Long and Henry E. Siu, "Refugees 

from Dust and Shrinking Land: Tracking the Dust Bowl Migrants'' (Working Paper 22108, National Bureau of 

Economic Research, Cambridge, Mass., March 20 16), https:/lwww.nber.org/papers/w22l 08. 

41 Witness's analysis ofBLS data. '·May 2016 National Industry-Specific Occupational Employment and Wage 

Estimates," U.S. Bureau of Labor Statistics, https:l/www.bls.gov/ocs/. 

"State and Area Employment, Hours, and Earnings: Pittsburgh, PA-·Manufacturing' and 'Health Care and 

Social Assistance,"' U.S. Bureau of Labor Statistics, https:l/www.bls.gov/sae/; "May 2016 Metropolitan and 

Nonmetropolitan Area Occupational Employment and Wage Estimates: Pittsburgh, PA," U.S. Bureau of Labor 

Statistics, https://www .bls.gov/oes/current/ocs _3 8300.htm. 

43 lncome change is for !989-2016. "Historical Income Tables: Metropolitan Statistical Areas (MAs): Table MSAI, 

Median Household Income by Metropolitan Statistical Area (MSA): 1969, 1979, and 1989," U.S. Census Bureau, 

https://www.census.gov/data/tables/time-series/dec/historical-incomc-metro.htm!; '·American FactFinder: Median 

Income in the Past 12 Months (in 20161nflation-Adjusted Dollars)," U.S. Census Bureau, 

https://facttinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid~ACS _16 _I YR S 1903. 

44 U.S. Department of Agriculture, "SNAP Questions and Suggested Answers," Supplemental Nutrition Assistance 

Program (SNAP) Community Outreach Partner Toolkit, 

https:/ lwww. fns. usda.gov I sites/ default/tiles/SNAP_ Basics_ Q%26As. pdf. 

45 Chris Arnade, "'The Pill Mill of America': Where Drugs Mean There Are No Good Choices, Only Less Awful 

Ones," The Guardian, May 17, 2017, https://www.theguardian.com/society/20!7/may/17/drugs-opiod-addictionepidemic-portsmouth-ohio. 

"Edward L. Glaeser, "The War on Work-and How to End It," City .Journal, 2017, https://www.cityjournal.org/html/war-work-and-how-end-it-15250.html. 
25 

Chairman RUBIO. Thank you. 

Mr. Lettieri. 

STATEMENT OF JOHN LETTIERI, PRESIDENT AND CEO, 

ECONOMIC INNOVATION GROUP 

Mr. LETTIERI. Chairman Rubio, Ranking Member Cardin, and 

members of the Committee, thank you for inviting me to testify 

today. 

The well-being of American workers depends upon entrepreneurs, and entrepreneurs are facing serious challenges. 

Chairman RUBIO. I am sorry. I think your microphone may have 

come off. 

There you go. 

Mr. LETTIERI. Sorry about that. 

Unless policymakers take action, the future of American entrepreneurship will remain under threat from structural and policy 

forces that have already combined to diminish the dynamism of the 

U.S. economy across every sector and every region. 

So how does entrepreneurship benefit the American worker? New 

businesses unleash chain reactions throughout the economy that 

help ensure the labor market works for working people. First, new 

businesses are a critical source of new demand for workers and a 

driving force behind net job creation. 

New forms also enhance competition, driving unproductive firms 

out of business and clearing the way for more innovative and productive ones to thrive. Through this process, workers reallocate to 

companies that enable them to be more productive and earn higher 

wages too. 

Before going further, I want to address a common misconception 

about the labor market, and that is the notion that workers today 

experience greater job churn than ever before. This is simply not 

the case. 

Even today, after a long economic expansion, turnover rates 

today only barely match those from the depths of the prior recession, the early 2000s. This matters because job churn is vital to 

workers’ interest in the labor market. 

Studies show that one-third of early career wage growth comes 

from job hopping, and that those early gains are critical to establishing a lifetime of employment trajectory. 

Research also shows that a reduction of labor market churn has 

a three and a half times stronger negative impact on young men 

with only a high school diploma than it does on those with a college 

degree. Young people, those with fewer skills, the currently unemployed, and the formerly incarcerated are the first to lose out when 

job churn slows down. 

So we know that workers benefit from the economic effects of entrepreneurship, but what is the state of entrepreneurship today? 

The state is troubled. Over the past several decades, the startup 

rate has declined across virtually all regions and all sectors of the 

economy before collapsing with the Great Recession. This collapse 

is reflected across every sector, and unfortunately, the national economic recovery has done little to improve the rate of business formation nationwide. 

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26 

Even the post-recession high reached in 2016 left the startup 

rate a full 2 percentage points below its long-run average. 

How does that translate for workers? For workers, that means 

that each and every year on record since the Great Recession, 

roughly 100,000 fewer new companies have come online to compete 

for their labor. 

Furthermore, the U.S. economy is less dynamic across all regions 

today than even a short while ago. At EIG, we evaluated Statelevel dynamism across even different metrics from 1992 to 2014. 

What we found was the most dynamic State today scores like one 

of the least dynamic states of the early 2000s—or early 1990s. This 

is a trend that leaves no corner of the country untouched. 

Another reason for concern is the strong relationship between demographics and dynamism. The rate of U.S. population growth now 

stands at its lowest level in the last 80 years. EIG will soon release 

new research finding that 86 percent of counties are now growing 

even more slowly than the country as a whole, and half of counties 

are losing population each year. Worse, two-thirds of counties are 

losing prime-age adults. Absent an aggressive policy response, 

small businesses, new businesses, and the American worker will 

find themselves navigating unfriendly terrain in the years ahead. 

So how should policymakers respond? I offered several policy recommendations in my testimony, but I want to emphasize two of 

those in particular now. 

First, there is a simple way to boost wages, to boost innovation, 

and to increase entrepreneurship without enacting any new program or incurring any cost to the Federal Government, and that 

is by banning the use of non-compete agreements. 

Roughly one in five workers is covered by a non-compete. These 

clauses are almost never negotiated, and they rarely come with any 

added benefits to the worker. Why should policymakers care? It is 

because non-competes are both unnecessary to protect trade secrets 

and are proven to stifle the very forces of healthy churn that are 

desperately needed in our economy today. 

Enforcement of non-competes leads to significantly lower rates of 

business entry. The new businesses that do form tend to be weaker, smaller, and more likely to fail within their first 3 years. 

Workers in states that enforce non-competes earn less, they stay 

longer in their jobs, and they are less satisfied with their jobs. 

These provisions almost certainly diminish overall levels of innovation by restricting the mobility of the economy’s most productive 

workers and lowering rates of entrepreneurship. Banning them 

would have an immediately favorable impact on entrepreneurship, 

innovation, and wages. I encourage Congress to do so. 

Second, we must enact a coherent immigration strategy. An effective immigration policy would help us boost entrepreneurship, 

spur innovation, and tackle all the demographic challenges I mentioned, all at once. And I would emphasize two ideas that get to 

the heart of the issues I have covered in my testimony. 

First, like a long list of other advanced nations, the United 

States should have a startup visa. Any entrepreneur who can pass 

a national security check and demonstrates the ability to fund-raise 

against a sound business plan should be welcome to start their 

business in our country. 

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27 

Second, we should open new pathways for immigrants, particularly high-skilled immigrants to connect with communities facing 

chronically slow or negative population growth, enacting a placebased visa. One tied to certain geographies rather than a single 

employer would help declining communities make better use of excess capacity, improve their fiscal stability, and boost local dynamism to the benefit of all workers. 

Policymakers should move quickly to enact bipartisan solutions, 

like the ones I have mentioned in my testimony. It would help 

American workers and entrepreneurs and communities thrive. 

Thank you, and I look forward to your questions. 

[The prepared statement of Mr. Lettieri follows:] 

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TESTIMONY BEFORE THE U.S. SENATE COMMITTEE ON SMALL BUSINESS AND 

ENTREPRENEURSHIP 

JOHN W. LETTIERI 

PRESIDENT & CHIEF EXECUTIVE OFFICER 

ECONOMIC INNOVATION GROUP 

"Small Business and the American Worker" 

March 6, 2019 

Chairman Rubio, Ranking Member Cardin, and members of the committee, thank you 

for inviting me to testify today. 

My name is John Lettieri. I am the President and Chief Executive Officer of the 

Economic Innovation Group (EIG). EIG is a research and advocacy organization 

focused on the decline of economic dynamism and the geography of economic growth 

and opportunity. 

My testimony today will focus on one simple message: the well-being of American 

workers depends upon entrepreneurs, and entrepreneurs are facing serious challenges 

in today's economy. Unless policymakers take action, the future of American 

entrepreneurship will remain under threat from structural and policy forces that have 

already combined to diminish the dynamism of the U.S. economy across every sector 

and region. 

How does entrepreneurship benefit American workers? 

The creation of new businesses unleashes chain reactions throughout the U.S. 

economy that help ensure the labor market works for working people. New businesses 

are a critical source of demand for workers and a driving force behind net job creation. 

Startups reliably add 2.5 million to 3.5 million jobs to the national economy that either 

offset the losses or build upon the gains of older firms each and every year. 1 

The entry of new firms also enhances competition, driving unproductive firms out of 

business and clearing the way for more innovative, efficient, and productive ones to 

1 EIG analysis of U.S. Census Bureau's Business Dynamics Statistics data. 
29 

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thrive. 2 Through this process, American workers reallocate to companies that enable 

them to be more productive and earn higher wages, too. 3 Thus, in a dynamic economy, 

American workers benefit from churn among companies. 

Before going further, let's address a common misconception about the labor market. 

The idea that, until somewhat recently, workers stayed attached to one job or one 

company throughout their careers is simply incorrect. Likewise, the idea that workers 

today experience greater churn in the labor market than ever before is also incorrect. 

Even after a long economic expansion, turnover rates only barely now match those from 

the depths of the prior recession. 4 

Figure 1. Workforce turnover rates 

Far from a threat to workers, churn is in fact vital to their labor market success. 

Canonical studies show that one-third of early career wage growth for American 

workers comes from job-hopping, and that those early gains are critical to establishing 

2 Ryan Decker, John Haltiwanger, Ron Jarmin, and Javier Miranda, 'The Role of Entrepreneurship in US 

Job Creation and Economic Dynamism," Journal of Economic Perspectives 28 (3) (2014): 3-24. 3 Michael Strain, "The Link Between Wages and Productivity Is Strong," Expanding Economic Opportunity 

for More Americans, Aspen Institute Economic Strategy Group, February 2019. 

'U.S. Census Bureau Quarterly Workforce Indicators, data through 04 2016. 

2 
30 

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stable lifetime employment trajectories. 5 The latest data from the Atlanta Fed showed 

that job switchers enjoyed at least one full percentage point higher wage growth through 

2017 and 2018 than job stayers.6 Slowing churn is therefore likely permanently 

impacting the labor market trajectories of American workers. 

What is the state of American entrepreneurship today? 

Over the past several decades, the startup rate, defined as the percent of all firms in the 

economy that started in the past year, has declined across virtually all regions and 

sectors of the economy. It fell steadily through the 1980s and 1990s before collapsing 

with the Great Recession. 7 Troublingly, the national economic recovery has done little to 

improve the rate of business formation. Startup activity finally picked up in 2016, as the 

rate of new business creation improved to 8.4 percent. Yet even that post-recession 

high left the startup rate 2 percentage points below its long-run average. 

How does this translate for American workers? It means that each and every year since 

the Great Recession, 100,000 fewer new companies have come online to compete for 

their labor. 

Figure 2. Total number of startups 

400,000 

300;000 

5 Robert Topel and Michael Ward, "Job Mobility and the Careers of Young Men," Quarterly Journal of 

Economics 107 (2) (1992): 439-479. The study defines early career as the first 10 years in the labor 

market. 

6 Federal Reserve Bank of Atlanta's Wage Growth Tracker. 7 This and all startup and small business related statistics in this section comes from our analysis of U.S. 

Census Bureau's Business Dynamics Statistics data. 

3 
31 

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This deficit helps explain why, since 2010, new firms have created only 2.4 million jobs 

each year on average-- 600,000 short of their 3.0 million average in the 1990s and 

800,000 short of their 3.2 million average in the 2000s (through 2007). 

Even in 2016, the post-recession era's high-point, 125,000 fewer firms launched than in 

2006, creating 1 million fewer jobs. Small businesses, for their part, have struggled 

similarly and relinquished their traditional role as the driving force behind national 

rebounds. Large, old companies have grown to dominate the U.S. economy at the 

expense of small, new ones. The unsatisfying nature, pace, and geography of the 

protracted recovery from the Great Recession may be directly related to these business 

dynamics of recovery. 

Figure 3. Net annual job creation by firm age 

3.5 

·4.5 

·8.5 

8l ('I) 

~ II) jg I' ro 8l 0 ,.. 8 § "' lfl to 1'- 8 8 0 ,_, ru l'l <t 10 Ill 

8l 8l Ol "' 0 

~ 0 0 8 ~ ,., .,..! 'f"'f "v-f .,-! .... 0) 0) 0) 0 0 !'J N 0 0 !'3 !'3 !'3 !'3 0 ,.. ,.. .,..! .... .-1 ,-1 .,..! ,.. t\1 N N N N N N N N 

IIIIIIIIIIFirmsageO -Firms ages 6 to 15 

1111111111 Firms agss 16 and over - - Total ootjob creation 

Older incumbent companies have stepped into the void left by missing startups and now 

consistently account for a greater share of net job creation than in the past. Yet, while 

American workers are clearly better off being hired by an established company than not 

4 
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being hired at all, this development raises a red flag. To generalize, incumbent firms 

have a fundamentally different relationship vis-a-vis labor than do entrepreneurs. The 

former, with mature business models, technologies, and market shares, generally 

prioritize reducing labor costs. Entrepreneurs, on the other hand, deploy workers in new 

and creative ways in order to unlock value where there was none before. American 

entrepreneurs find new ways for American workers to thrive. As we've seen, a recovery 

unfriendly to one is unfriendly to both. 

The Shrinking Geography of Economic Dynamism 

We are understandably fixated on national aggregates when it comes to understanding 

the economy. However, this can lead us to overlook how component parts of the 

economy-- communities-- are faring. The diminished rate of business formation is 

related to and driving a deeply uneven, and shrinking, geography of economic 

dynamism. 

First, let me be clear: The U.S. economy is less dynamic across all regions today than 

even a short while ago. At EIG, we evaluated state-level dynamism across seven 

different metrics from 1992 to 2014 and found that the most dynamic state today 

(Nevada) scores like one of the least dynamic states two decades ago.8 This is a trend 

that leaves no corner of the country untouched. 

The startup rate is the signal indicator of economic dynamism, given the chain reactions 

it unleashes. A metro-scaled analysis illustrates the implications of the startup slowdown 

for people and places. As the national startup rate collapsed, the number of metro areas 

in which the firm closure rate (relatively constant over time) eclipsed the firm birth rate 

(which has been falling over time) spiked to unprecedented highs, where it has 

remained. Thus, even as the number of firms populating the U.S. economy continues to 

modestly increase, a majority of metro areas are home to a declining stock of firms. Put 

differently, they are contending with a shrinking number of employers competing for 

local workers' labor. 

The United States now relies on a relatively narrow base of regional economies to drive 

net firm creation. In the 1970s, more than one-third of metro areas met or exceeded the 

national startup rate. By the late 1990s, only one in five did. Come the 2010s, that 

number was only one in seven. The combination of a declining national startup rate and 

8 The seven metrics are: Business churn, change in firms, jobs in new companies, jobs in incumbent 

companies, labor market churn, labor force participation,and net domestic migration. Economic Innovation 

Group, "Index of State Dynamism," May 2017. 

5 
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a contracting startup geography left five major metro areas alone responsible for half 

the net increase in firms in the U.S. economy from 2010 to 2014. As recently as the 

1990s, it took 30 metro areas to achieve a similar benchmark. 

Figure 4. Metro area firm birth and death rates over the initial recovery years 

12% 

10% 

8% 

Firm birth rate 

2010·2014 6% 

average 

4% 

2% 

.0% 

0% 

More births than deaths 

More deaths than births 

2% 4% 6% 8% 

Firm death rate 

2010·2014 average 

10% 12% 

County-level findings reinforce the unevenness of modern growth. From 2012 to 2018, 

37 percent of counties lost establishments and 34 percent lost employees.9 On the other 

end of the spectrum, one-third of counties accounted for 98 percent of new 

establishments and jobs. Large metro areas claim an outsized proportion of the gains: 

96 percent of 2012 to 2018 establishment and job growth occurred in a metro area and 

around a fifth of job and establishment growth occurred in the 10 with the largest 

increases. Rural counties, for their part, only accounted for 1 percent of establishment 

and job growth among all U.S. counties-by this measure barely improving after six 

years of national recovery. 

