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<title> - SMALL BUSINESS PRIORITIES FOR THE 116TH CONGRESS</title>
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[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]

SMALL BUSINESS PRIORITIES FOR THE 116TH CONGRESS

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

HEARING

BEFORE THE

COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTEENTH CONGRESS

FIRST SESSION

__________

HEARING HELD
FEBRUARY 13, 2019

__________

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Small Business Committee Document Number 116-005
Available via the GPO Website: www.govinfo.gov

__________

U.S. GOVERNMENT PUBLISHING OFFICE
35-125 WASHINGTON : 2019

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HOUSE COMMITTEE ON SMALL BUSINESS

NYDIA VELAZQUEZ, New York, Chairwoman
ABBY FINKENAUER, Iowa
ANDY KIM, New Jersey
SHARICE DAVIDS, Kansas
JARED GOLDEN, Maine
JASON CROW, Colorado
JUDY CHU, California
MARC VEASEY, Texas
DWIGHT EVANS, Pennsylvania
BRAD SCHNEIDER, Illinois
ADRIANO ESPAILLAT, New York
ANTONIO DELGADO, New York
CHRISSY HOULAHAN, Pennsylvania
VACANT
STEVE CHABOT, Ohio, Ranking Member
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa, Vice Ranking Member
TRENT KELLY, Mississippi
TROY BALDERSON, Ohio
KEVIN HERN, Oklahoma
JIM HAGEDORN, Minnesota
PETE STAUBER, Minnesota
TIM BURCHETT, Tennessee
ROSS SPANO, Florida
JOHN JOYCE, Pennsylvania

Adam Minehardt, Majority Staff Director
Melissa Jung, Majority Deputy Staff Director and Chief Counsel
Kevin Fitzpatrick, Staff Director

C O N T E N T S

OPENING STATEMENT

Page
Hon. Nydia Velazquez............................................. 1
Hon. Steve Chabot................................................ 2

WITNESSES

Mr. John Arensmeyer, Founder & CEO, Small Business Majority,
Washington, DC................................................. 4
Ms. Sabrina Parsons, CEO, Palo Alto Software, Eugene, OR......... 6
Mr. J. Kelly Conklin, Co-Owner & Founder, Foley Waite LLC,
Kenilworth, NJ................................................. 8
Mr. Thomas M. Sullivan, Vice President, Small Business Policy,
Chamber of Commerce of the United States of America,
Washington, DC................................................. 9

APPENDIX

Prepared Statements:
Mr. John Arensmeyer, Founder & CEO, Small Business Majority,
Washington, DC............................................. 40
Ms. Sabrina Parsons, CEO, Palo Alto Software, Eugene, OR..... 47
Mr. J. Kelly Conklin, Co-Owner & Founder, Foley Waite LLC,
Kenilworth, NJ............................................. 53
Mr. Thomas M. Sullivan, Vice President, Small Business
Policy, Chamber of Commerce of the United States of
America, Washington, DC.................................... 59
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
Employees and Consumers Benefiting from Tax Reform........... 65
Statement of Hon. Jim Hagedorn............................... 119
Recommendations for Subcommittees of the U.S. House Committee
on Small Business.......................................... 121
U.S. Chamber Statement on the Green New Deal................. 172

SMALL BUSINESS PRIORITIES FOR THE 116TH CONGRESS

----------

WEDNESDAY, FEBRUARY 13, 2019

House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 11:00 a.m., in Room
2360, Rayburn House Office Building. Hon. Nydia Velazquez
[chairwoman of the Committee] presiding.
Present: Representatives Velazquez, Finkenauer, Kim,
Davids, Golden, Crow, Veasey, Evans, Schneider, Delgado,
Houlahan, Chabot, Radewagen, Kelly, Balderson, Hern, Hagedorn,
Stauber, Burchett, Spano, and Joyce.
Chairwoman VELAZQUEZ. Good morning. The Committee will come
to order.
I thank everyone for joining us this morning, and I want to
especially thank the witnesses for being here today.
As I am sure we all agree, small businesses are critical to
the economic vitality and strength of our country. From the
tech company that started as an idea between two friends, to
more established Main Street retailers, or the local restaurant
looking to expand operations, all play an important role in
generating employment opportunities for our communities whether
they are in rural or urban America.
Starting a small business is what the American Dream is all
about. But unfortunately, as recent economic data suggests,
small firms are not without their own challenges. According to
ADP reports, small employers are lagging behind their larger
counterparts when it comes to hiring. Small business employment
grew only half a percent year over year, compared to 1.7
percent for all companies tracked by ADP. Declining confidence
levels over economic uncertainty is also weighing heavily on
small firms.
That is why today's hearing is so timely. It will allow us
to gain valuable perspectives on how to best help entrepreneurs
continue to do what they do best, invest in themselves, their
communities, and their workers.
Today, we are joined by a distinguished panel of witnesses.
This hearing is an opportunity to listen to their insights into
the challenges facing small businesses, and specifically, how
Congress can prioritize their needs. While the Small Business
Administration and other partners provide extensive support,
there is still more we as lawmakers can do to ensure their
success. As we heard at last week's subcommittee hearing,
access to capital remains an ongoing problem for countless
small businesses regardless of their size or location.
But this is not the only issue facing small firms. As the
ADP numbers indicate, we are still finding that many business
owners struggle to find qualified workers to fill job openings.
This is particularly true in areas that have been ravaged by
the ongoing opioid crisis or there has been a decline in
population due to a lack of opportunities.
Supporting policies to increase educational initiatives,
develop a skilled workforce, and allow small employers to offer
competitive benefits and wages to their workers are all key to
leveling the playing field for small businesses.
When it comes to taxes, entrepreneurs in every sector
deserve more certainty than they are currently being offered.
We can achieve this by taking steps to streamline the Tax Code
and provide greater retirement options for small business
owners and their employees. Finally, we also know the
importance of providing increased access to contracting
opportunities. This is especially true as Congress aims to
tackle infrastructure reform. It is imperative that in this
process we consider the economic potential that comes with
ensuring small firms operating in sectors such as construction,
engineering, and architecture, have a fair shot at receiving
federal contracts.
Today, the small business priorities we address will help
us set our agenda moving forward this Congress. It is my hope
that we will have a productive discussion.
With that, I thank each of the witnesses for joining us
today, and I look forward to your testimony.
I would like to yield to the Ranking Member, Mr. Chabot,
for his opening statement.
Mr. CHABOT. Thank you, Madam Chairwoman.
There are more than 30 million small businesses all across
this country. We call them the backbone of our national economy
because they are fundamental to every community all over
America. They create most of the new jobs in the economy, for
example.
Small businesses make up 99-99/100 percent of all firms.
They employ nearly half of private sector employees and create
two out of every three net new jobs. We call small businesses
the lifeblood of our national economy because they are the
essence of American strength and vitality. From entrepreneurs
to generational mom and pop stores, small business owners
personify diversity, creativity, and grit, essential
ingredients of the American spirit.
During my tenure on this Committee, one that spans over 2
decades now, we have heard from thousands of small business
owners, from economists and advocates, each with suggestions on
how to improve the way small businesses perform. Our success at
this Committee depends on open and honest dialogue with small
businesses, industry leaders, and government officials. Members
of this Committee will certainly have differing opinions on
priority problems and policy solutions, but as we maintain our
spirit of bipartisanship, I am confident that we will find more
areas of common ground.
Today, as we outline our policy agenda, we begin a search
for small business issues that we can tackle together. Recent
tax and regulatory relief has spurred economic growth and
generated high levels of optimism within the small business
community. In 2018, small business owners reported higher sales
earnings, investments, and hiring. Bolstered by their
confidence, they are looking to expand. At this Committee, we
know that thriving small businesses create more jobs,
revitalize communities, and sustain our national economy.
Our efforts should focus on how we, the government, can
support small business growth instead of constraining it with
more red tape.
In the 116th Congress, I look forward to continuing our
rigorous oversight of the SBA, the Small Business
Administration, and their contracting programs and regulatory
regimes. We are the stewards of taxpayer dollars. When federal
programs operate efficiently and effectively, everyone
benefits.
Madam Chairwoman, I am proud of the legislative successes
that we have achieved together at the Small Business Committee,
and I look forward to many more in the 116th Congress.
I would like to thank our witnesses for being here, all
four of them, and I yield back.
Chairwoman VELAZQUEZ. Thank you, Mr. Chabot. The gentleman
yields back.
If committee members have an opening statement prepared, we
would ask that they be submitted for the record.
I would like to take a minute to explain the timing rules.
Each witness gets 5 minutes to testify and the members get 5
minutes for questioning. There is a lighting system to assist
you. The green light will be on when you begin, and the yellow
light comes on when you have 1 minute remaining. The red light
comes on when you are out of time, and we ask that you stay
within the timeframe to the best of your ability.
I would now like to introduce our witnesses.
Our first witness is Mr. John Arensmeyer. Mr. Arensmeyer is
founder and CEO of Small Business Majority, a national small
business advocacy organization focused on empowering America's
entrepreneurs to build a thriving and inclusive economy. Prior
to starting Small Business Majority, Mr. Arensmeyer founded ACI
Interactive, an award-winning, international interactive
communications company. Welcome.
Our second witness is Ms. Sabrina Parsons. Ms. Parsons is
the CEO of Palo Alto Software, a business and marketing plan
software company based in Oregon. As a staunch supporter of
entrepreneurs, she is regularly invited to participate as a
judge for business plan competitions across the U.S., as well
as to speak on business planning, leadership, and women in
technology.
Our third witness today is Mr. J. Kelly Conklin. Mr.
Conklin lives in Glen Ridge, New Jersey, with his wife and
business co-owner. In 1968, they founded Foley Waite, LLC, an
architectural woodworking firm located in Kenilworth, New
Jersey. Mr. Conklin is Chairman of the Executive Committee of
the Main Street Alliance, a national network of over 30,000
small business owners. He also serves on numerous boards,
including 14 years on the Glen Ridge Planning Board.
And I now would like to yield to our Ranking Member, Mr.
Chabot, to introduce our final witness.
Mr. CHABOT. Thank you, Madam Chair.
I would like to introduce today's final witness, Thomas
Sullivan. Mr. Sullivan is the vice president of Small Business
Policy at the U.S. Chamber of Commerce. In this capacity, he
manages the Chamber's Small Business Council, which facilitates
small business input and involvement in Chamber activities. Mr.
Sullivan has advocated for small businesses in the public,
private, and nonprofit sector. Most notably, he served as Chief
Counsel for Advocacy at the SBA under President George W. Bush.
Tom is an expert on small business policy and a long-time
friend of this Committee. Thank you for joining us today. We
appreciate it, and I yield back.
Chairwoman VELAZQUEZ. Thank you.
Mr. Arensmeyer, you are recognized for 5 minutes.