9 EIG analysis of Bureau of Labor Statistics' Quarterly Census of Employment and Wages data. 

6 
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Figure 5. Change in establishments from Q2 2012 to Q2 2018 

Smm;J~ 8ursau ol Labor Sf<Jirsl•cs, QCEW 

Figure 6. Change in employment from June 2012 to June 2018 

B Ga,nof5%orMoreJob~ 

<iol.ll"Ce· &mau Df Labor Sli7lrsl~es QCEW 

7 
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EIG's Distressed Communities Index goes further to explore down to the zip code level 

where the fruits of recovery have concentrated. It finds that prosperous communities--

those that rank in the top fifth of all zip codes nationwide on a comprehensive 

assessment of well-being --dominated job and business growth over the past several 

years. In other words, jobs and businesses have grown increasingly concentrated in the 

places where incomes are already high and where housing vacancies, poverty rates, 

and worklessness are all low. 

The defining characteristic of such places? They are also the communities where the 

country's college-educated and advanced degree-holding populations congregate. 

Highly educated American workers and many of their communities have, so far, proven 

reasonably able to prosper despite the national decline in dynamism. Indeed, 

prosperous zip codes have produced more jobs and businesses over the recovery than 

the bottom four-fifths of American communities combined. Communities without such 

critical masses of human capital are much more clearly vulnerable to the downsides of 

the trends discussed here. 

Demographics and dynamism 

Up until very recently, high rates of population growth put wind in the sails of the U.S. 

economy and bolstered our entrepreneurs. Population growth not only provided a 

steady stream of new business owners, but it also stoked demand, provided new and 

fast growing firms with needed labor, and eased the piloting of new business models. 

Not long ago, we consistently pointed to demographic tailwinds as reasons to be 

optimistic about the future health of the U.S. economy. 

No longer. At 0.6 percent, the rate of U.S. population growth now stands at its lowest 

level in over 80 years and half the level of the early 1990s. 10 Population growth is 

projected to remain muted as net international migration stagnates and birth rates fall. 

EIG will soon release new research that unpacks these trends as they play out across 

the map. This research finds that 86 percent of counties are now growing even more 

slowly than the country as a whole." Half of counties are losing population each year, 

and two-thirds are losing prime age adults. And two out of every five U.S. counties have 

already reached Japan-level demographic stagnation. 

10 William Frey, "U.S. Population Growth Hits 80-Year LQY;~," Brookings Institution, December 21, 2018. 11 Forthcoming research with Adam Ozimek of Moody's Analytics. 

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In recent years, a burgeoning academic literature has explored the relationship between 

demographics and dynamism, and the findings are sobering. 12 Two prominent studies 

demonstrate how the slowing growth and aging of the population leads to fewer new 

firm starts. 13 Another compellingly shows how the aging of the large baby boom 

generation may be contributing to multiple related phenomena: fewer firm starts, an 

aging firm distribution, a growing concentration of employment into larger firms, and a 

falling share of national income going to workers. 14 These structural transformations 

suggest that small businesses, new businesses, and American workers will find 

themselves navigating uncharted and unfriendly terrain in the years ahead without 

aggressive new policy efforts to reverse current trends. 

How should policymakers respond? 

In spite of the headwinds, there is no need to accept a future in which entrepreneurs 

and innovation play increasingly diminished roles. Public policy can make a difference if 

geared towards the right fundamental goals. We need a labor market that allows 

workers to move fluidly and deploy their skills where they can best be of use. We need 

to encourage stronger attachments to the labor force, especially for lower-skilled 

workers. We should do far more to welcome highly-skilled workers and entrepreneurs 

from around the world into our economy and ensure they spread to more communities. 

And we should encourage higher rates and a broader geographic distribution of 

entrepreneurship using all the policy and regulatory tools at our disposal. 

These are achievable goals. Accordingly, I would like to offer the following 

recommendations. 

Remove harmful barriers to labor market churn. There is a simple way to boost wages, 

innovation, and entrepreneurship without enacting any new programs or incurring any 

cost to the federal government: ban the use of non-compete agreements in all but the 

most narrow of circumstances. While commonly believed to apply only to top 

executives, roughly one in five American workers are covered by a non-compete 

agreement that places time and geographic restrictions on their ability to pursue 

12 For one of the first kicking off the recent round of inquiry, see I an Hathaway and Robert E. Litan, 

"What's Driving the Decline in the Firm Formation Rate? A Partial Explanation," Brookings Institute, 

November 2014. 13 Fatih Karahan, Benjamin Pugsley, and Aysegul Sahin, "Demographic Origins of the Startup Deficit," 

Working paper, May 2018.; Joseph Kopecky, "An Aging Dynamo: demographic change and the decline of 

entrepreneurial activity in the United States," Working paper, 2017. 14 Hugo Hopenhayn, Julian Neira, and Rish Singhania, "From Population Growth to Firm Demographics: 

Implications for Concentration Entrepreneurship and the Labor Share," Working paper, December 2018. 

9 
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alternative employment in the same industry as their current employer. These clauses 

are almost never negotiated and rarely come with any added benefits for the employee. 

An estimated 38 percent of workers have signed at least one non-compete agreement 

in the past. 

Why should policymakers care? Because they are both unnecessary to protect trade 

secrets and proven to stifle the very forces of healthy churn that are desperately needed 

in our economy. They clog the arteries of our labor markets and mute the productive 

potential of workers and entrepreneurs. 

Consider what the current literature tells us about the effect of non-competes.15 States 

in which non-competes are aggressively enforced see significantly lower firm entry 

rates. The new businesses that do form tend to be weaker, smaller, and more likely to 

fail within their first three years. Enforcement of non-competes also seems particularly 

bad for female entrepreneurs. 16 Worse still, enforcement of non-competes hurts wages 

and job satisfaction. Workers in states that enforce non-competes earn less than 

equivalent workers in states that do not enforce them. Those bound by a non-compete 

stay in their jobs 11 percent longer with no offsetting increase in pay or satisfaction. 

There is even evidence that merely signing a non-compete-- even in states where they 

are unenforceable-- has a chilling effect on worker mobility. And these provisions likely 

diminish overall levels of innovation in the economy by restricting the mobility of the 

economy's most productive workers and lowering rates of firm formation. 

Banning or greatly curtailing the use of non-competes would have an immediately 

favorable effect on entrepreneurship, innovation, and wages. I urge Congress to do so. 

Improve incentives to work. It is critical to get marginally attached workers into the labor 

market and keep them there. Strong demand from employers is key, but so too are 

work-oriented incentives, such as the Earned Income Tax Credit (EITC). Unfortunately, 

the Tax Cuts and Jobs Act was a missed opportunity to reform and expand the EITC, or 

augment it with something more robust. Oren Cass of the Manhattan Institute has 

proposed a wage subsidy that would operate as a sort of reverse payroll tax, providing a 

more immediate and efficient boost to low-income workers than the EITC, and thus, in 

15 For a thorough review of the findings, see Evan Starr, "The Use Abuse and Enforceability of 

Non-Compete and No-Poach Agreements A Brief Review of the Theory Evidence and Recent Reform 

Efforts," Economic Innovation Group, February 2019. 16 Matt Marx, "Employee Non-compete Agreements Gender and the Timing of Entrepreneurship," 

Working paper, May 2018. 

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theory, an even stronger incentive to find work. This idea deserves thorough 

consideration. 

Support and renew effective place-based policies. It is necessary to consider creative 

place-based policy approaches in light of the deeply uneven map of post-recession 

economic growth. Previous place-based programs have a mixed and somewhat 

underwhelming track record, but it is easy to see why: they are often absurdly 

complicated, lacking in scale, and rigidly inflexible in structure. 

The recently-enacted Opportunity Zones incentive is a sharp departure from many of 

the design limitations of previous programs. For this reason, it has generated enormous 

interest among local leaders, investors, philanthropic organizations, and economic 

development practitioners. EIG was a leading advocate for Opportunity Zones, and I 

believe it holds great potential to provide a new capital lifeline to entrepreneurs and 

small businesses in struggling communities nationwide-- but only if implemented 

properly. The rulemaking process is still underway, but significant questions and 

concerns are holding back market activity among investors who wish to deploy capital 

into operating businesses (as opposed to real estate projects). It is crucial these issues 

are addressed by Treasury in the next round of proposed rulemaking. 

Even as we seek new tools to address declining entrepreneurship and regional 

inequality, we should also look to build upon past successes. The State Small Business 

Credit Initiative (SSBCI) was a resoundingly successful and relatively unheralded 

component of the Small Business Jobs Act of 2010 that seeded entrepreneurial activity 

in parts of the country desperately in need of it. Its novel design not only provided $1.5 

billion in flexible financing to entrepreneurial ventures throughout the country (nearly 

one-third in low- and moderate-income census tracts), but it also leveraged impressive 

state and private sector follow-on capital as it strengthened the capacity of local 

organizations to deliver for the future. The initiative lapsed in 2017; Congress should 

reauthorize it. 

Enact a coherent immigration strategy. In his last speech as president, Ronald Reagan 

said: "We lead the world because, unique among nations, we draw our people-- our 

strength --from every country and every corner of the world. And by doing so we 

continuously renew and enrich our nation.''17 President Reagan well understood how 

immigrants add to the vitality of the U.S. economy. Research finds they are roughly 

17 Ronald Reagan, "Remarks at the Presentation Ceremony for the Presidential Medal of Freedom," 

January 19, 1989. 

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twice as likely as native-born Americans to start new businesses. 18 The Center for 

American Entrepreneurship found that 43% of the 2017 Fortune 500 companies were 

founded or co-founded by an immigrant or the child of an immigrant. 19 

An effective immigration policy could help us boost entrepreneurship, spur innovation, 

and tackle demographic challenges all at once, which makes it all the more frustrating to 

see us squander such a key advantage. While comprehensive immigration reform is a 

much broader topic than the scope of this hearing, I would emphasize two ideas that get 

to the heart of the issues I have covered in my testimony. First, like a long list of other 

advanced nations, the United States should have a startup visa. Any entrepreneur who 

can pass a national security check and demonstrate the ability to fundraise against a 

sound business plan should be welcome to start his or her business in this country. 

Second, in addition to existing programs, we should open new pathways for immigrants 

-- particularly high-skilled immigrants -- to connect with communities facing chronically 

slow or negative population growth. Enacting a place-based visa -- one tied to certain 

geographies rather than a single employer -- would help declining communities make 

better use of their excess capacity (e.g., housing stock, schools, and infrastructure), 

improve their fiscal stability, and boost local dynamism to the benefit of all residents. 

Conclusion 

Even in the best of times, the share of workers starting a business, switching jobs, or 

relocating to a different part of the country at any given moment will be relatively small. 

Nevertheless, the economy depends on them to stay vibrant. Thus, the decline of 

entrepreneurship and the geographic concentration of economic dynamism pose 

significant threats to this country's long-term economic well-being. Policymakers should 

move quickly to enact bipartisan solutions, like the ones noted above, that help 

American workers, entrepreneurs, and communities thrive. 

18 Robert Fairlie, Sameeksha Desai, and A.J. Herrmann, "2017 National Report on Early-Stage 

Entrepreneurship," Ewing Marion Kauffman Foundation, February 2019. 19 "Immigrant Founders of the 2017 Fortune 500," Center for American Entrepreneurship, December 

2017. 

12 
40 

Chairman RUBIO. Thank you. 

Dr. Stevenson. 

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

FORD SCHOOL OF PUBLIC POLICY 

Ms. STEVENSON. Chairman Rubio, Ranking Member Cardin, and 

members of the Committee, thank you so much for the invitation 

to be here today. 

You have heard about the importance of entrepreneurship and 

jobs. I want to address the fact that technology is changing both 

entrepreneurship and jobs. 

Rather than eliminating many types of jobs, as is often reported 

in the press or feared, what technological change is likely to do is 

change the tasks that workers do in jobs. MIT researchers have 

gone occupation by occupation looking at the multiple tasks that 

are done and shown that most jobs will have tasks that are eliminated by technological change, by artificial intelligence and machine learning, but very few, if any, jobs will be completely eliminated by that. 

So the future holds a world in which jobs, almost all of them, 

need to be redesigned, and they need to be redesigned in a way to 

take advantage of the comparative advantage of human workers. 

Preparing people for the jobs, the way jobs will change, requires 

greater investment in education and worker training. Today’s 

workers get only a few hours of training from their employers, 

while workers generations ago received much greater training from 

their employers. 

Apprenticeship programs that I know Ms. York will speak about 

that receive public funding, provide compensation to workers, and 

encourage employers to take a chance on new workers are essential 

to this change, but these programs must adapt to the changing jobs 

of the U.S. economy. The U.S. economy is a service-based economy. 

Eighty-four percent of workers employed in the private sector are 

in the services. A third of our exports is services, and these are 

where the good jobs are and the good exports are and where we are 

growing our exports. 

Internationally, our comparative advantages are a highly skilled 

workforce, but we are losing ground to other countries. To preserve 

our place in the global labor market, we must make sure more 

Americans successfully complete college. 

In the last century, we made it possible for nearly all Americans 

to get a high school degree, even though other developed countries 

told us it was impossible. They said some people were simply not 

suited for higher education, ‘‘higher’’ meaning high school. 

Today, we are making the same arguments about our own citizens, while other developed countries succeed with a much higher 

percent of their citizens completing college. 

In the U.S., nearly two-thirds of young people start a college degree, but inadequate financial support, the challenges of raising a 

family while in school for some, and insufficient education prior to 

college—in other words, the failure of our school system before you 

get to college—mean that only 36 percent of people in their late 20s 

and early 30s have actually completed a college degree. We can, 

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41 

and should, have the majority of our young people successfully 

completing college. 

Let me address a second aspect of redesigning work. Total work 

hours may decline. The challenge is not about making sure that 

work does not decline. It is making sure that it declines only in a 

desired way and that it does not create the marginalization of communities without work. 

Historically, technological change has reduced work. We no 

longer send children into factories. We now enjoy retirement, and 

some people choose to stay home and raise their children, focus on 

their families and their communities rather than work. This is not 

a bad thing. We have thought that this was a good choice. 

So what can we do to make sure that any change in hours is 

done in a positive way? We need to provide an infrastructure that 

supports working families and allows some importantly, broadly 

shared declines in work, a decline in working while sick, a decline 

in working while dealing with a medical crisis of a loved one, while 

having a newborn in the home, people being able to afford to take 

time out of work and then get back to work once these crises have 

passed or once a newborn is ready to be left in child care. 

Too often, people are completely pushed out of the labor force 

when they are forced to choose between family obligations and 

work. Roughly half of parents say that they have turned down a 

job because they could not make it work with their family needs. 

That is a lot of parents who are forced to make very difficult 

choices. 

Paid sick leave encourages workers to stay home when they are 

sick. With contagious diseases, this benefits businesses and improves overall productivity, but sick leave policies that allow workers to stay home to care for a loved one may not directly benefit 

their employer. But they do directly benefit society, and that is why 

government has a role in ensuring that all people have access to 

that kind of leave. 

Similarly, parental leave policies generate benefits for society 

providing health and development benefits to children. 

The one last thing I want to mention is the importance of Congress and this Committee to ensure that we are building trust in 

society. There has been a large decline in trust, and some of that 

decline in trust is connected to not having that infrastructure that 

supports working families. 

People who do not trust other people are not themselves trustworthy, and that is something that impedes our entrepreneurship. 

It impedes our economic growth because we divert resources toward monitoring people rather than being more productive in our 

day-to-day world. 

I will end there. Thank you. 

[The prepared statement of Ms. Stevenson follows:] 

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Small Business and the American Worker 

March 6, 2019 

Betsey Stevenson 

Associate Professor of Economics and Public Policy 

The Gerald R. Ford School of Public Policy, University of Michigan 

Chairman Rubio, Ranking Member Cardin, thank you for the invitation to testify today. I want to 

start with the crucial role that small businesses plays in the economy. 

New businesses are typically small businesses and new businesses fuel our growth. Start-ups 

and young businesses are responsible for most of our growth in new net jobs. New companies 

are at the forefront of innovation, both in terms of introducing new products and services and 

showing us how to use technology to do things better. New businesses rely on a high-skilled 

U.S. labor force to be able to hire the people they need to bring their ideas successfully to the 

market. 

Many new businesses will thrive because the productivity gains allowed by technological 

change create the opportunity to offer better, faster, or cheaper goods and services. So I 

applaud the Small Business and Entrepreneurship Committee for recognizing that the promises 

and challenges of artificial intelligence, and other forms of technological change, are the 

promises and challenges of our future small businesses. And their success, or lack of success, 

will determine the future path of U.S. economic growth. 