STATEMENTS OF JOHN ARENSMEYER, FOUNDER & CEO SMALL BUSINESS
MAJORITY; SABRINA PARSONS, CEO PALO ALTO SOFTWARE; J. KELLY
CONKLIN CO-OWNER & FOUNDER FOLEY WAITE LLC; THOMAS M. SULLIVAN,
VICE PRESIDENT, SMALL BUSINESS POLICY, CHAMBER OF COMMERCE OF
THE UNITED STATES OF AMERICA

STATEMENT OF JOHN ARENSMEYER

Mr. ARENSMEYER. Thank you, Chairwoman Velazquez, Ranking
Member Chabot, and distinguished members of the Committee.
Thank you for inviting us to speak with you today.
As a long-time small business owner, I founded Small
Business Majority 13 years ago to empower America's
entrepreneurs to build a thriving and inclusive economy.
We have a network of 58,000 small business owners across
the country, with eight regional offices and partnerships with
over 1,000 business organizations. We advocate for smart public
policy solutions and deliver information and resources to
entrepreneurs with a particular focus on underserved
entrepreneurs--women, people of color, immigrants, and rural
small business owners.
We have created a policy agenda that focuses on seven
topics--access to capital, health care, retirement and other
portable benefits, entrepreneurship and the freelance economy,
supporting a skilled small business workforce, infrastructure
and economic development, and taxes.
I am going to address the first three issues briefly today
but I am happy to answer questions about any one of those
topics.
On access to capital, it is no secret that small business
owners face significant hurdles accessing capital. Small
businesses' share of total bank loans fell from 31 percent in
2010 to 21 percent in 2016, while the average small business
loan amount has steadily increased, making loans less available
for the smallest businesses.
Moreover, women business owners get nearly 50 percent less
in funding than their male counterparts. Similarly, a SBA study
found African American and Hispanic business owners were more
likely to report unmet credit needs.
New alternative and online lending opportunities have
sprung up to fill this market need. This is a potentially
positive development for small businesses. However, alternative
sources of financing operate in an almost entirely unregulated
market, making many small business owners vulnerable to
predatory practices. This new industry must be built on
transparency, fairness, and putting the rights of borrowers at
the center of the process.
A desire to encourage responsible innovation in online
lending is what drove us to cofound the Responsible Business
Lending Coalition (RBLC) in 2015. The RBLC has published the
Small Business Borrowers' Bill of Rights, a guide for
responsible small business lending standards that more than 90
fintech lenders, banks, and other groups have signed onto. The
RBLC has also produced policy recommendations for a national
Small Business Truth in Lending Act modeled on a law enacted
last year in California.
Other policy recommendations include quadrupling annual SBA
lending guarantees from $25 billion to $100 billion, thereby
increasing the volume of small business loans guaranteed by the
SBA to $1 trillion over the next decade. Increasing loan
guarantee percentages from 85 percent to 90 percent for loans
up to $150,000, and from 75 to 85 percent for loans between
$150,000 and $700,000. Dramatically expanding the annual budget
of the CDFI Fund from $250 million to $1 billion, and
prohibiting confessions of judgment in which borrowers agree in
advance to lose any dispute with the lender.
On health care, since its enactment, the ACA has provided
health care to 24 million individuals who otherwise could not
access coverage, many of whom work for small employers or are
themselves small business owners or self-employed individuals.
What is not well understood is that more than half of all ACA
marketplace enrollees fall into these entrepreneurship
categories.
So we must do three things: strengthen our healthcare
markets, expand health coverage, and reduce drug prices while
containing other inefficient costs in the system. Our
recommendations include maintaining protections for individuals
with preexisting conditions, addressing the rising cost of
prescription drugs, protecting consumers from surprise building
by limiting patient out-of-network cost-sharing. Blocking the
extension of both short-term health insurance plans and
association health plans, both of which offer inadequate
coverage and remove younger, healthier individuals from the
general pool, thus increasing costs for everybody else and
destabilizing markets, allowing people to buy into Medicaid
and/or Medicare, guaranteeing cost-sharing subsidies to
insurers, and creating a reinsurance program.
Finally, we need a modernized benefits infrastructure that
serves today's independent entrepreneurs and small business
owners who do not work for large corporations. We recommend the
following: supporting Federal efforts to establish a publicly
administered retirement savings program, like the Secure Choice
programs in some states and make participation open to the
self-employed; passing the FAMILY Act to establish a national
program that provides partial wage replacement for small
business employees and the self-employed; and there are a
number of other recommendations in our policy agenda.
Finally, Congress must focus on the particular needs of
rural entrepreneurs who start businesses at higher rates than
their urban counterparts and have higher 5-year business
survival rates while facing a unique set of challenges.
Yesterday, we released a report on rural entrepreneurship, a
copy of which we will provide to the Committee.
Thank you for the opportunity to comment on these important
issues. I look forward to answering your questions.
Chairwoman VELAZQUEZ. Thank you, Mr. Arensmeyer.
Ms. Parsons, you are recognized for 5 minutes.

STATEMENT OF SABRINA PARSONS

Ms. PARSONS. Chairwoman Velazquez, Ranking Member Chabot,
and members of the Committee, thank you for the invitation to
testify today about the needs and policy priorities of small
businesses around the United States.
My name is Sabrina Parsons. I became CEO of Palo Alto
Software in 2007 and have grown the business to over 70 full-
time employees. I am also an active supporter of entrepreneurs
in Oregon where my company is based, and a member of Main
Street Alliance, a network of 30,000 small business owners.
The policy priorities I am going to discuss with you today
support the family life of both small business owners and
employees, invest in entrepreneurship of women and people of
color, boost wages, and protect the immigrant members of our
communities.
Small businesses need national paid family medical leave.
Eighty-three percent of the U.S. workforce lacks employer-
provided, paid family leave care for a new child or a seriously
ill loved one, and more than 60 percent do not have employer-
provided temporary disability insurance to protect them when
they need time away from their jobs to address a serious health
issue or injury.
Although Palo Alto Software is now able to provide paid
leave, most small businesses lack the scale, expertise, and
resources for such a policy. When my company was smaller, we
could not afford the comprehensive paid leave we can today. And
in other industries it is even harder. For example, it is very
difficult in the restaurant industry where profit margins are
very narrow.
Access to paid leave should not depend on the size of
business or where a person lives and works. We need a Federal
program that gives all worker and small business owners the
kind of leave that Palo Alto Software offers.
For that reason, I ask you to support the Family Act, which
would create an affordable, self-sustaining national family and
medical leave insurance program, making paid leave affordable
and feasible for small businesses.
Small businesses need a strong public investment in child
care. As the mother of three, I know the impact of family
responsibilities on employees and small business owners alike.
The dearth of affordable child care provided by well-
compensated professionals frequently stands in the way of small
business success and growth.
The astronomical costs of child care put parents in a bind.
Nearly one in three families report spending 20 percent or more
of their annual household income on child care. In 28 states,
including my home state of Oregon, child care costs more than
in-state public college tuition.
We ask you to support Child Care for Working Families Act,
which would make unprecedented investments to ensure all
children have access to high-quality, early education, and
ensure that people who work in child care and earn a living
wage.
Boosting wages helps small businesses. The starting salary
for any employee at my company is $16 an hour, even customer
service, which generally pays very low wages. Given what it
takes for a family to make ends meet in Eugene, Oregon, I feel
strongly that people need to be paid living wages. Raising
wages is also better for business. When you pay $7 an hour, you
experience employee turnover over a period of 2 or 3 years that
ultimately can devastate a small business's bottom line.
I understand that raising the minimum wage is a source of
fear for many small businesses. However, the financials will
work out and make businesses stronger, and I believe this is an
area of tremendous opportunity for the SBA and others to
provide better financial management training, education, and
assistance to small businesses.
Fair treatment of immigrants is a small business issue. I
am the daughter of an immigrant mother and a U.S.-born father.
I was born in Mexico City and lived there until I was seven and
spoke Spanish before I spoke English. My mother recently became
a citizen of the United States. Humane and just immigration
policy is important to me as the daughter of an immigrant, as a
mother and community member, and as a businesswoman.
We owe it to all immigrants and ourselves to adopt an
immigration policy that respects family and the basic tenets of
freedom. Please put an end to family separation. Please do
whatever possible to bring healing to the families torn apart
by this policy. And please ensure that the immigrant business
owners, other immigrants in our community, and those who are
seeking refuge here have a fair opportunity to live, work, and
develop businesses here. The facts show these immigrants bring
more positive than negative to our country and are an integral
part of who America is.
Lack of equitable capital continues to hamper small
businesses, particularly for women and people of color. The
Wall Street Journal reports that Black-owned businesses
received only 11 percent of Small Business Administration loans
in 2008, and only 2.3 percent of those SBA loans in 2013. Women
entrepreneurs also experience disparities. A study by
Biz2Credit found that women-owned firms had a loan approval
rate that was 15 to 20 percent lower than their male
counterparts.
I urge you to pass measures to eliminate racial and gender
discrimination in small business lending and recognize that
there is a need to open access to affordable capital for small
businesses, particularly those owned by entrepreneurs who are
women and people of color. I also ask you to bring
transparency, oversight, and fair terms to all forms of small
business lending, whether bank or non-banking loans.
I appreciate the opportunity to share concerns and policy
priorities for small business owners.
Thank you, and I look forward to answering your questions.
Chairwoman VELAZQUEZ. Thank you, Ms. Parsons.
Mr. Conklin, you are recognized for 5 minutes.

STATEMENT OF J. KELLY CONKLIN

Mr. CONKLIN. Thank you, Chairwoman Vasquez, Ranking Member
Chabot, members of the Committee.
I appreciate the invitation to testify here today on behalf
of real small business people like me. We do form the backbone
of Main Street communities across the country.
My name is Kelly Conklin, and I am Chair of Main Street
Alliance. Our organization creates opportunities for small
business owners to speak for ourselves on public policy issues
that impact our businesses, our employees, and the communities
we serve.
In 1978, my wife and I founded Foley Waite, an
architectural woodworking firm. She was on one end of a sheet
of plywood and I on the other, working out of an 800 square
foot shop we lived over. Now our company owns a 13,600 square
foot building and employees 14 people.
Real small businesses like mine need policies, such as
universal health care, a fair tax system, equitable access to
capital, and paid family and medical leave, that serve the
needs of small business and that take into account the ways in
which racial and gender inequity serve as gatekeepers that
structure the small business sector.
Small businesses need high-quality--we are going to say
this over and over again today--high-quality, publicly-funded,
universal health care. The Affordable Care Act was an important
step in the right direction for small businesses but there is
much, much more Congress needs to do.
With the ACA, I saw my premiums finally begin to stabilize.
Then Republican leaders began massaging the ACA and creating
uncertainty. We know this has increased premiums in the
marketplace for individuals. April 15th is a day I dread, not
because it is Tax Day but because that is when I will find out
what this year's insurance premiums will be, how much they will
go up. My business went from providing 100 percent of coverage
for our employees to 85 percent, and now we are at 80 percent.
And we spend $8,000 a month on health care, a real hit. If my
wife and I could put half that money into our business, we
would have one of the most modern, well-equipped architectural
woodworking businesses on the East Coast.
We need universal, high-quality, publicly-funded coverage
that is affordable for everyone. This is not too expensive. The
private sector is delivering the most expensive and inefficient
health care in the world. The cost of doing nothing is too
great.
Our Tax Code should prioritize strong public investment
over corporate profits. The Tax Cuts and Jobs Act passed in
2017 hurts small businesses. The Joint Committee on Taxation
found that 61 percent of the benefits of this deduction will go
to the richest 1 percent of pass-through business owners by
2024. Just 4 percent of the bottom two-thirds will benefit.
The revenue lost to tax breaks for the very wealthy and big
corporations are made up for on Main Street with deteriorating
infrastructure and loss of services. We ask Congress to repeal
the Tax and Jobs Act with its tax giveaways to large
corporations and the very rich. Instead, create a tax system
that ensures the rich and big corporations pay their share of
taxes. Let us close corporate tax loopholes and create a more
progressive income tax structure.
Small businesses need equitable access to affordable
capital and protection from predatory financing. Bank lending
to small businesses has not fully recovered since the
recession. There is compelling evidence pointing to a
persistent racial discrimination and redlining in small
business bank lending.
The Minority Business Development Agency found that
business owners of color are 2.5 times more likely to be denied
when applying for traditional business loans compared to white
business owners. A 2014 study reported that women entrepreneurs
receive 16 percent of conventional bank loans and 17 percent of
SBA loans, even though they represent 30 percent of small
businesses.
We need lawmakers to hold banks accountable for
discrimination in lending and ensure entrepreneurs of color and
women get a real opportunity to start and grow their
businesses. Protect small business borrowers from predatory
lending with transparency in lending, reasonable terms and
underwriting, and honest practices.
Families are part of our bottom line. Only 17 percent of
the U.S. workforce have paid family leave through their
employers, and less than 40 percent have personal medical leave
through an employer-provided temporary disability program.
In New Jersey, we are fortunate to have had a state paid
program for more than 8 years, and I have encouraged two of my
employees to use it, one after his mother suffered a severe
brain injury and one after an employee's wife received a cancer
diagnosis.
The Family Act will create a national paid family and
medical----
Chairwoman VELAZQUEZ. Mr. Conklin, your time has expired.
During the question and answer period you will have some time
to expand.
Mr. CONKLIN. Okay. Thank you.
Chairwoman VELAZQUEZ. Thank you for your testimony.
Mr. Sullivan, you are recognized for 5 minutes.