Let me address the primary concern that most people have for American workers: that 

technology will eliminate jobs. 

Rather than eliminating many types of jobs, technological change will change the tasks that 

workers do in jobs. MIT researchers have shown that most jobs have some tasks that are 

suitable for machine learning and few, if any, jobs are composed of tasks in which a machine 

could effectively do the tasks typically done by workers. What this means is that employers and 

workers will need to redesign most jobs to take advantage of the comparative advantage of 

human workers. 

Jobs will change due to technology, but the fundamental question that remains is whether we 

will have enough jobs. 

In the past, technological change has not led to increased unemployment, but it has led to 

declines in work effort. We no longer send children into factories, but allow them to 

concentrate on the joys of childhood and investing in the skills that will help them succeed as 

adults. We no longer expect to die on the job, but hope for a period of retirement free from 

poverty. These declines in work effort have not been catastrophic-rather, they have been 
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choices to live a better life. In other words, historically we have had as much work as we have 

wanted, which has been a declining amount. 

The most important thing I want the committee to keep in mind is that the purpose of 

economic progress, of technological advancements, is to allow Americans to lead a better life, 

even if that means that people are working less. The important issue is whether people can 

work as much as they want to or need to in order to live a fulfilling life. 

Many people want to be able to stay home from work when they are sick or when they need to 

care for a sick child, parent, or spouse. Many want to be able to stay home and spend time with 

a new child. And some people want to be able to take a vacation or work a shorter work-week. 

These choices are plausible in a wealthy society, but they are only feasible if the gains from 

economic growth are widely shared. Our recent experience on this front explains why people 

are concerned. The share of income held by the top 1% of the population has risen to nearly 20 

percent, from around 10 percent in 1980, while the share going to the bottom 50 percent of the 

population has fallen to 12 percent from 20 percent in 1980. This has occurred as labor's share 

of national income has declined from around 63 percent at the end of the 1990s to around 56 

percent currently. 

Real GDP per capita grew to $56,717 in 2018, from $46,497 in 2000. Yet, almost none of this 

growth is seen in median household income, which has largely stagnated (over the same period 

it grew by 2 percent). 

In recent decades, we have failed to ensure that the benefits of technological advances are 

broadly shared. Therefore, the concerns that continued technological progress will yield gains 

that are not fairly distributed is a realistic fear. 

How can we help businesses recruit the workers that they need and also ensure that we share 

the gains from technology are broadly shared? I want to offer three answers for you today. 

First, increase education. Second, pass a Federal policy that gives all workers access to paid sick 

and family leave. And third, build greater trust. 

1. Education 

New businesses need skilled workers and workers need the opportunity to build the skills that 

increase their productivity and allow them to earn higher wages. In the 21st century we are 

hearing the same arguments about college that we heard about primary school in the 19th 

century and high school in the 20th century-that not all kids can or should get additional 

education. Yet bolstering the skills of American workers has long been the foundation upon 

which American growth has been built. 
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The rate of return for investing in a college education is at an historically high level. College 

graduates earn 65 percent more than high school graduates and are roughly half as likely to 

experience unemployment. 

In order to continue to have a successful and innovative economy, we need to make college 

more affordable and accessible to more people. Young people are enrolling in college at 

increasing rates, a positive trend that we should facilitate. We need to ensure that college is 

affordable and that students can complete the programs that they begin. The challenges of 

financing higher education lead too many students to lose momentum and fail to graduate. In 

addition, there has been an increase in older adults returning to school in order to bolster their 

career prospects. Older students often have other barriers to successfully completing college or 

other training programs such as affordable childcare and housing for a family. Our programs to 

help students must adapt to consider the growing share of students who are not supported by 

parents, but are themselves parents supporting children. 

Apprenticeships and other on-the-job training during school hold the possibility of preparing 

students for the world of work, while keeping them engaged, motivated, and confident enough 

to complete their studies. Many people learn better through situated learning by actively 

participating in the learning experience, such as that which occurs during apprenticeships. The 

United States faces two pressing challenges in developing apprenticeship programs. The first is 

that there are far too few apprenticeship slots. The second problem is that apprenticeships 

need to move beyond the trade occupations, which is a shrinking share ofthe economy, into 

services which are growing. 

The U.S. economy is a service-based economy. Construction and manufacturing jobs, a focus for 

many apprenticeship programs, are a mere 13 percent of all jobs in the economy. 84 percent of 

workers employed in the private sector in the United States work in the service-producing 

sector. A third of our exports are services, such as business and professional services like 

consulting, computer services, and financial services. In order for apprenticeships to succeed in 

training workers for the jobs of the future, our apprenticeship programs need to expand into 

the types of jobs workers are more likely to be hired into. 

2. Paid Sick and Family Leave 

Let me turn to the topic of paid sick and family leave. As a wealthy society, it is clear that we 

can afford to have people stay home when they or a loved one is sick or to care for a new child. 

Moreover, these policies are not as costly as many falsely believe. 
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Paid sick leave encourages workers to stay home when they are sick. With contagious illnesses, 

a paid sick leave policy can create a healthier workforce, improving overall productivity. Studies 

have shown that paid sick days do not lower business profits. 

Sick leave policies that allow workers to stay home to care for a loved one may not directly 

benefit their employer, but such policies do yield gains to society. Children are less likely to 

attend school while ill, reducing the spread of illness to others affecting teachers, children, and 

their parents. Older people who are cared for may be less likely to be hospitalized, reducing the 

need for costly medical care. These benefits are what economists call positive externalities and 

the only clear way to get the benefits of these externalities is through government action. 

Similarly, parental leave policies generate benefits for society by providing health and 

development benefits to children that last throughout their lives. Moreover, research shows 

that paid parental leave policies keep women attached to the labor force, resulting in higher 

wages and employment in the long run. Additionally, research shows that nearly a third of the 

gap between US women's labor force participation and that of other countries is due to the lack 

of family friendly policies like paid parental leave in the United States. 

Many businesses have discovered the cost of losing women when paid maternity leave is 

unavailable and have voluntarily expanded their parental leave policies. However, paid family 

leave cannot be left for businesses to voluntarily choose. Like paid sick leave, the benefits of 

access to paid family leave are bigger for the economy and society as a whole than for any one 

business. All children should have access to the benefits of paid parental leave in order to 

ensure equality of opportunity in the United States. Ensuring equal access to paid parental 

leave requires a Federal policy. 

3. Trust 

The last thing that I want to touch on is the importance of trust to the economy and to our 

lives. While the rule of law is essential to a well-functioning economy, so is basic trust. Trust in 

our government, trust in our businesses, and trust in our fellow citizens. Trust facilitates 

cooperation; it allows us to take a chance on a new worker, a new product, an unknown 

business. Yet trust is in steep decline in the United States. 

Trust in government is at a historic low for all age groups. But it is not just government that 

people are no longer trusting. Interpersonal trust has also declined substantially. That lack of 

trust is one reason people oppose paid sick leave-after all how can you trust an employee to 

only take a paid sick day when they are truly ill? But a similar question can be asked about 

trusting your worker to put in their best effort. And that latter question goes more directly to 

the heart of business success and the future of economic growth. 
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Employers must trust their employees. Without trust, costly monitoring is required. Technology 

has enabled some increase in monitoring, through programs that block employees using 

accessing certain websites and ones that monitor their keystrokes. However, technology on net 

is likely to make it more difficult to monitor workers. The challenge for employers is that 

technological change is making more of the tasks that are most suitable for humans, also tasks 

that are less easily monitored. How can businesses solve this problem? By building loyalty, by 

building trust with their employees. 

When workers trust their employers will be honest and fair, when they believe that their 

employer is doing the right thing by them, they do the right thing by their employer. For 

example, research shows that workers who trust their employer report other workers for 

stealing or slacking off on the job, providing a form of group monitoring. More generally, 

research has shown that intrinsic motivation can be more powerful that extrinsic motivation 

and intrinsic motivation thrives in an environment of trust. 

Policies like paid sick leave and paid parental leave, access to training and education, all help 

build a society with higher levels of trust. You can help build trust today by showing the 

American people a government that they can trust to work hard to find solutions for American 

families. The policies you choose can build trust by creating an infrastructure that ensures that 

our prosperity is broadly shared. 
47 

Chairman RUBIO. Thank you. 

And, finally, Ms. York. 

STATEMENT OF CARYN YORK, EXECUTIVE DIRECTOR, JOB 

OPPORTUNITIES TASK FORCE 

Ms. YORK. Greetings, Chairman Rubio, Ranking Member Cardin 

from the great State of Maryland, and an alum, as I, of the best 

high school in the country, the Baltimore City College High School. 

I just had to flag that, ladies and gentlemen. 

And, members of the Committee, my name is Caryn York. I am 

executive director of the Job Opportunities Task Force, and I am 

thrilled to join you today to discuss the realities of the American 

worker in 2019. 

Job Opportunities Task Force, JOTF because it is a mouthful, is 

an independent statewide 501(c)(3) nonprofit organization. Our 

mission is to help low-wage workers advance to high-wage jobs. 

Our mission, again, is to eliminate educational and employment 

barriers and is achieved via three strategies. 

Number one, program development. For the past 12 years, JOTF 

has partnered with Associated Builders and Contractors, Baltimore 

Metro, to run Project JumpStart, a 14-week pre-apprenticeship construction training program that helps Baltimore City residents obtain entry-level construction skills necessary to enter jobs in the 

building trades with a direct link to apprenticeships. Approximately 75 percent of city residents enrolled in Project Jumpstart 

are unemployed or under-employed. Many have limited work experience, and most have a significant history of criminal justice involvement. Thus, Project JumpStart was designed to address these 

barriers by providing a basic set of entry-level construction skills 

in carpentry, electrical, and plumbing, a strong focus on construction math and measurement, and certifications in safety, OSHA 10, 

first aid, and CPR. 

Associated Builders and Contractors, they cover the instructional 

training. JOTF, we provide the critical, intensive, customized case 

management services. Each student is provided with a $25 stipend 

per class to help mitigate costs like transportation, and JOTF pays 

for students to attend driver’s education for $250 to start them on 

the path toward securing a driver’s license, which we know is crucial to employment. 

Students also receive case management services that include assistance with housing, benefits screening, legal challenges, and financial education. Upon completion, graduates receive, because we 

also work with them after they have left the program, job placement support, a set of brand-new industry-approved starter tools, 

certifications related to construction and construction safety, and 

access to a JOTF-secured low-interest bank loan for up to $2,500. 

But Project JumpStart cannot fix everything. Many times, our 

Project JumpStart team will find that there are public policies that 

are preventing graduates who are employed from moving ahead 

and now risk falling back. This is where JOTF’s second strategy 

comes in, public policy advocacy. 

Our policy priorities generally fall into the following categories: 

adult education, postsecondary access, and affordability; skills 

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training; wages, benefits, and supports; reducing the impact of incarceration on workers; and transportation. 

Over the years, we have been instrumental and continue to be 

a leading voice in successfully educating State and local policymakers and business leaders about some of the most critical workforce issues, including but not limited to investment, investments 

in adult education and skills training. 

JOTF was the original architect of the Maryland EARN program, 

Employment Advancement Right Now, sector-based partnerships, 

paid leave, unemployment insurance for part-time workers and 

new labor force entrants, and the impact on incarceration that includes ban the box on both job and college applications, 

expungement reform, bail reform, occupational licensing reform, 

and accessible and affordable transportation options. 

These policies are crucial to ensuring the success of our folks like 

Project JumpStart graduates, but to round out our mission, we also 

provide research in public education. Our reports like ‘‘Overpriced 

and Underserved,’’ which highlight the cost of being poor, housing, 

transportation, and food; ‘‘Priced Out,’’ which focuses on access and 

affordability for postsecondary education; and ‘‘The Criminalization 

of Poverty,’’ which highlights the laws and policies that unnecessarily penalize and criminalize our poor workers have helped to 

educate the public, which includes policymakers and business leaders and the general public on the barriers that impact an individual’s ability to secure and maintain employment. 

Mr. Chairman and members of the Committee, I provide this 

lengthy background to illustrate JOTF’s deep understanding of the 

barriers that are impacting not just the worker, but employers and 

ultimately cities, states, and our country as a whole. 

According to the Georgetown Center on Education and Workforce, by 2020, about 65 percent of all jobs will require some form 

of postsecondary education, and at our current rate of production, 

the United States will fall short by 5 million workers. This is a 

problem for us all. 

We hear that there are no jobs. Nonsense. The jobs are here, and 

they are coming. The problem is that our workers cannot access 

these jobs. 

And so, because I know I only have a little bit of time left, when 

we talk about how to ensure that workers can access these jobs and 

we talk about it within the context of things like opportunity zones 

that have been designated according to low-income zones, if we 

want to incentivize businesses moving into these zones, then we 

need to make sure that businesses have access to an educated, 

skilled workforce. 

In my neighborhood in Baltimore City, 40 percent in Southwest 

Baltimore, 40 percent of residents lack a high school diploma, and 

the median household income is $10,500. And so there are a number of recommendations that I have highlighted in my written testimony, but I just want to make sure that I bring to your attention 

this afternoon, as we talk about things like apprenticeships and 

skills gaps and reentry and what to do about the excitement surrounding opportunity zones. 

I ask the Committee to consider the following: providing additional funding for work-based training programs, including pre-apLAP51NQ082 with DISTILLER

49 

prenticeship programs and apprenticeship opportunities, career 

technical education and job training, expanding Pell grants to people seeking short-term training programs that lead to in-demand 

jobs, funding for issues that apprentices may need additional support to address, such as transportation and day care; ease restrictions for workers seeking occupational licensing, particularly workers with a criminal background—Senator Cardin, Maryland leads 

the Nation in the most burdensome restrictions for prospective licensees; we need to do something about that—reducing the impact 

of incarceration on workers via banning the box on both job and 

college applications; expanding criminal record expungement, eliminating criminal justice fines and fees that lead to criminal justice 

debt; reform of child support enforcement laws that are sensible, 

family supporting, but punitively apply to noncustodial parents; 

and create tiered incentives to ensure low-income residents access 

to high-income job opportunities, particularly local hiring, local job 

creation, community engagement, and job training within opportunity zones. 

This can be done by aligning workforce development with economic development, investing in skills training, increasing access 

and affordability of postsecondary education, reducing the impact of 

incarceration on the workforce, and supporting public policy efforts 

that ensure workers and families are able to live, survive, and 

thrive in today’s economy. 

Thank you for your time, and I look forward to answering any— 

well, it depends on the question. 

[Laughter.] 

But I look forward to answering questions from the Committee. 

Thank you. 

[The prepared statement of Ms. York follows:] 

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JOTf 

Caryn York 

Executive Director 

Job Opportunities Task Force (JOTF) 

Chairman Rubio and Members of the Committee, it is my honor to appear before you today to discuss 

the skills gap, the impact of incarceration on the worker, and career and technical education (CTE) and 

apprenticeship in Maryland. 

AboutJOTF 

The Job Opportunities Task Force (JOTF) is an independent, 501(c)(3) nonprofit organization that 

develops and advocates policies and programs to increase the skills, job opportunities, and incomes of 

low-wage workers and job seekers in Maryland. We transform obstacles into opportunities for 

Maryland's workforce by integrating workforce, economic, and community development and to respond 

to the workforce needs of both employers and job seekers. 

Each day, JOTF works to eliminate obstacles to meaningful and stable employment through educational 

opportunities, job skills training, effective policy reform, and systems change. By doing so, we are able to 

help low-wage workers advance to high-paying jobs and create employment paths for workers from 

every background. JOTF takes a comprehensive approach to increasing economic opportunity for 

Maryland workers by combining targeted skills training, workforce supports, educating policymakers on 

workforce obstacles, advancing policies to mitigate those challenges, and using high-quality research to 

support our advocacy agenda while educating and engaging the community. 

Program Development 

JOTF values effective program development and management as a means of increasing job skills and 

incomes for low-wage, low-skill workers. JOTF maintains an active role as a workforce intermediary in 

high growth industries, particularly the construction industry, that help low-wage workers enter the 

workforce and advance into high wage careers. For the past 12 years, JOTF has partnered with 

Associated Builders and Contractors- Baltimore to run Project JumpStart, a pre-apprenticeship 

construction training program that helps low-income workers obtain entry-level construction skills 

necessary to enter jobs in the building trades with a direct link to apprenticeships. Approximately 75% of 

residents enrolled in Project JumpStart are unemployed; many have limited work experience and most 

have a history of significant criminal justice involvement. Thus, Project JumpStart was designed to 

address these barriers by providing a basic set of entry-level construction skills in carpentry, electrical 

and plumbing, a strong focus on construction math and measurement, and certifications in safety- OSHA 

10, First Aid, and CPR, while simultaneously providing concentrated case management services. We 

provide each student with a $25/class stipend to help mitigate costs like transportation, and JOTF pays 

for students to attend driver's education ($250) to start them on the path to securing a driver's license, 

which is crucial for employment. Students receive case management services that include assistance 

with housing, benefits screening, legal challenges, and financial education. Upon completion, graduates 

receive job placement support, a set of brand-new industry-approved starter tools, certifications 

relating to construction and construction safety, and access to JOTF-secured low interest bank loans up 

to $2500. 
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Public Policy Development and Reform 

JOTF recognizes the impact of barriers on low-wage workers and promotes policies and programs to 

eliminate educational and employment barriers to increase the skills, job opportunities and incomes for 

low-wage workers and job seekers. Our policy priorities generally fall into the following categories: 

• adult education, post-secondary access and affordability; 

• skills training; 

• wages, benefits, and supports; 

• reducing the impact of criminal justice involvement and incarceration; and 

• transportation. 

The development of our annual policy agenda results from hosting and participating in a series of 

meetings and informational sessions with advocacy partners, businesses, government officials, 

policymakers and community members. Over the years, JOTF has been instrumental and continues to be 

a leading voice in educating state and local policymakers and business leaders about some of the most 

critical workforce issues including: flexible leave, unemployment insurance for part-time workers and 

new labor force entrants, the impact of a criminal record on workers, sensible child support 

enforcement policies that promote financial stability for families, and viable transportation options. 

Research and Public Education 

JOTF performs research projects to deepen our own understanding of the issues impacting our 

communities and lay the groundwork for future policy recommendations. We use our research to 

educate the public- businesses, policymakers, government officials, workers and job seekers- on these 

issues and provide for robust discussion and actionable analysis. Our research continues to drive policy 

reform efforts and inform and influence effective program development and evaluation. 

In February 2018, after a two-year investigation, JOTF released our report, "The Criminalization of 

Poverty: How to break the cycle through policy reform in Maryland" which examines the ways in which 

Maryland's most impoverished individuals are further targeted and criminalized due to inability to pay. 

The Criminalization of Poverty report highlights three key themes and related policy recommendations: 

Common pathways through which the poor are criminalized -there are several key pathways 

in which poor individuals, particularly individuals of color, are put at risk of entering the criminal 

justice system that include racial profiling, civil asset forfeiture, motor vehicle laws, and the 

collection of civil debts. JOTF makes several recommendations to end common practices that 

criminalize the poor in these areas, such as eliminating driver's license suspension as a penalty 

for nonpayment of fines, creating low-cost auto insurance options for low-income drivers, and 

enforcing laws that protect against racial profiling. 

The criminal justice system's disparate impact on the poor- after an arrest, certain groups, 

particularly poor communities of color, face disparate treatment due to inability to afford fines, 

fees, and the resulting increased debt. JOTF highlights the need to limit the use of cash bail and 

implementing more robust pre-trial services while eliminating most criminal justice fees. 

The collateral consequences of a criminal record- several key collateral consequences present 

major barriers to economic success for individuals with a criminal background. JOTF's policy 

recommendations include expanding "ban the box" laws, expanding and simplifying 

expungement, expanding correctional education and job training, and opting out of the felony 

drug ban on TANF and SNAP. 

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With nearly 25 years of experience in workforce, JOTF is honored to share our expertise with the 

members of United States Senate Committee on Small Business and Entrepreneurship as a panelist 

during the Committee's "Small Business and the American Worker" hearing. We hope that the issues we 

share and recommendations we present will encourage a nuanced discussion and lead to systemic 

policy changes that will abolish the barriers to employment and skills attainment for marginalized 

communities, particularly the 1 in 3 Americans with a criminal record, low-income and low-wage 

workers and jobseekers, and our nation's opportunity youth, all of which disproportionately consist of 

Black and Hispanic or Latinx populations. 

The Workforce landscape 

According to the Georgetown Center on Education and the Workforce, by 2020 about 65% of all jobs will 

require some form of postsecondary education, and at the current rate of production, the United States 

will fall short by about S million workers.' Though new research suggests that previous assessments of 

the skills gap may have been overstated, there certainly remains gaps in access to the skills training that 

has the potential to provide opportunities for upward economic mobility and meaningful, stable 

employment.2 This gap in access is particularly true for workers and job-seekers that are low-income, 

low-wage, have a criminal record, or identify as Black or Hispanic/Latinx. 

At the conclusion of the final quarter of 2018, the overall unemployment rate for individuals age 16 and 

older was 3.6 percent. However, there are significant disparities in unemployment rates based on race 

and ethnicity. For White and Asian individuals, the rate was slightly lower, at 3.2 and 3.0 percent, 

respectively. Comparatively, for Black Americans, we see that percentage jump to 6.1 percent, with 

Hispanic/Latinx Americans experiencing a slightly lower rare at 4.3 percent. 3 Additionally, more than 

25% of Black or African American individuals were estimated to be less than 100 percent of the poverty 

level, with individuals identifying as having Hispanic or Latino origin at 22%, compared to 12% of White 

individuals 4 

Additionally, a criminal record has collateral consequences for the person, the family and the larger 

community. Those collateral consequences include penalties, restrictions and sanctions that are 

imposed outside of the criminal justice system once an individual returns to society. They are imposed 

as a result of laws, policies and practices and are often shaped by social stigma as well as public safety 

concerns. And they function to restrict the participation of individuals with criminal records in society. 

Simply put, the criminal record can serve as both the cause and consequence of poverty. 

There are many ways in which a criminal record can become a roadblock for individuals. The three key 

areas are employment, higher education and public assistance. Numerous studies have found that 

employment is one of the strongest factors in supporting the successful reentry of individuals with 

1 Carnevale, A. P., Smith,N. &Strohl, J., (2013). Recovery: Job growth and education requirements 

through 2020. Retrieved from https://cew.georgetown.edu/wpcontent/uploads/2014/11/Recovery2020.ES Web .pdf 2 Modestine, A.S., Shoag, D., & Ballance, J. Upskilling: Do employers demand greater skill when workers 

are plentifui?[PDF document]. Retrieved from 

https://www.aeaweb.os_g/conference/2019/preliminarylpaper/yySyK7fd 3 United States Department of Labor Bureau of Labor Statistics. (2019). Unemployment rates by age, sex, 

race, and Hispanic or Latino ethnicity. https://www.bls.gov/web/empsit/cpsee e16.htm 4 United States Census Bureau American FactFinder. (2017). Available from 

https://factfindercensus.gov/faces/nav/jsf/pages/community facts.xhtml 

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criminal records and in preventing recidivism. However, individuals with criminal records- including 

arrest records without any charges or finding of guilt-face major obstacles in finding employment. 

Limited access to correctional education and job training opportunities in jails and prisons and time out 

of the job market erode job skills and employability for workers and job-seekers that have experienced 

incarceration. Likewise, individuals who did not experience incarceration but possess a criminal record 

that results from interaction with law enforcement face many of the same challenges. The criminal 

record is the biggest barrier to securing and maintaining stable employment and other critical resources. 

Consequently, even if individuals are able to find jobs, they are likely low-wage, with few, if any, 

benefits, and little opportunity for advancement or wage growth. 

Further, research has established that education, particularly post-secondary education, is a key factor 

in increasing upward mobility and earning capacity for all individuals, particularly for individuals with a 

criminal background. However, there are limited opportunities for education while incarcerated. 

Individuals seeking to improve their employment prospects through education can find themselves 

unable to either secure admission to post-secondary institutions or take out student loans due to their 

criminal history. Currently, while some states, including Maryland, and the Common App have banned 

questions about criminal history, there is no federal outlawing post-secondary institution from asking 

about criminal history on the admissions application and use this information to deny admission to 

individuals with criminal records. These inquiries function to prevent individuals, disproportionately 

those with low incomes and minorities, from accessing higher education, which can be a key source for 

skills training attainment. Additionally, there are restrictions on federal financial aid for individuals 

convicted of drug crimes while receiving federal financial aid, and individuals who are subject to an 

involuntary civil commitment for a sexual offense. It is likely that individuals who are ineligible for 

federal aid are also unduly denied state aid because many states adhere to federal guidelines for 

determining state aid. 

Today, nearly 1 in 3 Americans have a criminal record- and despite significant research to indicate that 

those with a non-violent misdemeanor from many years ago, with no other infractions, pose no 

additional risk in the workplace -they still face challenges in accessing employment and education. Jobs 

are the key to economic security and crucial to the successful reentry of those returning to society from 

incarceration. 

Workforce in Maryland 

Career and Technology Education (CTE) 

Maryland's Career Technology Education (CTE) model was designed to provide high school students the 

opportunity to simultaneously pursue technical and academic programs of study, leading to 

advancement in a selected career field. The Maryland State Department of Education (MSDE) partnered 

with statewide industry partners to establish career clusters, including: 

• Arts, Media, and Communication 

• Business Management and Finance 

• Construction and Development 

• Consumer Services, Hospitality, and Tourism 

• Environmental, Agricultural, and Natural Resources 

• Health and Biosciences 

• Human Resource Services 

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• Information Technology 

• Manufacturing, Engineering, and Technology 

• Transportation Technologies 

Maryland CTE programming is aligned to establish both academic and technical skill standards, to ensure 

student success in both college and careers. The programs include work-based learning opportunities, 

such as internships and industry-mentored projects, as well as academic/classroom study5

• Students 

have the option to earn college credits and/or industry-recognized credentials in their selected area of 

study, depending upon jurisdiction. 

Prince George's County Public Schools (PGCPS), one of the nation's largest school districts, has recently 

revamped its CTE and Youth Apprenticeship programming to ensure that students pursuing courses in 

CTE receive hands-on and experiential learning opportunities, integrated academic and technical 

education, and connection to local industry partners. PGCPS is enhancing their CTE curriculum to reach 

more students to provide comprehensive exploration of high-skill, high-demand career pathways while 

also engaging with local industry professionals to inform the content of CTE programs for the region. 

Most recently, PGCPS has offered the opportunity to 11th and 12th grade students to enroll in a CTE 

Construction Trade Program that combines paid work experience, a structured learning environment, 

and the opportunity to earn a credential. Students who select this field of study work full-time with the 

PGCPS Maintenance Department during the summer and during their 12th grade year6 

Employment Advancement Right Now {EARN) 

The Maryland Employment Advancement Right Now (EARN) program established much-needed state 

funding for job training, employment advancement, and sector strategy opportunities for low-income 

Marylanders. EARN Maryland invests in strategic industry partnerships from key economic sectors in 

every region of the state. These partnerships use the power of coordination across education, workforce 

and economic development initiatives to address the multiple needs of companies, starting with the 

training of skilled workers. Once formed, the partnerships develop plans to train and educate workersand place them in meaningful employment. The ultimate aim of EARN Maryland is three-fold: 

• Address the demands of businesses by focusing intensively on the workforce needs of a 

specific industry sector over a sustained period. 

• Address the needs of workers by creating formal career paths to good jobs, reducing 

barriers to employment, and sustaining or growing middle-class jobs. 

• Encourage mobility for Maryland's most hard-to-serve jobseekers through job readiness 

training which may include GED® preparation, occupational skills development, literacy 

advancement, and transportation and child care components. 

Since EARN was established, over 2,900 unemployed/underemployed participants have completed 

entry-level skills training and over 5,600 workers have participated in incumbent worker training, 

5 Maryland State Department of Education. (2017). Maryland high school career and technology 

education programs of study [PDF file]. Retrieved from 

http://www.marylandpublicschools.org/programs/Documents/CTE/CTEBiueBook2017.pdf 6 Prince George's County Public Schools. Career and technical education task force report. (2017). 

Retrieved from https://www.pgcps.orgicareer-technical-education/cards/CTE-Task-Force-Reportand-Survey/ 

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obtaining additional credentials, certifications and/or skills. The analysis of training funds invested in 

FY18 demonstrated that for each dollar the State invested in EARN, an additional $18.50 is created in 

economic impact for the state7 

Apprenticeship 

The More Jobs for Maryland Act, effective beginning June 2017, provides tax incentives for new and 

existing manufacturers to create thousands of jobs, along with additional workforce development 

initiatives that the governor supports, including the registered apprenticeship program. In Maryland, 

registered apprenticeships are jobs where workers "earn and learn." While working on the job, 

employees receive one-on-one full-time training from a skilled craftsperson as well as related classroom 

instruction. An apprentice is "sponsored" by an employer or association and is paid according to a 

progressive pay scale. A registered apprenticeship sponsor is a business or association that manages a 

registered apprenticeship program that has been approved by the Maryland Apprenticeship and 

Training Council. A sponsor can also be the apprentice employer. Eligible registered apprenticeship 

sponsors and participating/signatory employers who hired a registered apprentice beginning in January 

2017 may qualify for a $1000 tax credit for each eligible registered apprentice. 

Opportunity Zones 

In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA) establishing Opportunity Zones in 

low-income census tracts to spur investments in distressed and underserved communities through the 

provision of tax incentives. In Maryland, there are 149 tracks approved as opportunity zones across the 

state, with large concentrations in Baltimore City (42) and Prince George's County (25). In addition to 

the federal tax benefits, Maryland Governor Larry Hogan has proposed offering state tax incentives for 

opportunity zone investors in Maryland that include: temporary deferral of taxable income for capital 

gains reinvested in an Opportunity Fund; additional temporary tax exclusion for investors with 

properties held up to seven (7) years; and permanent exclusion from taxable income of capital gains 

accrued after an Opportunity Fund investment if the investment is held for at least 10 years. 

According to the Maryland Department of Housing and Community Development, there are nearly 589 

census tracts eligible to be "opportunity zones" in Maryland. That is nearly 600 communities with a 20 

percent individual poverty and a median family income 80 percent or less of the area's median across 

the state. And while only about 150, or 25 percent, were approved due to program restrictions, it is 

clear that there is a dire need for investment in under-resourced, distressed communities across the 

state. Coupled with a statewide unemployment rate of 3.9 percent with significantly higher rates for 

Black (6.5) and Hispanic/Latinx (4.7) populations, additional jobs, particularly those that are meaningful, 

stable, and provide living wages, are a necessity to ensure that Maryland's families are able to thrive and 

strengthen our economy. lncentivizing companies- particularly those in the growing fields of 

biotechnology and cybersecurity- to bring additional development to these communities, hire locally, 

and meaningfully engage community members in the decision-making process is a great step towards 

community-driven revitalization and development. 

7 State of Maryland Department of Labor, Licensing, and Regulation. (2018). EARN Maryland 2018 

Annual Report. Retrieved from https://www.dllr.state.md.us/earn/earnannrep2018.pdf 

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Recommendations 

Given the vast number of Americans experiencing poverty and living in distressed communities, it is 

necessary that we work to narrow the gap in access to skills training and meaningful, sustainable 

employment in order to produce a healthy economy and increase economic upward mobility, 

particularly for marginalized communities. We suggest that the following policy recommendations: 

• Increase Funding Levels 

o Provide additional funding for work-based training programs, including, preapprenticeships, apprenticeships, CTE, and job training. Current policy that can be 

considered: 

• The JOBS Act: Expands Pell grants to people seeking short-term training 

programs that lead to in-demand jobs. 

• Increase WIOA funding for pre-apprenticeships and apprenticeships, including 

funding for issues that apprentices may need additional support to address, 

such as transportation and day-care. 

• Diminution Credit Incentives 

o Research shows that correctional educational accomplishment reduces recidivism and 

creates pathways to employment. In order to encourage inmates to complete classes, 

establish a 30-day diminution credit bonus to be awarded to those who earn their GED 

or high school diploma, complete a literacy skills program, post-secondary certificate or 

degree, or 2- or 4-year college degree. 

• Occupationallicensing 

o Limit criminal history consideration to a "look-back" period of no more than 5 years as 

data shows that after 3-4 years without recidivating, a nonviolent offender is no more 

likely to reoffend than someone with no record; limit consideration of a criminal history 

to crimes that are "directly related to" the occupation or will" directly impact the public 

safety" of those served by the occupation. 

• Ban the box on college and job applications 

o Ban post-secondary institutions from inquiring about criminal history on the admissions 

application and use this information to deny admission to individuals with criminal 

records. These inquiries function to prevent individuals, disproportionately those with 

low incomes and minorities, from accessing higher education, which can be a key source 

for skills training attainment. The same case can be made for employment. 

• Criminal Record Expungement 

o Limit public access to criminal background information; allow for automatic 

expungement of non-convictions; and, increase access to expungement and shielding 

for certain misdemeanor and felony convictions 

• Opportunity Zones 

o Create tiered incentives, such as tax credits and wage rebates for Opportunity Zone 

businesses that choose to pursue local hiring, local job creation, community 

engagement and providing job training. 