STATEMENT OF THOMAS M. SULLIVAN

Mr. SULLIVAN. Thank you, Chairwoman Velazquez, Ranking
Member Chabot, and members of the Committee, for the
opportunity to outline the U.S. Chamber of Commerce's small
business priorities.
Ninety-seven percent of Chamber members are small
businesses, and the Small Business Council that I head works to
ensure their views are considered as part of our policymaking
process. In addition to receiving input from our Small Business
Council, we learn a great deal from our quarterly small
business index and from our engagement with small businesses
where they live and work at our regional small business
summits.
The priorities that I will outline really have at the top
of the list workforce, the need for workers. The top priority
of the Chamber is to address the worker shortage that is making
it difficult for small businesses to grow.
The top issue for the small businesses I talk with every
day is finding, recruiting, hiring, and retaining qualified and
willing employees. There is really no single piece of
legislation that can solve Main Street's challenge of a worker
shortage. However, we believe there are legislative and
business leadership solutions that will go far in addressing
the need for workers, and those are outlined in more detail in
my written statement.
Immigration. The Chamber has long supported common sense
reforms to our Nation's broken immigration system. And when
businesses large and small are prevented from growing because
of a lack of workers, our call for reform is even more urgent.
As far as education goes, the Chamber supports high-
quality, lifelong learning to ensure all Americans have the
opportunity to reach their potential. There are several
legislative initiatives to expand high-quality education that
we support, and expand and improve training and retraining
programs that include employer-led ``earn and learn''
opportunities like apprenticeships.
Competing for talent and retention of employees. The
Chamber believes that providing small businesses with
healthcare coverage options and retirement options for their
employees are key ingredients for growth and allow them to
compete for and retain top talent.
Our local and state chamber of commerce partners are
excited about new opportunities to provide healthcare coverage
and retirement benefits for their small business members, and I
am hoping in the question and answers that I would be able to
detail some of those opportunities.
Access to capital. It is no surprise that this Committee is
already off to a good start when it comes to forwarding
bipartisan legislation that will help small businesses access
the capital they need to start, sustain, and grow. We hope that
H.R. 116, the Investing in Main Street Act, is taken up by the
Senate and signed into law. And we look forward to working with
this Committee on additional legislation that will help provide
access to capital for startups and small businesses.
Regulatory relief. SBA's Office of Advocacy acts as the
watchdog for small business within the Federal Government and
oversees implementation of the Regulatory Flexibility Act,
which is under this Committee's jurisdiction. I was honored to
lead that office from 2002 to 2008, and I appreciate this
Committee's support for that office and its mission.
One of our priorities for this Congress is to work with you
on legislation that can improve that office's work to the
benefit of our Nation's small business community.
Infrastructure. The Chamber is buoyed by the bipartisan
agreement that seems to surround infrastructure, and we
encourage you to help the Committees of jurisdiction to get the
legislation moving.
As far as working with other Committees, from
Infrastructure to Health Care, to Trade and Tariffs, to Tax
Policy, many of the Chamber's small business priorities fall
within the legislative jurisdiction of Committees other than
this one. To the credit of you all, you have a history of
helping those Committees understand the unique concerns of
small businesses. I compliment your vigilance in this area and
want to stress the importance of continued cross-Committee work
when it comes to small business priorities. At the Chamber, we
are similarly dedicated to advancing these and other policies
that can benefit Main Street businesses, fuel the economy,
provide for individuals and families, and grow communities.
Thank you.
Chairwoman VELAZQUEZ. Thank you, Mr. Sullivan.
I recognize myself for 5 minutes. And I would like to
address the first question to the members of the panel.
As a staunch supporter of entrepreneurs, I want to make
sure that I am doing everything within my power to provide the
tools to help small businesses and the business community to
turn an idea into a flourishing business. So as an active
member of the entrepreneurship community, what are some of the
opportunities and challenges that you see on the horizon? What
will be that one issue that you feel will make a difference in
empowering that small individual to turn an idea into a
startup?
Mr. Arensmeyer?
Mr. ARENSMEYER. Well, first, I think we need to make sure
we are connecting small business owners and entrepreneurs with
all the programs that are out there. We have a very extensive
entrepreneurship program across the country where we not only
provide education but we provide resources both online and
face-to-face. But most importantly, we connect people with
resources that are out there, resources from the SBA, resources
from the U.S. Department of Agriculture. I am pleased to see
the Rural Entrepreneurship Program has continued in the recent
Farm Bill. So a lot of it is just connecting people with
resources.
We need to make sure that they are connected to the local
community banks. The problem is there is no one solution. We
have to, when it comes to lending, you know, there are 7(a)
loans. There are other microloan programs, et cetera, but there
is no sort of one place where a small business owner can go to
get everything.
We are optimistic that some of the technology embedded in
some of the fintech products can be useful but we cannot let
those expand without very strict guidelines around
transparency, around underwriting rules because literally what
is happening is a lot of those small business owners are being
taken advantage of much the way individuals get taken advantage
of by payday loans. So it is a combination of making sure
people have access to resources and setting up policies to
ensure maximum access.
Chairwoman VELAZQUEZ. Thank you.
Ms. Parsons, I know that you care deeply about providing a
level playing field for women entrepreneurs, and we know that
women receive nearly 50 percent less funding compared to male-
owned businesses. How do you see this committee enacting
legislation or how can we enhance the programs so that we
provide that level playing field for women?
Ms. PARSONS. Yeah, thank you. I think that is a great
question.
Right now, if you want to get a loan for your small
business startup, and that is usually where people are going,
we have this system in place where banks, including SBA-backed
loans, are asking entrepreneurs to have 2 years in business and
$250,000 of revenue as a starting point, which clearly if you
are a startup entrepreneur you have neither, which then means
people are using personal assets to start their businesses. And
this is why women and people of color are falling behind. All
the statistics show that women have less access to personal
assets and personal guarantees. And so you just have this
catch-22 of the same entrepreneurs who have access to resources
are the only ones who can start businesses.
So the first thing that has to happen I think is the
recognition that where we are today and how we lend simply
leaves behind people who do not have access to personal assets
and who do not have personal wealth. And that would be the
first thing.
Chairwoman VELAZQUEZ. Thank you.
Mr. Conklin?
Mr. CONKLIN. Well, the single biggest problem we face, and
it has been an ongoing problem throughout the 40 years we have
been in business, is manpower. Skilled manpower. Access to
people who are trained and knowledgeable and can step into our
facility and safely do the work we do. And there is a focus I
think both educationally and culturally in our society that is
blind--to I think a very good opportunity for people to make
very good living--doing the kind of work we do. The focus on
STEM in education and the abandonment of training folks in the
trades and crafts over the course of the time we have been in
business. I went to the School for American Craftsmen. I do not
think it exists anymore.
Chairwoman VELAZQUEZ. Thank you.
Mr. CONKLIN. And my wife went to Philadelphia College of
Art. So we have to have workers and we have to have an
immigration policy that recognizes that the skillsets necessary
for small businesses to function include using tools, like saws
and chisels and hammers.
Chairwoman VELAZQUEZ. Thank you, Mr. Conklin.
Mr. Sullivan, I will come back to you in the second round.
My time has expired and now I recognize the Ranking Member for
5 minutes.
Mr. CHABOT. Thank you, Madam Chair.
It is a relatively new concept but I would like to get each
of your input or opinion on this briefly. Would you be inclined
to be for or against the so-called Green New Deal?
Mr. Arensmeyer?
Mr. ARENSMEYER. Well, there is no question that we have got
a major problem facing us, and we need to take dramatic action.
We have not studied the details. I am not even sure there is
that sort of a document so I cannot say that we would support
everything in it. But we definitely support the concept. And I
think what is important to remember is that as we figure out
how to reduce our carbon footprint and create more renewal
opportunities, there are business opportunities. And many of
those business opportunities are available to small businesses.
So we would like to see as part of a--and yes, there does need
to be a comprehensive effort to deal with this--we would like
to see making sure there is a role for entrepreneurship and for
new technologies and for new opportunities for business which
we think can create a whole new generation of jobs in this
country.
Mr. CHABOT. Ms. Parsons, inclined to be for it or opposed
to it?
Ms. PARSONS. I am inclined to be for it. Obviously, there
are not the details necessary, but I----
Mr. CHABOT. Let me just stop you there. And Mr. Conklin,
because I have only got limited time, I have got other
questions.
Mr. CONKLIN. Sure. Yes.
Mr. CHABOT. Inclined to be for or against?
Mr. CONKLIN. For.
Mr. CHABOT. Okay. Mr. Sullivan?
Mr. SULLIVAN. Congressman Chabot, the U.S. Chamber of
Commerce issued a very strong statement opposing the Green New
Deal. I would like to submit that to the Committee with your
permission.
Mr. CHABOT. Yes, absolutely. We would welcome that.
Let me go back to you, Mr. Sullivan. The 2018 surveys
relative to small businesses recorded really record-breaking
levels of optimism among small business owners. Are there a
couple of things that you would attribute that to, or what is
your opinion on that?
Mr. SULLIVAN. Thank you, Congressman Chabot.
We think that there was a significant change in the
attitude of small business on whether or not Washington, D.C.
was wind in their face or wind in the back, and in
particularly, this administration's attention to regulatory
relief, red tape relief for small business. We believe that is
the single most ingredients that has caused small business
optimism to be as high as it has been over the last year and a
half.
Mr. CHABOT. Okay. Thank you.
Let me follow up. Some of the other witnesses, one in
particular, indicated that the Tax Cuts and Jobs Act was not
helpful. In fact, not putting words in their mouth, but just
basically went to the wealthy and not others. What is your
opinion relative to how small businesses were affected, either
positively or negatively as a result of that legislation?
Mr. SULLIVAN. Thank you for the question, Congressman.
First of all, with regard to our quarterly survey, when we
surveyed small business owners when tax cuts were passed in
late 2017, their optimism spiked. So that had raised the
highest optimism levels that we have seen, and I think that is
echoed by the monthly confidence survey that was issued by
NFIB. So the initial passage was a huge boost to small business
confidence. What we have seen since then is a steady stream of
small businesses who have told us that they have reinvested
savings from tax cuts into growing their businesses. And with
the Congressman's permission, I have a list of 612 of those
companies over the past year who are willing to be very public
about the reinvestment that has occurred because of the tax
cuts. So we were very favorable of the tax reform and the
statements by small businesses from the past year backup our
support.
Mr. CHABOT. Thank you very much.
Madam Chair, I would ask that those, by unanimous consent,
be part of the record.
Chairwoman VELAZQUEZ. Sure. Without objection.
Mr. CHABOT. Thank you very much.
And I have only got a little bit of time left, but
workforce came up by a couple of the witnesses, and I know that
when I go around my district that is one of the first things