For more information, please contact: 

Caryn York, Executive Director 

Job Opportunities Task Force (JOTF) 

caryn@jotf.org 

(410) 234-8045 

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57 

Chairman RUBIO. Great disclaimer. Perfect disclaimer. 

Before we get into questions, he was not here at the outset, but 

I wanted to give Senator Romney just a second because I know Mr. 

Cass has worked with you for many years, and he wanted the opportunity to introduce him. 

Senator ROMNEY. Has Mr. Cass spoken yet? 

Chairman RUBIO. Well, he gave his opening statement. 

Senator ROMNEY. Oh, he gave his statement. So I get to ask him 

a question, then, or do you just want to—first, I want to say hello. 

For those that do not know, Oren Cass was kind enough to be 

my domestic policy advisor, and he was responsible for all the good 

things I came out with. I am responsible for the mistakes. 

[Laughter.] 

And, as you all know, he has taken his experience and perspective and brain power to extraordinary heights in being an author 

of a very interesting reevaluation of how we think about success in 

this country and how we create not just a growing economy, but 

growing happiness and stability and satisfaction on the part of the 

American worker and the American family. And it is an approach 

which obviously has garnered great attention from some of the columnists of the leading papers in the country, but also policymakers 

and thinkers. And I appreciate his help in the past and his help 

in the future. 

Thank you, Mr. Chairman. 

Chairman RUBIO. And I am going to generally waive my time, 

other than the first question to you, Mr. Cass, because I know 

there will be a vote here at 4:00, and I want to make sure everybody here gets to go and do that. I am going to be here to the end. 

Both in your opening statement and in the book that has gotten 

a lot of attention, you make the fundamental argument that American policymakers have been hyper-focused on consumer prices, 

raising standards of living, and redistributing income when in 

fact—and I will just focus on just growing the economy at any cost, 

but that that focus is the wrong one. That, instead, our focus 

should be on creating dignified work that supports strong families 

and communities, and that that, ultimately, is what leads not just 

to sustainable growth that is positive and raising standards of living and the like, but it also leads to long-term prosperity. 

So I just want to give you a chance to outline that. To a lot of 

people, that is a different construct than they perhaps heard, certainly from my side of the aisle in many cases. 

Mr. CASS. Sure. Thank you, Senator, and thank you, Senator 

Romney, for that. 

You know, I have likened our situation to the romantic comedy 

heroine in the kind of generic trailer who has it all or so she 

thought, dot-dot-dot. You know, she has the car and the apartment, 

and yet something is missing. 

What we found, I think, if you look at our economic data, is that 

on the terms we have set of growing the economic pie of raising 

material living standards, we have succeeded. The economy has 

grown enormously. We redistribute more than ever to the lowestincome households, and everyone’s material living standards have 

risen. And yet, in conjunction with that, we see all of these very 

serious maladies, whether you are talking about collapsing families 

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and communities, declining personal health, declining life expectancy, exit from the labor force, and so on and so forth. 

And I think what we have lost is the recognition that what is ultimately most important to individuals and what provides the basis 

for our communities, our families, and for the economy ultimately 

is not how much you can consume. It is your opportunity to engage 

as a productive contributor in society. 

I think in our single-minded focus on just consumption, we have 

actually managed to erode, to a significant degree, the health of the 

labor market that provides the real foundation for a healthy society. 

So it comes down to a lot of choices we make on a whole bunch 

of different dimensions and tradeoffs that we face and that we need 

to take a hard look at if we want to really make sure that, first 

and foremost, we are giving everybody the opportunity to, I would 

say, achieve what truly is the American dream, which is not in 

terms of how big your television is. It is about being able to, a lot 

of times, grow up in the community that you grew up in, to stay 

there, to build a family, to support it, to contribute, to save for your 

kids, to set them on a path to success as well. And I think we are 

going to have to make some sacrifices elsewhere on the consumption front if we really want to put that front and center. 

Chairman RUBIO. Thank you. 

Ranking Member. 

Senator CARDIN. Well, I thank all four of you. You have all pointed out that one of the problems we have in getting qualified workers is the fact that we do not have enough people who are educated 

and trained at the level we need, and we have discriminated 

against a large segment of our population who have criminal 

records. If you are a small business with a limited pool, you have 

a hard time competing with the qualified applicants that are available. 

So, Ms. York, I want to just follow up on the point that you mentioned quickly about Maryland and the problems on licensure. 

It has been estimated as many as 600,000 people return from 

prison every year in the United States, and that as much as 64 

million Americans, adult Americans, have a criminal record. That 

is 25 percent of our adult population. 

So this is a huge number, and we talk about opportunities of returning citizens, and yet we know it is extremely difficult. 

You mentioned in my own State of Maryland, we have restrictions in regards to licensing. Could you just briefly tell us what you 

have been able to do to try to provide opportunities for those who 

have served a prison term, who are returning to our community, 

who have not only an opportunity, but the skills necessary in order 

to compete? 

Ms. YORK. Thank you. 

You are absolutely right in terms of the stats that were articulated around the numbers of individuals who are returning back to 

our communities from incarceration because we should all know 

that if you were not sentenced to life, you are coming home. And 

so if they are coming home, it is incumbent upon all of us to think 

about how we want them to return and how we can ensure that 

they do not return back. 

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And so, when you take these large numbers of individuals who 

are returning back to our communities with a criminal background, 

with a criminal record that is used in hiring decisions and even 

housing decisions, and then you juxtapose that against the number 

that shows us that the majority of jobs nowadays requires some 

type of occupational license and the policies that actually prohibit 

individuals or that allow boards to deny licenses to these individuals, then you begin to see how these criminal justice challenges 

actually become workforce challenges. 

And that is why an entity like the Job Opportunities Task Force 

is actually involved in this work. We found that there is a significant segment of the working population that is effectively unemployable as a result of a criminal record. 

There are a number of job opportunities, but yet folks were unable to access them because of their criminal record or because of 

the communities that they were raised in, which made it really difficult for them to access the educational opportunities that would 

allow them to access high-wage employment opportunities. 

So whether it is through Project JumpStart, where we are taking 

city residents and training them in the trades and then helping to 

deal with all of these wraparound case management services that, 

quite honestly, business owners and employers do not have the 

time to deal with but understand how important they are, as it is 

related to someone’s ability to actually secure and maintain employment. 

So pre-apprenticeship—we talk about apprenticeship. Pre-apprenticeship is so important to ensuring that the individual is actually successful in the apprenticeship program, and then ensuring 

that we are supporting those policies that successfully facilitate the 

individuals once they are matriculating through the programs and 

then afterwards because, in today’s market, you will hear from employers that, you know, the workforce has changed, and so the 

workforce is aging. They are now looking for workers, and that includes workers with criminal backgrounds, and so how can we fix 

this disconnect so that employers have access to qualified workers 

and workers get jobs? 

Senator CARDIN. I am going to look forward to looking at some 

of those specific recommendations. 

I think we have an opportunity here. This past Congress passed 

the FIRST STEP Act, which I thought we came together in a sensible way on sentencing. Now I think it is important for us to come 

together on dealing with the realities of the population of our country. 

All of you have mentioned the importance of higher education 

and the availability and access to higher education. You have all 

talked about the appropriateness for technical education. Not everyone should go to college, and the importance of that. 

My concern is that if you look at those that are going to be on 

track for higher education and those that may be on track for technical education, there is a disconnect between the communities you 

come from. 

So how do we provide equal opportunity so that those who should 

be going to college can have a better opportunity for income are not 

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denied that opportunity because of the community they happen to 

come from? 

Mr. Cass, do you have an idea on that? You talked a little bit 

about equalizing through wage, directly through wages. But would 

not it be better that someone who should be in college has that opportunity rather than saying that we are going to get you into a 

technical program, which is important? I am for technical education, but it should be based upon aptitude and need and talent. 

Mr. CASS. Well, I certainly agree with that. 

I think the first step in any system that has multiple tracks 

should be to ensure that the choices the students and their families, which track that they move on to. 

Senator CARDIN. Would you acknowledge that today that is not 

necessarily the case in America? 

Mr. CASS. Well, we do not have a multitrack system today in 

America. We have a system that attempts, I would say, to push everybody into a college pipeline and essentially abandons those who 

do not reach it. 

Senator CARDIN. Not if you come from certain neighborhoods. 

Mr. CASS. No, not for every neighborhood. But, certainly, if you 

look, for instance, with respect to funding at what we spend money 

on or if you look at where Federal attention is, it is almost entirely 

on trying to increase the share of people attending college. 

So I think it is very important to recognize that while we want 

to make sure we have two robust tracks, the imbalance we have 

today is the total lack of a vital non-college track, and that when 

we lack that, it is those who would perform best on that track who 

we hurt most. 

I think a lot of folks look at, for instance, your observation that 

we might have a disparity in terms of people from which communities move on to which tracks and say, well, therefore, that is a 

reason not to have tracks. I think that is the wrong way to think 

about it. 

I think, essentially, we have a track, and it is a college track, 

and it is not the appropriate one for many people. Creating an additional track and giving people the option of accessing it would be 

a tremendous benefit to a tremendous number of people who do not 

have access to it today and would bring our system much closer to 

one where as many people as possible are on a track that is appropriate for them. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

Chairman RUBIO. Senator Hawley. 

Senator HAWLEY. Thank you, Mr. Chairman, Ranking Member. 

Thank you for calling this very important hearing. 

I just want to pick up right there. It seems to me something you 

just said, Mr. Cass, is very important, which is that we essentially 

have at this point in this country an educational system, job system that pushes folks toward going to college, which is great, but 

if you do not come from the right background where you have advantages that get you there, then you are essentially left on your 

own. 

Too often, I think we have an economy where increasingly we say 

to folks who have not gotten a 4-year degree, ‘‘Good luck to you. 

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We cannot promise you a good-paying job. We cannot promise you 

will be able to find any good work,’’ and we talk endlessly about 

getting better jobs for folks who have college degrees. What about 

those who do not have college degrees? 

I come from a State in which most folks have not gotten a 4-year 

college degree, but they still want good work, and they still deserve 

good work. And our communities and families still depend on the 

availability of good work. 

I think my question is—and I will just pose it to the panel, but 

I will start with you, Mr. Cass, and go down the line—what should 

we be doing in order to ensure that we have a labor market that 

can provide good, honest-paying jobs for folks who do not have a 

4-year college degree and who do not live in one of these metropolitan hubs on the coast, but who maybe come from a State like mine 

that is majority rural or majority ex-urban, who still want to have 

communities that are prosperous, who want to be able to support 

and raise a family, but who want to do that without having to 

move to someplace else, and who have not gone to college? A 4-year 

college was either not available to them or not for them, but yet 

they still want to have access to good-quality, meaningful work. 

Mr. CASS. Well, I think it is an excellent question. 

I would mention a few things. I think education certainly has to 

be at the top of the list, and I like how you described it, which is 

people get to age 17 or 18, from whatever background they come 

from, with the aptitudes and preparation that they have, and absolutely, we should be talking about how to do better reform in society as a whole to make sure that we get people to that level as prepared for success as possible. 

But to the extent that we are not, I think it is a mistake to just 

wish that we were and proceed from there. 

Given where people arrive at age 17 or 18 today, providing them 

with more of the apprenticeship-type pathway that we have heard 

I think is critically important. Frankly, investing Federal money 

that would otherwise go to the kids who are in college, I would 

rather see us investing in the kids who are not headed for college 

in a sense. So I think that is very important. 

Then one other thing I would mention is just our regulatory infrastructure right now wildly undervalues work and physical economy, whether it is farming, whether it is infrastructure, construction, resource extraction, manufacturing, and favors finance and 

technology. And we should not be surprised that that is where all 

the investment goes, and I think we need to recognize and put a 

much higher premium on the value of the work that people do in 

the physical economy. 

Senator HAWLEY. Thank you. 

Mr. Lettieri. 

Mr. LETTIERI. I agree with much of that, so I will just add on the 

demand side. 

A tight labor market, strong demand pulls people into the labor 

market and boosts wages for lower-skilled employees, lower-paid 

employees. So I think that is very important to overall labor market stability and the health of people who have less of an education 

or less skills entering the workforce. 

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I would also say, as I mentioned in my testimony, a healthy 

churn in the labor market is important for everybody, particularly 

marginally attached workers, and so the more—I will connect this 

back to entrepreneurship. The more firm entry you have in the 

business market, the more that chain reaction flows to the benefit 

of marginally attached workers, many of whom we have talked 

about here, who face a number of challenges entering the labor 

market. 

One of those is demand, and one of those is a static economy. So, 

when we have static economies, many of those regions you talk 

about are very static. They are not suffering from business decline. 

They are suffering from lack of business entry, and they are missing that chain reaction that business entry sets off. 

And so, to the extent that we can focus on entrepreneurship as 

well, that does create more labor market opportunities up and 

down the chain and more demand for work of all different types. 

Senator HAWLEY. Dr. Stevenson. 

Ms. STEVENSON. So let me also focus on the demand side, putting 

this in a little bit in perspective. 

So, among people in their 20s, their late 20s, 64 percent do not 

have a college degree. Sixteen percent of our private-sector jobs are 

in the goods-producing sector. So there is nothing that this Committee or this Congress can do that is going to be able to take most 

of the people who are not going to college and get them into some 

sorts of goods-producing job. 

So we need to be thinking about technical training in a way that 

is very different from the way we used to think about it, so things 

like computer coding, other types of service jobs are going to be an 

important place for good jobs. So do we have the training programs 

to make sure people can do those kind of jobs? That is an important question. 

And then the spillover effects for things like are we providing 

subsidies for high-quality child care, if we provide subsidies for 

high-quality child care, it makes it easier for families to work, and 

it also pushes up wages in the child care industry, which is an important industry. And we can make that a better paying job, a better job for people to feel that both men and women can enter their 

jobs of taking care of early childhood education. 

So we need to be both building the skills of the workers who are 

able and can thrive by having more skills. We need to be rethinking what we mean when we say technical training, and we need 

to be investing in the parts of our economy like health care and 

education services, where there is huge demand, but right now, 

those are seen as undesirable jobs. They are undesirable because 

they are low paid, and a lot of that pay interacts with public policy 

in terms of what is the reimbursement rate for an elder care worker, for example. So there are things we can do on that end that will 

both support families and work. 

Senator HAWLEY. Ms. York. 

Ms. YORK. Thank you. Great question. 

I listed a number of recommendations in my written testimony, 

which is five that I want to highlight. 

Number one, just understanding and making sure that we are 

clear about the fact that the worker is not monolithic, and so workLAP51NQ082 with DISTILLER

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ers are going to be subjected to different barriers and challenges, 

depending on where they are from, but also maybe their race and 

their ethnicity and their gender, all dealing with different barriers. 

Also, redefining college. A lot of times when we talk about college 

and higher education, we are just thinking 4-year college degrees. 

Training programs should also be included when we talk about 

postsecondary education, and we cannot forget community college, 

which leads me to my third point. 

Many times, individuals are not able to access additional 

credentialing because of access or affordability, and sometimes 

community college can even be expensive for our low-wage workers 

who are seeking to obtain maybe evening classes or additional 

credentialing so that they can access high wages, and so redefining 

how we talk about college and then making sure that we are talking about the affordability of all levels of college. 

And then, lastly, aligning workforce with economic development. 

It is so frustrating to me and many other stakeholders when we 

talk about economic development and what businesses are looking 

for over here and then we talk about what it takes to actually move 

workers from A, B, to Z here. It is important that when we are 

talking about crafting training programs that we are listening to 

employers. What is it that you need so that we can craft the curriculum that will ensure that you can draw from these trainees, 

and then you can hire them and employ them? So that we are killing a bunch of birds with one stone. 

And so those in addition to all the many recommendations I have 

listed in my written testimony, I believe would help ensure that we 

are able to get to the labor workforce that we are looking for. 

Senator HAWLEY. Thank you. 

Thank you, Mr. Chairman. 

Chairman RUBIO. Thank you. 

Before I turn it over to Senator Young, yesterday I had a meeting with NIFB, which represents a lot of small, mid-sized business. 

And for the first time in years, the number one concern in their 

survey of business owners is the lack. They cannot find trained 

workforce to fill the jobs that they need at the small—— 

Ms. YORK. Absolutely. 

Chairman RUBIO. And they are willing to train people, but obviously, that is an additional burden that they are facing. So I think 

that is a very important question. 

Senator Young. 

Senator YOUNG. Thank you, Chairman, for holding this hearing. 

I appreciate all of our witnesses for being here. 

Mr. Lettieri, you place great emphasis in your testimony on indicating that we should, at the Federal level, consider banning the 

enforcement of non-compete agreements, except for perhaps under 

narrow circumstances. It is a bold proposal and one that, in many 

ways, I find attractive. 

Could you please explain what exceptions might exist to that ban 

and enforcement, though? 

Mr. LETTIERI. Yeah. Thank you, Senator. 

The most obvious exception is probably when a business owner 

sells his or her business to an acquirer. In that case, in many 

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compete. So I think that is the kind of thing that makes a lot of 

sense. 

In California, the most restrictive State in the country, when it 

comes to non-competes, they allow for that exception. I think that 

makes sense as a national rule as well. 

Senator YOUNG. Okay. 

There is another concern that I anticipate, should we go this 

route, and it is the states—this has traditionally been the prerogative of the states to determine whether or not to ban the enforcement of non-competes, and if so, whether they banned broadly or 

more narrowly. 

So what would be your response to someone who had these sort 

of federalist concerns? 

Mr. LETTIERI. Sure. I think it is an important question to address. 

It has been the purview of the states because the Federal Government has chosen not to have a say in the matter, but non-competes are properly understood as part of employment law, and employment law certainly is an area where the Federal Government 

has a strong interest and set a national baseline against which 

states can modify and do other types of their own prescriptions 

that are unique to their states. 

I think this is clearly a case in which both falling within employment law jurisdiction and being a matter of such importance to the 

overall health of the national labor market, there is both a compelling economic rationale and certainly a clear legal rationale as well 

I think for the Federal Government to have a say, as it does on 

many, many other employment law matters. 

Senator YOUNG. Sure. 

I can anticipate a number of businesses. I grew up in a family 

business, and we would have sales lists, customer lists. And those 

were very important to our business model. So there is certain information that is important to certain types of businesses. Are 

there steps that companies can take without the use of a non-compete agreement under the law that can be used to protect those legitimate interests? 

Mr. LETTIERI. I think that is one of the—this is one of the questions that gets to the heart of why non-competes are so problematic. It is for the very reasons that employers often use to justify 

their use. They are not necessary. 

Employers have access to trade secrets protection, to other protections of intellectual property. They have the use of nondisclosure 

agreements and non-solicitation agreements. When you look at the 

reasons that employers give for the use of a non-compete, they 

often fall into one of those other, more finely scoped categories. And 

those categories, those tools do not carry the same type of broad 

harm that non-competes carry throughout the labor market and 

throughout the economy. 

So if you have alternatives that are more finely scoped to the 

concerns that employers have, over legitimate concerns, frankly, for 

intellectual property and trade secrets, those are the best tools to 

apply to those challenges and leave aside the broad prohibition on 

the very thing that our economy is based on, which is competition. 

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And for workers, their knowledge, their skills, that is the only 

thing they have to trade on. So this is the kind of thing that I 

would say, going further, really harms individual liberty and 

makes it very hard for us to get the kind of outcomes we all say 

we want, which is a boost in wages, more entrepreneur dynamism, 

more innovation in our economy. So we have to look upstream from 

that and say if this is a tool that is being misapplied, what are the 

alternatives? And when we ask that question, we find that there 

are many that employers have to reach to. 

Senator YOUNG. So you mentioned dynamism, and I know that 

is something that you are intently focused on at Economic Innovation Group. You and I have discussed it at some length. Do we 

have economic literature? Is there some good evidence out there 

about the impact of non-competes on the marketplace, and if so, 

what conclusions can we draw? 

Mr. LETTIERI. Very clearly, the literature agrees on a few fundamental things. One, that the enforcement of non-competes greatly 

harms new business entry and markets, in some cases, up to 20 

percent. That it harms the overall wage environment for workers, 

even those not covered by a non-compete. But in states that enforce 

them, it has a depressing effect on everybody’s wages in certain 

fields and on and on. 

I mentioned in my testimony job satisfaction, the amount of time 

that a worker stays in a job. All of them are harmed. So it is very 

hard to find an issue that unites the academic literature the way 

that non-competes does. 

It is not really a disagreement among academics as to whether 

they are harmful; it is just to what extent they are harmful. And 

the more literature we have, the more ways we are finding that 

they are harming both workers and entrepreneurs. 

Senator YOUNG. Thank you all for being here. 

Mr. Lettieri, thank you for answering my questions. 

Mr. Chairman, I know it is very un-senatorial, but I yield back 

the balance of my time. 

Chairman RUBIO. You had 2 minutes left. 

Senator Shaheen. 

Senator SHAHEEN. Oh, goody. Can I take it? 

Chairman RUBIO. Yes. 

Senator SHAHEEN. Well, thank you all very much for being here. 

I apologize for missing your testimony. 

I want to begin with you, Dr. Stevenson, because I sort of heard 

the end of the question about child care, but in New Hampshire, 

child care, next to mortgage, is the highest expense that families 

face. For an average family with a newborn up to 1 year old in New 

Hampshire, it is over $12,000 a year just for child care for that one 

child. 

So can you talk about the challenges that presents for families 

as they are trying to get in and out of the workforce? That is often 

coupled with the fact that most people do not have access to family 

medical leave or family leave around the birth of a child and what 

challenges that also presents. Where, on the one hand, they want 

to go back to work. The costs of child care are very high. They do 

not have leave to stay home with the child, and what kind of conundrum do families face? 

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Ms. STEVENSON. Thank you very much for that question. 

I think one of the real surprises in recent years is that we have 

been in this long boom, and yet fertility continues to decline. 

Why is it that millennials are finding it so hard to have children? 

Well, you touched on part of the reason, which is that they are 

graduating from college with enormous amounts of college debt, 

and then they are facing down child care costs that are—that is 

itself actually equal to the cost of going to college or even greater. 

So those costs combined with many of them having graduated in 

a recession, so not having the job changes what they needed to 

have to get the wage gains they needed early in their career, then 

they face unsustainable costs of child care, they are in jobs where 

they may not have access to paid leave, maternity leave, paternity 

leave, or flexibility or parental leave. All of these things are leading 

some people to say, ‘‘I cannot afford to have children.’’ So we are 

seeing fertility decline. 

What we see with the challenges from child care and not having 

access to what I think of as an infrastructure that supports families is some people choose not to have children, but other people get 

sidelined from the labor force. 

We see in the data very clearly that people who have access to 

paid leave, women who have access to paid leave are more likely 

to stay attached to the labor force, will be in the labor force for 

longer, and will have greater wage growth over the course of their 

lives. 

We see quite clearly in the data that women who feel that they 

need to take time out of the labor force have a really hard time getting back in. 

One of the problems with our labor force and with the lack of dynamism is that we are failing to provide the on ramps when people 

take an off ramp out of the labor force. So we get people who exit 

for some reason or another, and they cannot get themselves back 

in. 

For many women and many families, if you sit down—if you 

have a 1-year-old child and you sit down and you look at what is 

the cost of the woman going to work, what they are going to pay 

in child care, the marginal tax rates on the woman’s additional 

work, the cost of her commute to work, they find at the end of the 

day, they are not netting very much. 

So many families then put themselves in a situation where they 

say, ‘‘Well, maybe we cannot afford to have you stay in the labor 

force,’’ but when you step out, you come in at much higher wages 

or maybe not at all. 

As I mentioned before, if we have greater support for child care, 

there are a couple things that happen. We invest more in children, 

and those children have better outcomes and earn higher wages. 

We have a large, large body of literature—— 

Senator SHAHEEN. Right. 

Ms. STEVENSON [continuing]. That shows that early childhood 

education reaps benefits for taxpayers over the course of that kid’s 

life, but it also reaps benefits for families as women are able to get 

back to work, as they are able to support their families. Those kids, 

particularly lower-income kids, will grow up in a household with 

higher income, which generates its own second set of benefits. 

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So this issue is very, very crucial to the success of American families. 

Senator SHAHEEN. I certainly agree, and I hope that we can find 

ways in which we provide more support for families around child 

care and early childhood education. 

My next question is really for any or all of you because one of 

the biggest challenges we have in New Hampshire right now is affordable housing. 

We have an economy that is generally doing pretty well, very 

well. We have a very low unemployment rate, one of the lowest in 

the country. We have a lot of jobs that are going unfilled, and we 

have companies that cannot get workers because they cannot afford 

housing in the communities that they are in. 

So does anybody have any suggestions about how we better spur 

affordable housing? 

Ms. YORK. So I will go first. 

You know, I am sure that John may have some comments 

around how there are a number of initiatives to provide for housing 

opportunities within the context of opportunity zones. However—— 

Senator SHAHEEN. And we have those in New Hampshire, and 

we are seeing some benefits from those as well as we also have 

HUBZones, but they are not providing the incentives—— 

Ms. YORK. Correct. 

Senator SHAHEEN [continuing]. That builders need to actually 

put in housing that is more affordable. 

Ms. YORK. Correct. 

So, you know, from a workforce perspective, this is something 

that the Job Opportunities Task Force has recently started to take 

on because we are finding that for low-wage workers, about 40 percent of their wages or more is going toward housing cost. And we 

are talking about renting. 

There was recently a study on CNN that showed that in Maryland, we were fifth in the Nation for how much you must make an 

hour to rent a two-bedroom home. It was somewhere around 

$29.50. So housing instability is a workforce challenge. 

So I think that this also goes toward an earlier comment that I 

made around aligning economic development with workforce development because you are absolutely right. Employers and businesses, in addition to looking for a pipeline of educated skilled 

workers to determine where they are going to move, they are also 

looking for the livelihood and what is it going to take to ensure 

that our workforce is going to be able to live and thrive, and one 

of that includes housing. Are there actual options, and are they affordable options? 

So I would highlight, of course, or uplift opportunity zones as a 

way to encourage localities and states to get creative with how to 

ensure that housing is provided at an affordable rate across income 

levels. 

I think that you are starting to hear creative options for whether 

they be housing co-ops, for particular populations. For instance, we 

have individuals that are returning from incarceration, and they 

need a place to stay as well. So how do we provide those housing 

opportunities for them so that it is not contributing to the larger 

homelessness situation? 

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So that might not necessarily answer your question of what we 

can do to incentivize builders and others to move into our communities to ensure that we are providing this housing. I would say 

that the only solution is how can we use opportunity zones as a 

way to provide incentives to connect some of these dots. 

I do not know if John wanted to comment on this. 

Senator SHAHEEN. And that may work in 20 years. It is not going 

to work next year or in the next 3 years. 

Do you want to add something, John? 

Mr. LETTIERI. I was just going to add that as we look at housing 

challenges around the country, the most fundamental relates to 

zoning and land use regs that are local, so that the prohibition on 

building toward density and scale of housing close to where the 

jobs are is a fundamental challenge that no matter how effective 

a subsidy, there is no way to get around that principal challenge, 

and no subsidy is going to be effective at overcoming that at scale. 

So I agree there is tremendous opportunity with opportunity 

zones to make certain types of deals more affordable and especially 

I think in workforce housing where there is a huge missing middle 

in the labor market. I see that as being a perfect match, but that 

does not compensate or only partially compensates for the fundamental challenge, which is too many places are far too restrictive 

about allowing for local building and density and their housing policy. 

Senator SHAHEEN. I certainly appreciate that. We have a project 

in downtown Portsmouth that has been held up around concerns 

by abutters. It is multifamily affordable housing that is right downtown. 

Now, I think it is going to go forward, but as you say, there are 

too many—there is the ability of too many restrictions to be put in 

the place of going forward with that housing. 

Thank you, Mr. Chairman. 

Chairman RUBIO. Thank you. 

Senator Romney. 

Senator ROMNEY. Thank you, Mr. Chairman, and to each of the 

panelists, thank you for your participation. 

It has been a puzzle, I think, for many to see that we are one 

of the very wealthy countries in the world, perhaps the wealthiest 

of the major nations in the world if you look at a GDP per capita 

basis. We have a lot more stuff than we used to have as middleclass families, 30 years ago. The things we have in our homes are 

extraordinary, and yet the degree of anxiety, unhappiness, anger, 

anger directed toward our politics and toward elements in our life 

that we are not happy with is at a very, very high level. And I 

think it has been instructive to recognize that perhaps some of this 

is too much focus on, if you will, GDP and GDP per capita and not 

enough on some of the other elements. 

You have described as part of the prescription to bring more family, work-oriented, and more satisfying life experiences, a dual 

track, if you will, in education. I want to put in a plug and then 

get to my question. 

The plug is that some years ago in the State of Utah, a few of 

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eryone is accepted, and you can come in and you can get certification to go into a job. You can get licenses to do various things. 

You can get an associate degree, or if you want, you can keep on 

going to get a 4-year degree. 

So, as you come in, you do not have to say which one you are 

going to do. You take different classes. You find which ones that 

you find most compelling and most interesting. You pursue that 

course, and off you go. Some go the 4-year route, some go 2 years, 

some get certification, but I will put that aside. But it is a very successful effort in providing people a wide range of tracks, if you will, 

in the same institution. 

But what I want to turn to is something which I have seen time 

and again, which is even with community colleges that talk to the 

local business community to say what kind of jobs are you looking 

for, what kind of training do we do. It seems to me that some of 

the most effective training is done by the business itself, by the 

company itself. 

We give R&D credit when companies are willing to invest in 

stuff. We do not give an R&D credit when companies are willing 

to invest in people, and I wonder whether you believe that employer-based education and employer-based training might be a 

highly efficient way of helping people find a satisfying career and 

whether we might be wise in providing a credit of some kind to 

businesses that hire someone who may have been incarcerated, 

someone who has been out of the workforce for a long time, someone who is just coming in for the first time, and then providing 

them this credit for training purposes to get them started in their 

career. 

Mr. CASS. Yeah. Thank you. I think that is exactly the right way 

to think about it, which is that employer-led training is pretty 

much, as far as we know, the only way to do training. 

I mean, when you have government-led programs that try to 

guess what the employers want, they tend to work out fairly poorly. Partly, it is a function of employers knowing better what they 

want. Partly, it is a function of just actually getting on the job 

sooner. So the kind of credit you have described I think is a very 

good approach. 

We actually have, to our detriment, I think, a wide variety of 

very targeted credits, so a credit if you hire this exact kind of hardto-employ person in this industry and so on and so forth. 

I think a much better model and one that fits with the tracking 

concept we have discussed and with apprenticeships generally is to 

really focus the model on saying for folks who are sort of in those 

late teen years, essentially 17 through 20, that is a period of time 

when we essentially want to subsidize the employment. That getting that person into a job, even while they are still in high school 

be on the job part of the time, it is going to be incredibly important 

to building skills sooner and ultimately saying we can get someone 

to age 20 for less than we spend on college with earnings in the 

bank, years of experience, and industry credential and a job. 

So targeting more of what we call education spending right now 

toward supporting that kind of relationship I think is a very important approach. 

Senator ROMNEY. Thank you. 

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Any others that would like to comment? 

Yes, Ms. York. 

Ms. YORK. Thank you. 

So I do think you are on to something; however, I do think there 

should be multiple options in terms of training. 

I mentioned the Maryland program, the Employment Advancement Right Now. This is an employer-led program, where the employers—you have the jobs. You know the curriculum that you are 

looking for, and so you tell us the curriculum, and we partner, 

whether it is a nonprofit—for instance, in construction, it is JOTF, 

and we partner with the training provider, say Associated Builders 

and Contractors, or it could be a community college. But you are 

working with that community college to come up with the curriculum that is directly aligned with the jobs that you are looking 

for. 

But I also want to make sure that we are not moving away from 

community colleges because community colleges also provide an opportunity to access that training so that you can access the jobs, 

and then we can allow employers to build on top of that. 

Regarding your last point, tax incentives for employers who may 

be interested in hiring individuals with a criminal background, you 

know, I struggle with this because for the Job Opportunities Task 

Force, we are always interested in ways to incentivize businesses 

to hire, to incentivize businesses to ensure that they have a robust 

workforce. 

But the flip side of that is when we talk about individuals with 

a criminal background and we talk about providing a tax credit as 

an incentive, these are actually very qualified individuals. They are 

able-bodied. There is actually nothing wrong with them, aside from 

the fact that they have a criminal record. 

So, in today’s market, when we have an aging workforce, when 

we have all of these challenges where employers are now having 

to recruit and consider employees, prospective employees, that before they did not necessarily have to, such as individuals with a 

criminal background, I worry that we may be sending the wrong 

message by relying too much on tax credits to incentivize employers hiring individuals with a criminal background, when these are 

probably—would be some of your best employees because they are 

hungry, they have something to prove, and would be eager to come 

on your job site and would be eager to be trained by you as an employer and everything that comes with that, outside of having a tax 

credit or some type of tax incentive. 