that the small business folks, or even medium business or even
large talk about how tough it is to find good, qualified
people.
Real quickly, Mr. Arensmeyer, is that something that you
think is a real challenge? Or what can we do about it?
Mr. ARENSMEYER. Absolutely it is a real challenge. And we
need to have policies that encourage--first of all, there is a
labor shortage now in this country, so we need to have
immigration policies that recognize this and recognize the
tremendous value that immigrants bring to our economy. And we
need to need to make sure that we are matching the skills of
employees with the needs of small business owners. We found
this particularly in the rural study we just did where there
was even a bigger gap in rural areas between the needs of small
businesses and the population.
Mr. CHABOT. Thank you very much.
Chairwoman VELAZQUEZ. The gentleman yields back.
Now I recognize Representative Andy Kim, Chairman of the
Subcommittee on Economic Growth, Tax, and Capital Access for 5
minutes.
Mr. KIM. Great, thank you.
I am very honored to be on this Committee and be able to
look out for small businesses across my district, across New
Jersey, and across the country.
Small businesses are the lifeblood of both Burlington
County and Ocean County where I reside, and we are very much
focused on what we can do. And as I have gone around both
counties and talked with business owners and talked with other
entrepreneurs, what comes up often is our concern in New
Jersey, and I am sure in a lot of other places about our young
Americans, especially coming out from schools, we are worried
about brain drain and other issues of that as we have seen an
exodus out from New Jersey.
So I wanted to just focus on that in two ways. First, with
regard to student debt and the huge amounts of problems that
young Americans face with regard to the debt that they carry,
how does that impact--I wanted to ask Mr. Arensmeyer about
this. I wanted to ask, you know, what can we do to try to help
alleviate these issues, to help entrepreneurship with younger
Americans while they are still dealing with student debt? Are
there any particular ideas that come to your mind?
Mr. ARENSMEYER. Thank you, Congressman.
We actually did a poll 1-1/2, 2 years ago of millennials,
and we found that almost half of them say that their student
loan debt has been an impediment to them considering starting a
business. I mean, that is huge. I mean, this is a new
generation of Americans, new generation of people who we want
to continue to start small businesses. So figuring out how to
get some kind of student loan debt relief is absolutely
essential to making sure that we foster the next generation of
entrepreneurs.
Mr. KIM. Thank you.
In addition to making sure we can foster the
entrepreneurship and the start of small businesses, I think a
number of you also talked about the workforce developing and
making sure that we are bringing in top talent in terms of the
employees of these small businesses. So I wanted to ask Mr.
Sullivan and Mr. Conklin to just go into this a little more. I
had some very good meetings yesterday with different community
college leaders and others that had been talking about this,
and in New Jersey, trying to find ways to strengthen that
pipeline between colleges and universities and training centers
to small businesses in particular. And I wanted to ask you if
you had any lessons learned or any good examples from around
the country that, you know, we certainly might be able to draw
upon in New Jersey and elsewhere and we on this Committee might
be able to use and replicate to be able to strengthen that
pipeline.
So Mr. Sullivan, why do we not start with you?
Mr. SULLIVAN. Thank you, Congressman.
So at the Chamber, we are really very proud of our
Foundation that has what is called a Talent Pipeline Management
Program. Really, the fundamental idea here is to connect the
business community and what they need with what the workforce
training centers are training the eligible employees. There has
been a disconnect in many communities where the workforce
process is teaching things the local community does not need.
So something as simple as connecting the need with the training
has actually gone very far. And this is a program that is
basically open sourced from our Chamber Foundation to local
communities through their workforce centers, through local
chambers of commerce, and other employer organizations. So I am
happy to share with the Congressman a more detailed explanation
of our Talent Pipeline Management program, but it is an
exciting initiative that we believe will go far in addressing
the workforce issue.
Mr. KIM. Great. Thank you. I certainly would love to follow
up with you and learn some more about that. So let us talk
offline.
Mr. Conklin?
Mr. CONKLIN. Yes. Thank you, Congressman.
Well, we have a member in Oregon who worked with others in
his industry, the auto repair industry, to set up an
apprenticeship program. They linked with local high schools and
they replicated a program that existed when I was in high
school. And that was a part-time apprenticeship, part-time
school curriculum day for kids who were interested in
particular trades. It was pretty much limited to the auto trade
when I was a kid. I have heard of similar programs that involve
electricians and plumbers. That is a pretty basic approach, but
you first have to convince people that that is a path they want
to follow. And we have a cultural disconnect between the
reality of what is happening on the shop floor, say at Foley
Waite and what we are preparing people for and encouraging them
to follow. Part of it is that I do not think people understand
how well you can do in the trades. You can do very well in the
trades. You could have a great career in the trades. But we are
not really encouraging people, and people, kids particularly do
not seem to be particularly interested in pursuing it. There is
some work involved and that is something that I think is a
little discouraging, and there is some work involved in making
it happen.
Mr. KIM. Great. Thank you so much.
I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
And I recognize the gentlelady from American Samoa, Ms.
Amata Radewagen, Vice Ranking Member with the committee for 5
minutes.
Ms. RADEWAGEN. Talofa, and good morning.
I want to thank you, Chairwoman Velazquez, and Ranking
Member Chabot for holding this hearing. And I want to thank all
of you for testifying today.
I am honored to serve on this Committee, as strengthening
and diversifying the economy through the growth of small
businesses of American Samoa. It is one of my biggest
priorities.
Like the rest of the country, small businesses make up the
majority of the businesses in my home of American Samoa.
Unfortunately, due to the remoteness of American Samoa, it is
difficult for my constituents to receive the technical
education to grow their businesses, although our SBDC is doing
a great job to raise awareness of their services.
One of my main concerns is a lack of microlending in
American Samoa. I have seen microlending in neighboring
independent Samoa and it has met with great success. I look
forward to working with you all over the next 2 years to
continue to grow America's small businesses.
Now, Mr. Arensmeyer, my question is for you. How can
existing entrepreneurial development resources, such as Small
Business Development Centers, Women's Business Centers, SCORE,
or Veterans Business Outreach Centers better tailor their
programs to meet the needs of underserved businesses?
Mr. ARENSMEYER. Thank you. And absolutely, there are some
great programs out there. We work very closely with the SBDCs,
with the Women's Business Centers, with SCORE, with veterans'
groups. And I am glad to hear that in American Samoa there is a
thriving SBDC. We need to get those resources in the hands of
people. A lot of times small business owners, they maybe think
they need capital but they are not ready for it or they need to
do some things to fix their credit. They need to maybe come up
with a business plan to better understand where they are going
before they actually get credit, and those organizations can be
very useful and we spend a lot of our time connecting small
business owners with those organizations. So, I do not know, I
am guessing the Rural Microentrepreneur's Business Program
applies to American Samoa, I am not sure, but that is a program
that we definitely think needs to be strengthened. And we do
need to continue to connect businesses with those resources
that are out there.
Ms. RADEWAGEN. Thank you, Madam Chairman. I yield the
remainder of my time.
Chairwoman VELAZQUEZ. The gentlelady yields back.
And now I recognize the gentleman from Maine, Jared Golden,
Chairman of the Subcommittee on Contracting and Infrastructure
for 5 minutes.
Mr. GOLDEN. Thank you. Thank you, Madam Chair.
Mr. Sullivan, I thought we would talk a little bit about
infrastructure. You expressed some interest in that.
If this Committee were going to work, let us say, with the
Transportation Committee or even work independently on our own,
what would your members of the Chamber look for, particularly
let us talk about ones from rural communities, like a state
like Maine and very small businesses. You know, would they put
the priority on something like broadband? Would they put it on
rail development? Would they put it on just straight roads and
bridges? And as a follow up, if you could also talk a little
bit about how would we ensure that an infrastructure package
truly got down to small businesses and into rural communities,
thinking about maybe specific provisions that would ensure that
it does not just go to the states that maybe have more money or
bigger companies that have more resources for things like
matching fund requirements or other provisions.
Mr. SULLIVAN. Thank you, Congressman, for the question.
So the threshold answer to your question is that small
businesses are hugely enthusiastic about infrastructure reform,
which I cannot overstate the optimism that our members have
with Congress coming together in a bipartisan way on this
issue. That is not normal these days, and because
infrastructure does have such a bipartisan enthusiasm, that has
made small business owners who I speak with very optimistic.
We had a conference on this topic just last week. I was
told it was the first time ever we had a small business panel
as part of this conference. And their answer to your question
of which need do we address was ``all of the above.'' And I
mean, that gets at the beauty of this Committee and the beauty
of Congress, is that you all have small business communities
who want different things. But the constant throughout is that
infrastructure is absolutely crumbling. What we heard last week
primarily were the traditional things of roads and bridges
because you have this kind of, this duality. On the one hand,
small business owners cannot get to their jobs, whether it is a
bad road or a damaged bridge, that is curbing their ability to
get more jobs and make more money and grow. The second part of
that duality is that these small business owners are convinced
that when there is that investment nationally, that they will
receive some of the benefits of infrastructure spending and
construction. And so as you know, many of the small business
owners are in that business, and so they have a dual benefit.
As far as the formula goes, I would love to follow up with
you and get into some of the more particulars on what we are
supporting on infrastructure reform.
Mr. GOLDEN. I would appreciate that. In fact, I think I am
meeting with one of your counterparts later to talk in depth
about some of this.
Mr. SULLIVAN. Thank you.
Mr. GOLDEN. Thank you.
If I could, Mr. Arensmeyer, you talked a little bit about
in your testimony about how we can bring an advantage to rural
small businesses when talking about opportunity zones. And I
think you talked a little bit about concerns that it may
sometimes not benefit small businesses specifically but rather
sometimes just go towards real estate development, which is
fine. But I think that we also want to, I mean, the point is to
create jobs. So if you could just talk, maybe expand upon that
testimony a little bit more.
Mr. ARENSMEYER. Sure, Congressman.
There is no question that investing in real estate is
sometimes easier to figure out, to make happen, to underwrite
than investing in small business. So what we do not want to see
happen is have the Opportunity Zones kind of devolve into, you
know, primarily real estate projects and not enough support for
actual small businesses. So there needs to be an effort. There
need to be guidelines--I believe those are still being worked
on by the Treasury Department--to make sure that actually, a
good chunk of that investment is going directly to small
business. We are not opposed to some of it going to real estate
but we want to make sure that it does not end up being the easy
way out in terms of underwriting these investments. So we think
that is critical. And we think it is the legislative intent of
the bipartisan support that existed for the Opportunity Zones
from both sides that that be the case.
Mr. GOLDEN. Thank you.
Chairwoman VELAZQUEZ. The gentleman yields back?
Mr. GOLDEN. Yes, ma'am.
Chairwoman VELAZQUEZ. Thank you.
Now I recognize the gentleman from Ohio, Mr. Balderson,
Ranking Member of the Subcommittee on Innovation and Workforce
Development for 5 minutes.
Mr. BALDERSON. Thank you, Madam Chair, and the Ranking
Member for holding this testimony today. Congressman Hern.
Sorry about that, everybody.
I see this as an opportunity for members of our Committee
to plan for the next 2 years and share each of our priorities
to help lift America's small businesses. In Ohio, we have a
saying that our state is the heart of it all, and like much of
small businesses are the heart of the American economy. So I
look forward to working with all of you and having your input.
As the Madam Chair said, regarding my position in Workforce
Development, it is a passion of mine.
I am going to direct my first question to Mr. Sullivan, and
I understand that you did not get through all your written
testimony but I did read your written testimony and I got
excited when I saw a couple things that you mentioned in there.
You referenced to Ohio's Common Sense Initiative. Could you
take a moment to kind of expand on that a little bit, please?
Mr. SULLIVAN. Thank you, Congressman. It is always good to
hear that a member of Congress gets excited when they read a
testimony. So thank you for that first.
What you were referencing was in the statement talking
about one of our Small Business Council members, Michael Canty
in Ohio, and some of his experience with red tape, both
positive and negative. I will start with the negative, and that
is something that this Committee is more familiar with than
most, and that is that any state, local, or Federal mandate is
going to impact a small business more than a larger business.
And there are studies that document this, but it just makes
sense. I mean, I think we are familiar with husbands and wives
at the kitchen table late at night in early April trying to get
all of the materials together before they go and see their CPA.
It just takes more time and time is money compared to a larger
business that has an accounting department.
So the negative that Michael Canty describes is just really
the overwhelming burden of red tape. The positive is that there
are state initiatives, like the Common Sense Initiative, and
Federal, like the Regulatory Flexibility Act, that their basic
premise is (a) one size mandates do not work when it comes to
small business, and (b) more importantly, that when you involve
a small business in the development of regulatory policy you
end up with a great two-for. One, you get a regulatory policy
that is sensitive to how it impacts small business, and two,
you actually get buy-in from the small business community about
what the end product is. And that is really the basic tenet of
both the Regulatory Flexibility Act and the Common Sense
Initiative that was done in Ohio. And this is, quite frankly, a
model that has been followed by many states.
Mr. BALDERSON. I was proud to cosponsor that piece of
legislation back in 2009, and I can sit here and tell you that
the new administration in Ohio is moving forward and we are
going to make that initiative better. So I look forward to
working with you.
I want to talk about the national level and how we can make
that even better. And you spoke about that. But I look forward
to discussing it with you in the future.
I yield back, Madam Chair.
Chairwoman VELAZQUEZ. The gentleman yields back, and now I
recognize the gentleman from Texas, Mr. Veasey, for 5 minutes.
Mr. VEASEY. Thank you, Madam Chair.
I wanted to ask Ms. Parsons if she wanted to continue to
expand on her thoughts on the Green New Deal. It sounds like
you had more that you wanted to say, and I wanted to see if you
wanted to expand on that. I think that most of us know right
now that it is not anything concrete and solid. There have been
some proposals. I believe I have heard the words ``more
aspirational.'' And so maybe a work in progress. Do you want to
just kind of expand on what you wanted to say?
Ms. PARSONS. Yes, thank you. I do.
As a mother of three kids, climate as obviously a huge
worry. To have your children--I have got a ninth grader who is
14, seventh grader who is 12, and a third grader who is 9--they
are very cognizant of what the future brings. And living in
Oregon, our climate is going to change. And it will change the
nature of what it means to live and work in Oregon. We are a
state that has been dependent on natural resources, wood
products, trees. Our entire ecosystem will change. And we are
already planning in Oregon for what it looks like when you no
longer have evergreen forests. When there is no longer snow in
most of Oregon. This is the Northwest, so it is an impact that
is very frightening to the generation of our kids who are
cognizant. Even my third grader understands what this will
mean. But for the economy of a state like Oregon, and many
other states. I mean, I cannot speak to what it is going to do
in Texas, for instance, although I suspect many Texans will be
moving up north, but it will impact how people do business and
traditional businesses in manufacturing, in logging because our
climate will affect our natural resources. And I think it is
very important to listen to scientists and develop policies
that are fact-based.
Mr. VEASEY. I also wanted to ask Mr.--say your last name
again?
Mr. CONKLIN. Conklin.
Mr. VEASEY. I am sorry. I am having a hard time seeing it
from here. Oh, thank you very much.
I wanted to ask you, I think that you had spoken about
trades earlier and about how there are young people that just
are not being directed in that area, and they are not being--
they do not know about those opportunities, and for whatever
reason they are not taking advantage of them. One of the areas
that have been talked about on this particular subject a lot is
Germany. And there are two things that occur in Germany that
are not happening here anymore. There is not as much of a
stigma attached to blue collar jobs in Germany. One of those
reasons is because the ratio between what white collar workers
and what blue collar makers make in Germany, there is much less
of a discrepancy than there is here in the United States. And
so there is less stigma attached to those jobs.
Another issue that I would like for you to touch on,
including the one that I just mentioned, is also labor unions.
As you know, the quality and income inequality in this income
has slipped dramatically with the demise of certain labor
unions in this country. Of course, everybody knows the story
about Henry Ford and when productivity went up it was also good
for the worker. We have seen a decline here in that area with
the decline of organized labor. Of course, in Germany, and the
business community and the labor forces, it is my understanding
they do go at it pretty hard in Germany, but at the end of the
day, it is a result that has led to better outcomes and quality
of life for the citizens there. Can you touch on that, please?
Mr. CONKLIN. Well, I cannot speak with great expertise
about Germany. I think the contribution that unions made
through history to the improvement for workers on the shop
floor has outlasted the strength of their influence in our
current economy, which on the one hand speaks to the importance
of that contribution, and on the other hand it speaks to the
reality of the decline of unions, particularly in the trades,
and how they interact with small businesses. When we started,
we were a nonunion shop, and the union shops went out of their
way to make it as difficult for us as they could. But they did
not prevail. In fact, over the course of the time that we have
been in business we have watched the trade unions' portion of
the work that is done shrink to the point where there just is
not a whole lot of noncommercial, small scale, high value work
being done by union workers.
But I think the larger question is, and it speaks to the
culture we are in now, we are just not encouraging kids to
pursue the trades. My employees make $60,000 to $70,000 a year.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
Now, I recognize the gentleman from Oklahoma, Mr. Hern,
Ranking Member of the Subcommittee on Economic Growth, Tax, and
Capital Access for 5 minutes.
Mr. HERN. Thank each of you for being here today. It is
always good to be on this Committee having been a small
businessman for 34 years, so it is exciting.
One of the things I have learned about being up here is not
every small businessperson thinks the same way and certainly
the three of you have some different ideologies that I would
not prescribe to.
I have had the blessings of starting and growing and sold
many businesses over the last 34 years, since 1985, starting
out as a one person shop writing software and growing into
banking and manufacturing, skilled labor. And Mr. Conklin, you
are so right. We undervalue the value of skilled labor today
and technology and welding, C&C machinery, woodworking
materials. Also, I have been blessed to be involved on the
banking side, so I have seen the other side of what has been
impacted in community banks over the last 10 years through most
recently Dodd-Frank, but just a consolidation of community
banks where most lending occurs for small business men and
women. Must of the testimony that I have heard over the last
couple hearings, I have never heard of the folks offering the
lending and I probably created more small businesses as an
individual than anyone. So one of my goals is to figure out how
we put the resources of where capital can be accessed into a
reserve or a place where you can find it. So it is interesting.
But I would really, you know, if you look at the optimism
in 2016, I think my goal is to keep that optimism going. And I
think the optimism from small businesses as a whole, as
identified by the NFIB, is that the government get out of the
way of small businesses, not get in the way. So that would be
my goal as we go forward.
But I want to talk just real briefly from each of certainly
the three of you all on this end about what you think we could
do differently as far as access to capital. Briefly if you
could because I have got like an hour's worth of questions.
Mr. ARENSMEYER. Thank you, Congressman. We have a couple of
suggestions in our policy agenda. One is to, I mean, we are
going for broke here, quadrupling the SBA lending guarantees
from $250 million to $100 billion a year, to reduce the loan
guarantee percentages. And to expand the CDFI budget, the
Community Development Financial Institutions are a tremendous
source of capital for small businesses across the country but
they only represent about 1 to 2 percent of all small business
lending. So we have a bunch of other stuff in our policy
agenda.
Mr. HERN. Sure.
Mr. ARENSMEYER. But those are a few things.
Mr. HERN. Those are great.
Ms. Parsons?
Ms. PARSONS. Yeah. I want to talk about a program that I
think is fairly innovative in the State of Oregon. I was
appointed by Governor Kate Brown onto the Oregon Growth Board.
It is a board that uses a very small percentage of lottery
money and invests in funds that invest in Oregon businesses
with a particular focus on equity, diversity, and inclusion.
And we are really looking at social impact investing. Any
returns from those investments go straight into the Oregon
State School Education General Fund, and so it is an experiment
to say can we take some lottery money and do some innovative,
social impact investing that puts emphasis on investing in
funds that help Oregon entrepreneurs and particularly the
equity diversity party.
Mr. HERN. If my staff could get that information because we
have a particular interest in that as well.
Ms. PARSONS. Great.
Mr. HERN. Mr. Conklin?
Mr. CONKLIN. In 1980, when my wife and I had hired I think
at that point two employees and we were doing more work for a
construction company across the street and was offering us
great opportunities to work for some major corporations that
surround New Jersey, we needed to borrow $5,000 for some
equipment. It just was not available. Nobody was interested in
loaning it to us. I think ultimately we leased some equipment
at a relatively high rate of interest and we got what we needed
in the most expensive way. And, we got the sense that we were
pretty much on our own. We are going to have to figure this
stuff out for ourselves and find the money where we could and
pay more for it. And that is exactly what happened.
So when we were talking about how women and----
Mr. HERN. Mr. Conklin, I am so sorry. We are running out of
time.
Mr. CONKLIN. Yeah.
Mr. HERN. But I would love to get your thoughts.
I just want to close out with this. I know that when you
are creating jobs and you are in the business world and you
have tons of risk, I just want to share with you from both
perspectives what Dodd-Frank did to community banks. Now, I
understand the big banks and why it was created, but to
community banks where we get our resources it was devastating
because it created a hurdle that you talked about a minute ago.
Dodd-Frank introduced tons and tons of regulators into the
system to ensure that there was no discrimination, but what
they also put in there was a high hurdle to actually take