So, I mean, I struggle with it because I understand that we want 

to incentivize businesses, but I also want to make sure that for individuals with a criminal background, we are not putting them in 

a box where we are assigning them some particular handicap because the only handicap is the fact that they have a criminal 

record. And we as a society have assigned the stigma to that 

record. But they can work, and they are great workers. 

Senator ROMNEY. Thanks. 

Ms. STEVENSON. So I think what we have learned in recent years 

is that when the labor market gets really tight, businesses hire 

people that they would not have looked at when the labor market 

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is not so tight. It is not a big surprise. It means that incentives 

matter. 

How much of an incentive do they have to hire hard-to-employ 

people? How much of an incentive do they have to provide training? 

One strong incentive is a tight labor market. We are not always 

going to be blessed with a tight labor market. So I think it is absolutely a good idea to be thinking about what are the other ways 

in which you can build incentives into the system when there is not 

a tight labor market. 

I do think that it would be very wise for the Committee to think 

about a set of incentives that might actually move with the state 

of the labor market. You might not need incentives as strongly 

today with our 4 percent unemployment, but I would sure like to 

see those incentives when employment is 6 or 7 percent. And I 

would rather you debate that right now than waiting until we see 

unemployment at 6 or 7 percent and start debating it then. 

It is possible to have policies that are automatic stabilizers by increasing the kinds of incentives we provide employers to hire people as the unemployment rate rises. 

So I personally think that the types of tax incentives that you 

are talking about are a wise thing for you to be considering, and 

I would add to that to think about ways in which you could thinking about ramping that up and down as the business cycle changes. 

Senator ROMNEY. Thank you. 

Chairman RUBIO. Just some questions, now reclaiming my time 

I did not use at the beginning. 

Ms. York, let me ask you. I support—I think we all would—the 

goal of helping those who have criminal backgrounds, convictions 

in their background, to finding meaningful work, but we are all 

aware there is a stigma associated with that. Some employers shy 

away from it for a lot of different reasons. 

Other than just the market need, we need to hire people. We are 

going to have to hire people that we would not have hired at other 

times. What have been some of the more successful methods that 

you have been able to use to convince employers to hire people that 

have had a previous conviction? 

Ms. YORK. So, I mean, one of the methods is actually one that 

is not led by JOTF. It is one that Dr. Stevenson just articulated, 

just the fact that we have a tight labor market. So, by default, they 

are having to consider workers who they would not necessarily consider. 

JOTF is also a member of a number of business associations. You 

would not think we are, but we tend to be because we have to be 

responsive to both the worker and the employer. We find that within those groups, those employers that for a long time maybe have 

always hired individuals with a criminal background are now able 

to anecdotally advise and inform and influence their colleagues and 

their partners on what it is like to actually have an individual with 

a criminal background on their job site and how the sky has not 

fallen, and ‘‘Actually, it is one of my best employees.’’ 

Outside of that, it is really just getting folks to actually understand, particularly employers to actually understand the dynamics 

of an individual with a criminal background and add that humanistic approach because a lot of times, we just focus on the fact that 

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you went to jail. You have this record, and that is all I see, and 

that is all I care about. 

These are individuals. These are our neighbors. These are our 

brothers and sisters. And, again, if they were not sentenced to life, 

they are coming home. So if they do not have access to employment, then they are going to jeopardize our communities because 

they will feel that they have to resort to an illegal means. 

This then becomes a business challenge for those businesses that 

are looking not just for a stable, educated, skilled workforce, but 

also a safe environment. 

So how can we talk about the importance of investing in these 

individuals? Not just for the moral, social, feel-good kind of thing, 

but making the business case for why this actually will ensure that 

our communities are safer and you have access to workers. But we 

are really relying on other anecdotes from other employers. We are 

relying on the fact that if you train them and provide them with 

the supports, quite honestly it does not matter that you have a 

criminal background because if you can get to work on time and 

if you have the skills and the training that is necessary, all of that 

is irrelevant outside of any regulatory challenges that are presented with the criminal background. 

Chairman RUBIO. Mr. Cass, the strategy of productive pluralism 

that you describe, I think it could have some interesting implications for small business. 

The primary focus of labor market policy is on connection. That 

is what we made it, connecting workers, especially young workers, 

to productive employment that is consistent and builds skills. Then 

it seems like that might entail greater engagement for small business and entrepreneurs. 

I wonder if you could just discuss that because it sounds to me 

like that is tailor-made for connecting workers to the needs of 

small businesses, startup businesses, and unique industries. 

Mr. CASS. Yeah, I think that is right. 

There are two things that I would say about the special relevance to small businesses here. One is to recognize the role that 

small businesses play in the ecosystem of a local economy. 

Dr. Stevenson rightly pointed out that a very small share of overall employment is in manufacturer, for instance, but when you step 

back and look at the ecosystem of a local economy, what you tend 

to have is a few large employers, some of whom need to actually 

be sending something out to the rest of the world, and that then 

supports a much more robust and vibrant service sector around it. 

So I always say we cannot all serve each other coffee. 

So to have a vibrant small business sector, it cannot simply all 

be, for instance, child care providers providing child care for each 

other. We need to make sure that the economy is one in which the 

types of business that small businesses are likely to engage in can 

still connect to larger multinational, nationwide companies, and 

that is where a lot of their growth and productivity gains are likely 

to come from. So small businesses as kind of a key component of 

local economies in particular is very important. 

Then the second thing I would say—and this goes back to what 

we were speaking about a moment ago with respect to education— 

is that small businesses are in an especially tough place when it 

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comes to training. A small business might need to hire one person 

every year or two. They cannot run a gorgeous global training program with three off-sites a year for their one worker per year. So 

for small businesses in particular, it is really important to have 

structures at the local level that allow multiple small businesses to 

come together to collaborate with larger businesses, a little bit like 

Ms. York was describing, where you design the curriculum. Maybe 

it is hosted at the community college, and then all the small businesses that need a particular skill set have access to those trainees. 

So having small businesses be able to collaborate in that respect 

is critical to having to be able to take on new workers, where they 

are not going to be able to invest in a full training program themselves. 

Chairman RUBIO. I also wanted to ask you about—it is really impossible to talk about work today without automation, and when 

people think of automation, they tend to think of a robot or a computer that was going to replace their job entirely. 

I guess I can open this up to the entire panel. 

I know you, Mr. Cass, have a different view on this. Perhaps 

those of you have different views on it. But how should workers understand both the challenge and the opportunity embedded in automation and in technology, which does, as always, create the potential of displacement, but it also creates the potential of increased 

productivity and thereby higher pay and new fields opening up? 

You talk to people particularly in the small business world, but 

even in larger firms, there is just a lot of fear among workers that 

they are going to get replaced by a robot. So what is the best way 

for us to focus on that, particularly as it impacts entrepreneurship 

and startups? 

Go ahead. I will just go from left to right. 

Mr. CASS. Yeah. I will say one thing about it. I realize the more 

I talk about this that we have a real problem that we 

anthropomorphize robots, and so it sounds like it makes sense to 

say a robot could take your job. 

But a robot is just a new form of technology. You would never 

say electricity took my job. That would sound ridiculous. You would 

never say many of the sort of technological breakthroughs that 

have made people more productive over time took your job. It happens that the kinds of robots we are picturing look more like a 

worker, but at the end of the day, the effect is the same. 

As Dr. Stevenson said, rarely do they actually replace the person. 

They replace some portion of the person’s tasks, and so the key is 

going to be for workers to collaborate with technology and to recognize that the technology is what makes the worker more productive. 

I think the one other thing we could focus on as we talk about 

it and as policymakers talk about it is to realize that workers are 

actually the constraints on how quickly we can deploy technology. 

When we talk about these jobs that we cannot find the worker 

for the job or we say jobs are going to change in these ways and 

workers are going to have to catch up, that is not actually true. 

Jobs can only change as quickly as we have workers to fill them, 

and one way of understanding the skills gap and these other challenges we have right now is that businesses have designed procLAP51NQ082 with DISTILLER

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esses and tried to deploy technologies for which the workforce is 

not ready. 

So one effect of that is that is going to slow down the rate at 

which automation actually happens, but a second is to reconfirm 

the fact that this is going to accrue to the benefit of workers and 

really finding ways to design technology for the workers we have 

and equip workers to work with that technology is going to be the 

secret sauce for a labor market that thrives. 

Mr. LETTIERI. Count me in as an automation apocalypse skeptic. 

I do not think there is evidence to back up many of the concerns 

that we often hear thrown around about the rise of automation as 

it relates to replacing workers. 

To Oren’s point, there are very few jobs that can actually be replaced in full by a robot of any form. 

I think the key is that we are missing the kind of safety net that 

robust business dynamism used to provide. We have always had industries and jobs being phased out of our economy. That has always been true. Productivity gains, by definition, are displacing of 

some future potential worker as we get more efficient at doing certain things. 

The difference is we have not felt that in previous eras because 

we have had a more robust firm entry that has caught more of 

those being left out of certain jobs or taken out of certain industries 

and brought them back into productive use. 

So areas of the country that are particularly un-dynamic are the 

ones not with high death rates of firms, but of incredibly low birth 

rates of firms. That is what is missing. 

One of the major things that is missing I think as we think about 

the worker piece of all this, we need to think about the entrepreneur as well. Incumbent businesses tend to shed jobs on net 

every year as a whole, of any size, and so where we get net job creation is disproportionately from new businesses. When that fades— 

that is the engine of job creation—that is the missing safety net for 

workers. 

Ms. STEVENSON. So my testimony focused much on this because 

this is something that I am thinking a lot about, and as has been 

repeated, the idea that automation does not take jobs. It takes 

tasks. 

But that creates an enormous opportunity for us to create jobs 

that are more meaningful, and this is one of the things I am looking at in my research. It is which are the tasks that are being 

taken, and are they the tasks we like to do or the tasks we do not 

like to do? 

In the past, what has happened with technological changes, our 

jobs have gotten better. We have seen an increase in job satisfaction. We like the stuff that we are able to do more. 

I certainly know that my job being a university professor is 

something that is much more common today because of all the 

technological change that has come before, and I like my job a lot 

more than I would have liked working in an agricultural field. 

So there is a lot of promise that comes from this, but I do think 

it is worth keeping in mind that there is a lot of disruption. When 

I go to conferences on AI, I will tell you that I am shocked at how 

fast the technology is moving. 

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I agree very much with Oren Cass that we can only move as fast 

as our workers are ready for us to move. So there is a real limit 

that comes from our workers, but the technology is moving quite 

rapidly. And we need to make sure that our workers can keep up. 

It is one of the reasons why I have such concern that in the race 

between technology and education, technology seems to be racing 

in front of education, and I think we need to correct that problem, 

quite rapidly. 

I do want to emphasize that these kinds of technological changes, 

this AI, is going to allow us to produce services that are more 

tradeable. So the idea that—when we hear services, you think cup 

of coffee. I think that is not the right way to think about it. The 

U.S. is really succeeding with a lot of trade and business services 

that are a really important source of not just international trade 

for us, but, of course, cross-national boundary trade. 

Remote work is allowing people to live in places that they could 

not have lived having the kind of job that they were having before. 

So technology will create a lot of opportunities. We need to make 

the space for it to happen, not try to get in the way of it, and then 

help make sure that the prosperity that comes from it is shared, 

so that lots of workers are able to benefit from this change and not 

just the few owners of—the people who own the technology. 

The anecdote I always like to tell people is I had a long conversation once with an Uber driver who told me that he thought selfdriving cars were the worst thing in the entire world, and toward 

the end of 20 minutes of him railing against how terrible self-driving cars are, I asked him, ‘‘What if you owned the car? What if you 

were the one sending it out to do your work and you could stay 

home?’’ And, all of a sudden, his attitude toward self-driving cars 

changed a lot. 

So the real question about this technology is not going to be that 

it replaces workers. It is going to be about who owns it. 

Ms. YORK. I have nothing else to add to the remarks of my eloquent panel, besides that absolutely for workforce advocates, we 

are looking at how we can use these opportunities to turn them 

into training opportunities for workers, but we are also struggling 

because we also like self-checkouts at the grocery store but also 

know that that is taking real jobs away from real people. So how 

do you balance efficiency and easy access and quickness with ensuring that folks are able to still be employed and have good jobs? 

Chairman RUBIO. Do you have something? 

Senator CARDIN. Just two quick observations. One, as you point 

out, innovation is where job growth will take place and good jobs 

will take place, whereas where we started because innovation occurs much more frequently among small businesses than large 

businesses. So our tools to preserve a healthy small business community very much is part of having the type of economy we need 

and the type of jobs that we want. So I would just make that—sort 

of bring this together. 

The second observation is on these tax credits. We recognize that 

the labor market changes at times. So there are different periods 

in which employers have different incentives. 

But I can tell you as one of the champions of the Work Opportunity Tax Credit and having talked to a lot of employers who have 

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used the Work Opportunity Tax Credit, there is a higher risk factor 

by those employers, and it has to be compensated somehow. 

We can talk about getting good workers, as we all want, but we 

know that our workforce programs are not equitably distributed, 

particularly people coming off of welfare, returning citizens, and 

people who are unemployed. If you are an employer and you have 

a choice between trying to take someone who currently has a job 

or somebody who is unemployed, there is a natural bias in favor 

of someone who is already employed. So long-term unemployed individuals have a much more difficult time in getting the attention. 

And the Work Opportunity Tax Credit has compensated for that, 

and it has worked very well over time. 

I just really want to put that on the record because there was 

some conversation about the values of tax credits or compensation 

issues, and I certainly understand that discussion. And we really 

need to focus on what is the right policy, but I do believe that our 

current tool of the Work Opportunity Tax Credit is one that has 

worked well and is very valuable. 

Chairman RUBIO. I want to thank all four of you for being here 

and all the members that attended. This is really meaningful to us 

for two reasons. One is the jurisdiction of this Committee, small 

business and entrepreneurship, and it is important to mention 

those two because they are not always—the focus of small business, 

obviously we have oversight responsibility over the Small Business 

Administration, and we are going to be undertaking the task, I 

hope, of reauthorizing it because it gives us the chance to help 

modernize its programs to deal with some of the things we are taking testimony on. 

And on the entrepreneurship side, the notion that we want to 

continue to be an economy in a society in which new business and 

new idea are being pursued, and in many ways, technology is intimidating to people, but it also has lowered the barrier to entry 

in a lot of fields. 

It used to be that in order to have a business, you had to have 

a big marketing department. You had to have people you could 

send out to find customers. Today, a small business is everything 

from an Uber driver who is an independent contractor to someone 

selling things online, and they do not have a massive sales force. 

So technology has empowered entry into the marketplace that 

would not have been there. 

It has actually, in many ways, opened up entrepreneurship, access to markets, but it also has lowered the barriers to entry in a 

business that you would normally need more traditional constructs 

around in order to pursue. 

So these are the kinds of things that we need to be thinking 

about as we not just try to reauthorize and modernize SBA, but 

writ large public policies that help incentivize all of this. 

So, again, we are grateful to you for your time, for your forwardthinking ideas across the board on strengthening the Nation’s labor 

markets, which I think go hand in hand with enhancing small business dynamism and entrepreneurship. 

The record for this hearing is going to remain open for 2 weeks, 

and if there are any statements or questions for the record by any 

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of the members, they should be submitted by Wednesday, March 

20th, at 5:00 p.m. 

With that, thank you again. This hearing is adjourned. 

[Whereupon, at 4:09 p.m., the Committee was adjourned.] 

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APPENDIX MATERIAL SUBMITTED 

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Senate Committee on Small Business and Entrepreneurship Hearing 

March 6, 2019 

Follow-Up Questions for the Record 

Questions for Mr. John Lettieri 

Questions from Senator Hirono: 

Mr. Lettieri, in your testimony you discussed the importance of training a highly skilled and 

competitive workforce. I have strongly supported career and technical education (CTE) and 

science, technology, engineering, and math (STEM) programs to make sure we are training the 

21st century wor1.force of the future, and making sure the United States remains competitive 

abroad. 

1. Can you elaborate on the importance of training a high-skilled and competitive 

workforce, and what that means for small businesses? 

Small and new businesses across the country need access to a skilled and talented workforce, 

and must compete against incumbent firms to procure the best workers to help them form and 

expand. But it isn't enough for workers to be skilled. They must be mobile as well, and able to 

move to better work opportunities when they arise. Incumbent firms, however, often use tactics 

like non-compete agreements that are detrimental to worker mobility and economic dynamism. 

Nearly 1 in 5 workers are bound by a non-compete agreement, which stifle entrepreneurship. 

Greater enforceability of non-competes is shown to reduce new firm entry by 18 percent. This is 

why I urged Congress consider banning or greatly curtailing the usc of non-compete 

agreements. 