loans, whether it was mortgage, expand the mortgage period from
30 days to about 60 days, but also in a sense of what it did to
folks who came in with a business plan and no personal wealth
to create jobs.
I could tell you a story how I started my first business,
my true business of mowing lawns when a guy loaned me $100 at a
bank on a passbook account without any credit. Those days are
long gone but that is how businesses used to start. Today, to
your point, you have to have a quarter million dollars to come
in. If I had that I would not even start the business.
So thank you all so much for your testimony.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
And now I recognize the gentlelady from Iowa, Ms.
Finkenauer, Chairwoman of the Subcommittee on Rural
Development, Agriculture, Trade, and Entrepreneurship, for 5
minutes.
Ms. FINKENAUER. Thank you, Madam Chair. And thank you to
our panel here today. It is great to hear the different
perspectives and where you all come from.
But this question is actually to Mr. Arensmeyer, who I had
the opportunity to see yesterday and had the pleasure of
getting to speak at the Rural Small Business briefing. I know
you organized yesterday with the Co-Chairs of the Congressional
Rural Caucus as well. So thank you for that opportunity, and
thank you for your testimony today.
I know you talked about how rural entrepreneurs start
businesses at higher rates, but also how there are a host of
challenges facing rural businesses and that the unemployment
rate is still very high in rural areas. I know one of the
challenges for rural businesses and farmers is the trade war
started on Twitter, but also, on top of that we have got low
broadband deployment and transportation and infrastructure
issues, along with young people leaving rural America. Or not
coming back home after they have left to go to college. And I
look forward to getting to tackle some of those issues, in
particular on the Rural Development, Agriculture, Trade, and
Entrepreneurship Subcommittee. But from the small business
majority's view, what should we be doing to ensure our farmers
and our rural employees and small businesses can thrive? Were
there any recommendations? I know, I really appreciate again
getting to speak yesterday, but also seeing all the young folks
in that room, and I imagine you all had some very interesting
discussions and interesting ideas that came out of that. And I
am wondering if you would be able to share any of that with us
today about how best we can support rural businesses and our
farmers.
Mr. ARENSMEYER. Thank you, Congresswoman. And thank you
very much for joining us yesterday at the release of our rural
report. And your comments were very enlightening.
You have identified some of the issues. I mean, broadband
is a huge issue. One in four rural entrepreneurs say they do
not have access to broadband. I do not know if you were still
around, but one of the people on the panel, one of the New
Mexico Native American business owners literally talked about
how she has a home-based business and talked about how she had
to worry about whether her kids were playing videogames,
whether her husband was doing work online for her to be able to
actually get on, and she has a floral business, and make
orders. So it was kind of an interesting, although not very
happy story. So broadband is key.
You know, access to resources is absolutely key. I know I
sound like a broken record here, but just because of distance,
a need. Infrastructure is huge. I am glad Tom has talked a
little bit about that. Not only do small businesses depend on
infrastructure more than most businesses on sort of a per
capita basis but there are actually jobs available for small
businesses getting involved and improving infrastructure. So
you know, again, I talked about the Rural Microentrepreneurship
Assistance Program. There are programs out there, but we need
to do more. And, you know, there is a whole list of suggestions
in our report. I would be happy to share that with the
Committee.
Ms. FINKENAUER. Great, thank you.
Mr. Sullivan, I wanted to talk to you as well because I
know in my district we have really active chambers in some of
our larger towns, and also some in our smaller towns as well.
Has the U.S. Chamber put together, or could you tell me, you
know, what could we be doing better working with some of the
smaller chambers in some of the smaller towns to attract more
people, especially young people back to the area, fill up those
Main Streets, and anything that you guys have suggestions for
or things like that.
Mr. SULLIVAN. Well, thank you, Congresswoman.
First of all, let me compliment you on one of the bills
that you worked on and this Committee passed. I see that you
sponsored H.R. 246, which was the----
Ms. FINKENAUER. The long name. Yeah.
Mr. SULLIVAN. Stimulating Innovation through Procurement
Act. It is really another example of the bipartisan nature of
this Committee and how important it is to get that type of
movement behind bills because then they can get through the
House and hopefully through the Senate.
Ms. FINKENAUER. Knock on wood.
Mr. SULLIVAN. You mentioned local and smaller chambers of
commerce. Actually, the best part of my job is getting out of
Washington, D.C., and visiting with these incredible local
chambers. How do you get more people to them? I do not know
other than trying to breathe in the same type of optimism that
this Committee has about entrepreneurship and how government is
there to help them and not to get in their way. And we are
trying to do that. But I think your question brings a whole set
of opportunities for us to work together to kind of ignite that
type of enthusiasm for local chamber membership.
Ms. FINKENAUER. Absolutely. I look forward to having those
conversations. And thank you again to all of you for being
here. And I yield back.
Chairwoman VELAZQUEZ. The gentlelady yields back.
And now I recognize the gentleman from Florida, Mr. Spano,
for 5 minutes.
Mr. SPANO. Thank you so much, Madam Chair, and thank you
all for being here this morning. I just have a few questions.
My first question is to Ms. Parsons. My experience as a
small business owner in the district that I represented for
several years before I was even involved in public office or
publicly policy was I was on the chamber board, two chamber
boards involved in numerous local networking organizations to
try and keep my business going and growing. And it was not
until I was elected to office that I first heard about the
Small Business Development Corporation. So my concern is that,
and maybe we are doing a better job of that now. I hope so. But
at that point in time there just was not enough dissemination
by small business development. And look, they have done a great
job. I do not mean to disrespect them in any way, but what can
we do specifically to get the word out in order for it to
filter down to people on the frontlines out there trying to
build a small business that will actually allow them to access
opportunities?
Ms. PARSONS. Yeah, thank you. That is a great question. And
my business has worked with SBDCs for over 25 years. We work
very closely. We have donated millions of dollars of software
to SBDCs all around the country because we really believe in
entrepreneurship. But you are right. People do not know about
it. They call our business and ask for help, and that is not
what we do. We sell them software and tools, and we always
recommend, and in fact, on our website, free and public, we
have an entire directory where people can find their local
SBDC. And it is a content site that attracts 2 million unique
visitors. We need more businesses like mine to help and aid in
this effort because small business development centers have
free support and free help, and yet the community does not know
about them. We need community colleges who often house SBDCs to
also engage in those marketing efforts and to do more to pair
SBDCs with entrepreneurship classes that they are giving to
their local communities so that people know that there is free
support and expertise to help them navigate access to capital.
Mr. SPANO. Thank you. Thank you so much.
My next question is for Mr. Sullivan. I had a meeting with
some constituents, small business owners just last week in my
office, and they were just frustrated by their inability to
hire people. They could not find truck drivers, other kind of
nonskilled labor positions. And they are not in the ag
business. Right? So the season guest worker program will not
help them.
My question is should we open up or expand our guest worker
program, right, so that our small businesses will have the
access to the labor that they need?
Mr. SULLIVAN. Congressman, thank you for the question.
The simple answer is yes. Our immigration system is
completely broken and small businesses are hurting because of
it. I tried to detail out in my written statement the story of
Dick Cardew. He produces hay and folks unfortunately then
categorize that as kind of the need for seasonal workers. Well,
he is producing hay in Arizona. It is a yearlong season, and he
needs workers. And there are hundreds of other examples like
this. And so we are with you and we want to work with you to
pass comprehensive immigration reform through Congress.
Mr. SPANO. Thank you. I yield back, Chair.
Chairwoman VELAZQUEZ. The gentleman yields back.
I now recognize the gentleman from Illinois, Mr. Schneider.
Mr. SCHNEIDER. Thank you. Thank you, Madam Chairwoman. And
I want to thank you and the Ranking Member for hosting this
hearing. I want to thank the witnesses for being here today and
sharing your experiences.
This is a critically important issue as others have already
stated. Small business is the engine that grows our economy. It
creates the majority of the new jobs. It is where the majority
of Americans find their work. And if we are going to strengthen
our communities, whether it is urban communities or communities
in rural, small business is going to be key to that.
And when I think about business, and I have said this for
years, there are four key pillars that business success depends
on. One we cannot really help with. You guys have to come up
with your own business idea. That is up to you and that model,
that paradigm, whatever buzzword you want to use is what is
going to help propel you to success.
But where we can make a difference is improving access to
talent, making sure you have the people you need. Improving
access to capital. Providing a stable business environment
which is a stable government that does not threaten shutdown on
a continuous basis. It is eliminating obstacles and hurdles. It
is finding ways to reduce complexity, and it is looking for
ways to find levers to amplify or multiply the work that you
are doing.
So my general question, and I will open this up to the
entire panel is if you can think of three of the things that
you are concerned about, from health care, infrastructure,
debt, student loan debt as a piece of it, and one thing that
would make a difference that we can do that will propel small
business forward in the country. What would you recommend to
this Committee? And we will start at the end.
Mr. ARENSMEYER. Congressman, I want to just address a
couple issues we have not talked about that much here. I mean,
there is no one silver bullet but a huge issue is health care.
And health care is something that has been a tremendous concern
for small businesses for years. As I detail in my testimony,
the ACA has actually created tremendous opportunities for
business owners, business employees, small business employees,
and self-employed entrepreneurs to access health care. As I
said, over half of the participants in the marketplace fall
into those categories. We absolutely have to shore up, we have
to reduce the market risk. I talked about some of the issues
there of eliminating some of these short-term plans and
association business plans that are sort of balkanizing the
market and leaving the rest of the market much more expensive
and less stable. There is a functioning small business market
now and it has gone up. The increases in the market have gone
up half of what they were going up before the ACA. So there is
no reason to start creating new markets out there. We should
support the markets that exist. We obviously have to get
control over drug prices and other out-of-network prices. I
just want to----
Mr. SCHNEIDER. I do not mean to cut you off but we are
limited in time.
Ms. Parsons, if you could opine.
Ms. PARSONS. Yeah, there are so many things that I would
like to say but I will keep it to urging you to support the
Family Act, which will provide paid leave for all small
businesses. One of the things that I think people do not
necessarily understand is one of the biggest problems small
businesses have, and I am not talking about the SBA definition
of 500 employees or less, I am talking about micro small
businesses, 20 employees or less, is the infrastructure,
resources, and tools to understand how to do better financial
analysis which big businesses have. They have analysts and
planners and they can understand how to structure their
financials and provide paid leave. The economics are there.