2. How can broadening participation among women and underrepresented minorities, and 

expanding the talent pool of workers we can draw upon, improve competitiveness? 

Our country is leaving too much of its entrepreneurial talent on the sidelines. The gaps in 

economic dynamism, workforce participation, and living standards are widening between 

prosperous communities and the rest of the country. America's most distressed zip codes are 

still experiencing declines in employment, while prosperous communities overwhelmingly 

account for the national employment growth since the Great Recession, according to EIG's 

research. Prosperity and opportunity is increasingly uneven and clustered. Take, for example, 

access to venture capital: 75 percent of all venture capital goes to three states (Massachusetts, 

California, and New York), and 98 percent of venture capital in 2017went to men, the vast 

majority of whom were white.' Expanded education and skills-training of women and minorities 

'https:/ /www.inc.com/melanie-curtin/its-tough-to-get-vc-moncy-if-youre-not-a-white-guy-now-theres-a 

-game-changing-solution.html 
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has the potential to spur new business creation and entrepreneurship, create new jobs in 

distressed or at risk areas, and help revitalize stagnating areas of the country. 

3. What role can immigration play in making sure we remain competitive? 

An economy needs a vibrant workforce to remain healthy. This week, EIG released a report, 

"From Managing Decline to Building the Future," which found that 43 percent of U.S. counties 

are experiencing population decline. By 2037, nearly 67 percent of all counties are projected to 

have a smaller prime-age work population than they did in 1997. While economists and 

demographers have long discussed the potential negative economic impacts of population loss 

and a quickly aging population in Japan and Western Europe, that is increasingly becoming the 

reality for communities across the United States. Counties across the country are facing not only 

population loss, but the erosion of housing markets, public finances, and economic dynamism 

that are a direct effect of these demographic shifts. 

Immigration can help address and potentially offset some of these stark trends. EIG's previous 

research finds that the most prosperous communities- ranked as such across a variety of 

metrics including rates of poverty, employment and vacancy- have the fastest gro¥<ing share of 

minority population thanks in part to an influx of foreign-born residents. Immigrants contribute 

a great deal to the economic groV\1:h of c.ommunities and the country as a whole, as well. 

Research shows that skilled immigrants tend to be highly inventive, productive, and 

productivity-inducing in others. Immigrants represent 18 percent of all global patent-filers, are 

inventors or co-inventors of about 25 percent of all technologies developed in the United States, 

and account for 33 percent of all U.S. Nobel Peace Prizes. 2 Currently, the 20 most populous U.S. 

counties currently contain 37 percent of the country's skilled immigrants compared to only 19 

percent of the country's total population. The inflow of human capital from abroad is another 

way in which smaller municipalities are struggling to compete. Our latest report suggests a new 

visa program that could serve as a powerful economic development tool for struggling 

communities experiencing population decline. The visas would constitute an additive and 

voluntary pathway for skilled immigrants to come to the United States. Eligible communities 

would opt-in to hosting visa holders, who would provide a much-needed injection of human 

capital and entrepreneurial vitality into parts of the country that retain considerable economic 

potential. 

'Kerr, William R. The Gift of Global Talent: How Migration Shapes Business, Economy & Society. 

Stanford University Press, 2018. 
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Senate Committee on Small Business and Entrepreneurship Hearing 

March 6, 2019 

Follow-Up Questions for the Record 

Questions for Dr. Betsey Stevenson 

Questions from: 

Senator Hirano 

Promoting College Access and Affordability 

Dr. Stevenson, in your testimony you highlighted that new businesses need skilled workers and 

that workers need the opportunity to build the skills that will increase their productivity and 

allow them to earn higher wages. One of the most effective ways that we can promote these 

kinds of opportunities for workers is by making sure college is more accessible and more 

affordable to more people, which is why 1 have been a strong advocate for strengthening and 

expanding federal student aid like Pell Grants-the single largest source of federal grant aid 

supporting postsecondary students. 

QUESTION 1: 

Can you elaborate on how improving college access and affordability can improve opportunities 

for workers to build the skills they need to improve productivity and earn higher wagesincluding for non-traditional students like single parents, working adults, and others? 

Response: 

Researchers have shown that American workers' skills grew rapidly throughout the 20th century 

spurring the productivity growth that propelled both GDP groVvih and shared prosperity. The 

United States chose to lead the world in educating citizens by providing access to high-quality 

free high school in the 20'h century. Unfortunately, in recent decades the United States lost the 

lead in education as other countries do more to ensure that a larger share of their population can 

enroll in, and complete, higher education. In order for the U.S. to have more rapid economic 

growth, we must have more rapid productivity growth. The way to achieve this is by improving 

college access and affordability. 

To be concrete, college graduates earn 65 percent more than high school graduates and are 

roughly half as likely to experience unemployment. Additionally, as the US economy shifts to 

increasingly service and technology-oriented fields, the demand for college-educated workers 
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has grown substantially.' College educated workers have the written communication, analytical, 

and technical capabilities to thrive in these industries and to continue the innovation that drives 

further growth. 2 

By increasing access to secondary education (through Pel! Grants, college preparation resources, 

GI benefits, etc.) we can provide additional opportunities for traditional and non-traditional 

students to enroll in post-secondary education programs leading to the skills and credentials 

needed to access higher wage jobs and create a stronger, more productive labor force. 

Many college students are independent, have their own families, or attend classes and work at 

the same time, with about one in four students being a parent. 3 Schoolwork alongside other 

responsibilities presents financial challenges for these students. 

Non-traditional students are about half as likely to complete their degree program as their 18-22 

year old counterparts. 4 This suggests a need for programs that improve access and affordability 

as well as programs and infrastructure to help older students who may have families and 

professional obligations complete their degrees. 

QUESTION2: 

How docs improving access and affordability for these students strengthen the workforce for 

small businesses? 

Response: 

Small business owners are reporting that their biggest challenge is the lack of skilled 

workers they can find to employ. 5 Improving access and atTordability for non-traditional 

students to complete post-secondary programs will lead to a more diverse and highly skilled with 

the technical expertise and cognitive ability that small businesses are seeking. In sum, more 

1 David H. Autor, "'Skills. education. and the rise of earnings inequality among the ''other 99 percent,'' Science, 344 

(6186), May 2016. 

Share of hours worked by college graduates appreciated from 35% in 1982 to over 45% in 2012. 

Anthony P. Carnevale, Tamara Jayasundera, Artem Gulish, "America's Divided Recovery: College Have and Have 

Not's," Georgetown University Center on Education and the Workforce, 2016. 

Post recovery, 11.5 of the 11.6 million jobs added between 2008-2016 were for people with more than high school 

education. 

2 David H. Autor, ''Skills, education. and the rise of earnings inequality among the "other 99 percent," Science, 344 

(6186), May 2016. 3 https:/ /www .jcc. scnate.gov /pub! ic/ _ cachelfi les/5 2 70bffa-c68e-44 ffi-acOS-693485083 7 4 7 /the-college-a ffordability-crisis-inamerica.pdf 

4 U.S. Department of Education, National Center for Education Statistics, "2012114 Beginning Postsecqllili!ry 

Students Longitudinal Study" (BPS:l2114). Prepared February 2017. 

Shapiro, D., Dundar, A., Huie, F., Wakhungu, P.K., Bhimdiwala, A. & Wilson, S. E., "Completing College: A 

National View of Student Completion Rates Fall 2012 Cohort" National Student Clearinghouse Research Center, 

December 20 18. 5 http:f/www.nfib.com/surveys/sma!l-busincss-economic-trends/ 
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students with the skills that small businesses are seeking makes it easier for small business to 

find and hire the skills they need. 

In addition, the rising burden of student debt may prevent small businesses from being 

created. Student debt may prevent entrepreneurs from securing loans in order to start a business. 

One study from the Federal Reserve of Philadelphia concluded that business creation for the 

smallest firms decreased as debt increased.6 Students who graduate with student loans simply do 

not have the luxury of considering entrepreneurship. But more problematically, when that debt 

extends farther into their careers, they are unable to take their skills and the good ideas they are 

developing to pursue them if they are still struggling to pay their student loans and purchase their 

first home. 

QUESTION3: 

What other kinds of supports should we be providing for these students (i.e. child care, housing 

benefits)? 

Response: 

In 2017, student parents accounted for 26 percent of the total college population in the 

U.S. These students are more likely to encounter financial hardships, work full-time while in 

school part-time, which creates a greater need for childcare benefits. Their financial aid must 

consider the costs of childcare and the costs of supporting a child. A parent attending class must 

find childcare for not only the duration of class, but for enough hours that they can adequately 

prepare for class. Students with children also spend a significant amount of their time caring for 

their children- 43 percent of women and 3 7 percent of men reported that they are likely/very 

likely to leave college in order to care for these children. Providing student parents with 

childcare benefits will allow for financial relief as well as encouraging them to spend the time 

necessary to succeed in their studies and training. The bottom line is that parents simply have 

fewer hours in the day to devote to studying and work due to their care-giving responsibilities. 

Yet they face greater costs as students and our current system docs little to help them overcome 

these greater barriers. 

Providing childcare benefits will allow more people to enroll and stay enrolled in 

college. 7 In addition, we should recognize the higher housing costs non-traditional students may 

face and the challenges of securing health insurance, not only for them, but also for their 

dependents, particularly if they are facing a decision of whether to leave employment in order to 

pursue additional training. 

There are social benefits that last decades--extending well into the life of the childfrom a parent receiving additional education and training. They earn more, which means that 

they pay more in taxes and are less likely to rely on public benefits. Higher household earnings 

mean that their children do better in school and grow up to become higher-earning adults. 

Additionally, by reducing the probability that non-traditional students drop out without a degree, 

students will be more able to repay their student loans. In short, providing more support ensures 

greater success, and that success benefits us all. 

6 https://www.cbpp.org/rescarch/state-budget-and-tax!funding-down-tuition-up 

7 https://iwpr.org/wp-contcnt/uploads/2017 /02/C451-5.pdf 
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Finally, it is important that we provide Hexibility to parents. That means increasing federal grant 

and loan programs to better cover part-time enrollment in post-secondary institutions would 

improve Hexibility for students to balance work and parenting with school. Additionally, 

promoting and certifying online options for post- secondary education would allow further 

Hexibility for non-traditional students and increase access, in terms of mobility and affordability, 

for all potential students. 

Promoting Apprenticeship and Experience Based Learning Opportunities 

Dr. Stevenson, in your testimony you discussed the importance of apprenticeship and 

experience-based learning opportunities to keep students engaged and prepare them with the 

necessary skills for the real world, and highlighted two challenges for the United States-which 

are an overall lack of apprenticeship positions, and a lack of positions in the service sector. 

QUESTION 4: 

How can the federal government better promote apprenticeship opportunities for students? 

Response: 

Apprenticeships are an important way to provide access to higher paying, more productive jobs. 

Apprenticeships allow participants to earn a wage while completing their program and overtime 

learning the skills to grow within the industry or trade. 87 percent of apprentices are hired by 

their sponsor once completing the program and starting wage is over 50,000 dollars. 8 

Apprenticeships can also be beneficial for the hiring firm, a Department of Commerce study 

found relatively high rates of return on apprenticeship programs, especially compared to hiring 

lower skilled workers who do not participate in an apprenticeshipY 

However, access to apprenticeship programs in the United States fall far short of those in many 

European countries. Apprenticeships in the US often happen later in life and less than 0.2 percent 

of the workforce participates. In Europe, apprenticeship programs reach about 50% of young 

people. 10 One element of the apprenticeship shortage is supply of potential apprentices. By 

8 The White House, "FACT SHEET: Investing $90 Million through ApprenticeshipUSA to Expand Proven 

Pathways into the Middle Class," April21, 2016. 

Numbers updated in October 2016 White house blog suggests 91% hired after program completion and wages over 

60,000 dollars. 

Robert Lerman, "Expanding Apprenticeship-A Way to Enhance Skills and Careers," Urban Institute, through the 

Department of Education. 

'Dr. Susan Helper, Ryan Noonan, Jessica R. Nicholson, David Langdon, "The Benefits and Costs of 

Apprenticeships: A Business Perspective," Case Western Reserve University and the U.S. Department of 

Commerce, November 2016. 10 Robert!. Lerman, "Are Employers Providing Enough Training'' Theory, Evidence and Policy Implications," 

PreparedjiJr National Academy ofSciences Symposium on !he Supply Chain for Middle-Ski// Jobs: Education. 

Training, and Cer/ificalion Palhways. 
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integrating opportunities for apprenticeships into Career and Technical education curriculums, 

which have increased in popularity and are available in the majority of school districts across the 

country, 11 there could be an opportunity to reach children at a younger age with an opportunity to 

try out an apprenticeship and decide if it's a fit. 

Apprenticeships can also be made more accessible to older populations who looking into career 

change. The living wage provided during apprenticeship programs may offer a more affordable 

option for some students to access higher job potential and wage, compared to returning to postsecondary education. State Apprenticeship Agencies could be incented to promote 

apprenticeship opportunities to capable, motivated adult-learners in their communities by 

integrating with community college and certificate programs. 

QUESTIONS: 

Are there existing programs and activities, either at the U.S. Department of Education or the U.S. 

Department of Labor, that we should be supporting to promote apprenticeship opportunities? 

Response: 

The majority of apprenticeship programming is run through the Department of Labor (DOL). 

The DOL oversees the National Apprenticeship System (NAS) through which they work with 

State Apprenticeship Agencies who are responsible for registering programs, protecting safety 

and security of participants, issuing credentials, promoting development of new programs, and 

ensuring quality of programs participating. Programs entered into the NAS are considered the 

gold standard. However, there may be opportunities to promote earlier introduction to trades 

through Career and Technical Education programming. 

The Department of Education has recently partnered with the DOL to investigate program 

alignment between career and technical education and registered apprenticeships to scale preapprenticeship and youth apprenticeship programs. This could provide a better link to 

apprenticeship education earlier on in a student's educational path, which would promote earlier 

entry into higher skilled profession and additional opportunities for students to find productivity 

and enjoyment in learning. 12 

11 National Center for Education Statistics, "Career aqd Technical Programs in Public School Districts 2016-20 17," 

2016-2017. 

120ffice of Career, Technical, and Adult Education, "II Apprenticeship Works for High School," U.S. Department of 

Education, November 18, 2016. 
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QUESTION6: 

Can you elaborate on the challenges you highlighted, and discuss what it would mean to have 

more apprenticeship positions in the service sector? 

Response: 

The Department of Labor National Apprenticeship Program and the National Apprenticeship 

Program has grown to include almost 600,000 participants in 2018 across 50 states, Guam, 

Washington DC and Puerto Rico. 13 However, active apprenticeships only account for about 

340,000 of these opportunities and the majority of these are in construction, manufacturing, and 

transportation. Less than 10% of these apprentice roles are in technology or service industries. 14 

If we look at job opportunities overall, 84 percent of the United States workforce is employed in 

the service-producing sector and this share will continue to grow with technological change. 

There is significant value to increasing the share of apprentice opportunities in service and tech 

industries to ensure that apprentices have the option to gain experience in a field that will 

continue to grow throughout their careers. 

Apprenticeship programs often face high startup costs, which are often paid back within the first 

few years from higher returns to skilled workers who continue v.ith the company and increase 

productivity compared to less skilled hires. 15 One way to spur apprenticeships in emerging 

industries would be to subsidize some of the startup costs associated with apprenticeship 

programs and provide additional resources around building these programs. Additionally, more 

firms will look into starting programs if there is student demand, as discussed in question 4, there 

are many opportunities to begin expanding awareness and access to apprenticeships to younger 

students, through strengthening the link between CTE and apprenticeships, and adults seeking 

career change. By increasing apprenticeships in growing fields, we could create higher paying 

jobs for more highly skilled workers that would further stimulate the growing service and 

technology industries. 

13 U.S. Department of Labor Employment and Training Administration, "Registered Apprenticeship National 

Results Fiscal Year (FYl 2018,'' (1010112018 to 9/30/2018). 

" U.S. Department of Labor Employment and Training Administration. "Registered Apprenticeship National 

Results Fiscal Year (fY) 2018," (1010112018 to 913012018). 

10% from adding Public Administration (19447), Health Care and Social Assistance (4507), Educational Services 

(3690), Information ( 1152), Professional, Scientific, and Technical Services (493), and Finance and Insurance (145) 

to total29434 apprenticeships. This is less than 10% of the 343044 active apprenticeships in 2018. 15 Dr. Susan Helper, Ryan Noonan, Jessica R. Nicholson, David Langdon, "The Benefits and Costs of 

Apprenticeships: A Business Perspective," Case Western Reserve University and the U.S. Department of 

Commerce, November 2016.