Paid leave will return to the small businesses because they
will retain their workers. People have to choose right now from
do I take care of my sick child or do I keep my job? And at the
end of the day you are not going to make that choice. You are
going to take care of your sick child. So----
Mr. SCHNEIDER. All right. Thank you. I am sorry to cut you
off.
Mr. Conklin?
Mr. CONKLIN. I would say both my predecessors covered some
of the important issues so I will go back to the Green New
Deal.
We have a 13,600 square foot flat roof in a neighborhood of
buildings that are similarly structured. It is absurd to me
that they are not all covered with solar panels. We could
produce more energy off our roof than we consume, and we
consume quite a bit of energy. We need to have imaginative
programs put in place very quickly that make it affordable for
companies like mine to actually do that work. And sometimes
that means the company has to put a new roof on the roof before
it can put the solar panels on the roof. We need to be really
imaginative about this and we really need to hit it hard.
Mr. SCHNEIDER. Thank you.
And if I can indulge one last, Mr. Sullivan, last word.
Mr. SULLIVAN. I will try to be really quick.
I think the biggest thing that you can do is really build
on the success of this Committee going forward. Work with your
colleagues in the Education and Labor Committee and celebrate
the examples that are going on right now. I mention the Tapani
sisters in Minnesota, for instance. Celebrate what is working
to solve this workforce challenge and celebrate it loud and
proud through your work with those Committees so that you can
inspire others to follow in their footsteps.
Mr. SCHNEIDER. Thank you. And I will echo that. And I think
we need policy that is strong, confident, secure that moves us
to the future that addresses our challenges, whether it is
environment, health care, education, infrastructure, and small
business can lead the way.
And with that I am happy to yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
And now I recognize the gentleman from Tennessee, Mr.
Burchett, for 5 minutes.
Mr. BORCHER. Thank you, Chairlady and Ranking Member.
I had a couple of questions, and I apologize if they have
been asked before. If they have, you all just say they have
been asked before and I will go back and watch the tape.
But ultimately, where do you all find that government is
still getting in the way of small business? I hear this a lot
when I am talking to folks. And how can this Committee work to
solve that problem?
Mr. ARENSMEYER. Congressman, you know, I think there is not
sort of one big answer to that question. There are many cases
where government is needed to help small business. We talked
about some of those in terms of resources, in terms of
obviously, you know, you have heard about the FAMILY Act, about
healthcare needs, about access to capital. On the other hand,
there are times when government, maybe we should look at
regulations and we should figure out how to streamline them.
When we have done polling, we found that fewer than 20 percent
of small businesses ranked regulatory problems at the top of
their list. And in fact, the biggest regulatory problems that
exist are more at the state and local level, particularly the
lower level. There is not a huge human cry from the businesses
that we deal with about Federal regulations. So again, I think
we support the work of the SBA's Office of Advocacy, certain
laws, the SBREFA process. We are not sure we need another sort
of comprehensive process on top of that, and we do need to look
at, and you all need to and the regulatory agencies need to
look at each regulation, what it is trying to do, what the cost
benefit is, and not sort of have a global sort of response to
that.
Mr. BORCHER. The thing I always found in my time in the
legislature in Tennessee and as mayor, a lot of the time
somebody was trying to fix a problem that did not exist and it
is always easy to put another nickel on a can of beer until all
your beer drinkers call you and then you know you have got a
real problem.
Did anybody else want to take a shot at that one? Chamber?
Mr. SULLIVAN. Yes, Congressman, I am amazed at the
government's inability to reward those small business owners
who are trying desperately to keep up with local, state,
regional, and Federal requirements. And I think the time has
come for us to admit that and for Congress to pass a
comprehensive law that gives these folk a pass. As long as no
one is hurt or imminently in danger, let us start rewarding
these small business owners for trying to get it right instead
of looking to nickel and dime them and penalize them. And they
are the ones who are trying the hardest to comply with all the
regulatory mandates.
Mr. BORCHER. I noticed too the little cafeteria where I eat
at frequently, Wright's Cafeteria, and my predecessor still
eats there quite a lot, too, that when the state came in and
said you all have to submit your tax forms on computers, that
in fact was an unfunded mandate because David Wright, my good
friend, he is tight as a tick and he did not want to have to go
out and buy a computer. And so it was that way all over the
state. There were a lot of problems that that solution that we
were looking for created.
And as new opportunities for small businesses a part of the
growing economy, is there a skills gap for new types of
industries? I assume there is. I assume that is a pretty common
thing. Just a head nod will be sufficient. All right.
Where do you all see the opportunities for innovation and
helping train folks that are looking to join the work force? I
see a lot in our inner city, hardworking black folks and our
Hispanic community, they just seem to be almost left out of
some of this stuff and to me it looks like we, you know, one
size does not fit all. Do you all see that? Any response would
be appropriate if you would like. Or just a head nod. I do not
know, Chairlady, do we enter head nods as----
Ms. PARSONS. I would love to tell you about a program in
Oregon that is directly addressing by bringing school teachers
into technology companies. It is called Elevate Lane County,
and technology companies in Lane County, Oregon, are bringing
school teachers in. We are volunteering to do this. We have
them in a program for 3 weeks in the summer. They are paid by
the Department of Labor to be there and they learn specific
skills so that they can bring a specific computer science
course to their high schools that September. So from a
technology company perspective, it is fantastic because we
often feel that government moves very slowly and this allows
something to move very quickly. This summer will be the third
summer. My company has helped train four teachers, but all
together we have trained over 40 teachers. And the immediacy of
being able to train teachers and then provide a computer
science course and then take those students and bring them in
as interns, in Lane County, Oregon, we have had six students
graduate from college and get jobs in computer programming
directly because of this program.
Mr. BORCHER. Chairlady, I have gone over my time so I do
not yield back any of my time. Thank you.
Chairwoman VELAZQUEZ. The gentleman's time has expired.
And now I recognize the gentleman from New York, Mr.
Delgado for 5 minutes.
Mr. DELGADO. Thank you, Chairwoman. And thank all of you
for your testimony.
I am going to share a story from Otsego County. Last week I
was at an event there and I met with owners of a small, family-
owned farm that was started by two brothers and their wives.
The family founded the farm in 2010 with a vision to create a
vibrant food system in Upstate New York that is strengthened by
a commitment to preserving the beauty of our natural lands and
the human treatment of animals. They have worked hard to
deliver grass-fed meat to their customers and have been
successful enough to have customers in places such as Long
Island, Pennsylvania, and New Jersey. However, making
deliveries to their downstate and out-of-state customers has
not been very easy. Members of the family take turns loading up
their truck with fresh meat and driving up to 5 hours to meet
their customers. The cost associated with growth, and in this
case working with a distributor, has limited the ability of
many small businesses to expand to their full potential. This
family-owned business is one of many in my district that has
great products to offer but faces challenges marketing those
products to a broader market and meeting the costs associated
with expansion.
So Mr. Arensmeyer, my question for you is, in your
testimony you highlighted some of the unique challenges that
rural Businessowners often face. What actions should Congress
take to ensure that existing Federal programs are meeting the
demand from rural small businesses that are looking to expand
and move their products into larger markets?
Mr. ARENSMEYER. Thank you, Congressman.
That has become a huge part of our work, is making sure we
are getting out with our entrepreneurship program across the
country and letting people know about these programs. As I
think was highlighted by one of your colleagues before, a lot
of times these programs exist and people do not know about
them. A gentleman who ran a small business and did not know
about SBDCs until he got into the public policy world. We find
that all the time. We find that there are things, SBA programs,
SBDCs, Women's Business Centers, we need to do a better job of
communicating those, and it is even more essential in rural
areas because it is much harder sort of physically to get
access to those so we need to use technology. We do a lot of
work with webinars, as well as face-to-face seminars. So I
would just say that there are Federal, state, and local
programs and there are entities like SBDCs out there and we
need to collectively do a better job of making sure small
businesses know about those.
Mr. DELGADO. Appreciate it.
I will ask one other question for you, sir. You mentioned
in your testimony, I am not sure if someone has already asked
this, and if I missed it I apologize. You were talking about
the different ways we could legislatively help small business
owners, and you mentioned a buy-in to Medicare. I believe you
referenced that.
Mr. ARENSMEYER. Yes.
Mr. DELGADO. Could you speak to why you think a buy-in to
Medicare would be helpful for small business owners?
Mr. ARENSMEYER. You know, it creates another option. You
already have a whole sort of Medicare system set up and
certainly on a no-cost basis allowing people to buy in we think
is a good thing. There are a lot of entrepreneurs that fall in
the upper end of the subsidies where they phase out at 400
percent of Federal poverty level, which is about a little over
$50,000 for a single person, about $90,000 for a family of
four. And they struggle sometimes to be able to cover that, to
offer that coverage. So we think if there is another option to
expand into Medicare, let us see how it goes. Maybe you allow
everybody. Maybe you lower the age to 55 or 50. You know, I
think, you know, it is no secret. There are all sorts of
proposals out there around health care. We think the ACA was a
huge step in the right direction. We still need to have the
debate about how really to get to universal coverage and what
is the way to do it, is to start to incrementally move in that
direction. See what works, what does not work. And create some
additional options for small businesses who might be struggling
with existing subsidies.
Mr. DELGADO. Thank you very much.
I yield back my time.
Chairwoman VELAZQUEZ. The gentleman yields back. And now we
recognize Mr. Stauber from Minnesota for 5 minutes.
Mr. STAUBER. Thank you, Madam Chair and Ranking Member
Chabot for holding this hearing. And to the witnesses.
I, too, am a small business owner. My brothers and I have
owned a business for 28 years and there are ups and downs and
struggles. And as my colleague from Oklahoma stated, there are
some political differences here. I listened to them and the
partisanship on some of your comments, I do not agree with
them. But we are going to have a healthy discussion as we move
forward.
The small business in my mind, I want to tell you a story
about what happened in Minnesota just recently. In Ely,
Minnesota, we have small businesses. They are outfitters for
canoeists and men and women who want to fish and recreate. The
United States Forest Service implemented a system after holding
hearings where these small businesses in Ely, Minnesota, said
that is not the way we should do it. The U.S. Forest Service
went ahead, took zero input, the system failed, to get permits
into the boundary waters canoe area wilderness. Those small
businesses are backed up now at least a month and some change.
Every day they do not have customers is a day without money.
And I look at the Federal Government to listen to our small
businesses, listen to our chamber of commerces. They are the
engines of our economy. If we lose our small businesses, every
time we lose a small business down on Main Street USA or Main
Street Minnesota, we lose an employer or employee, we lose
money, we lose the economic drivers of our Main Street.
And to my colleague sin Maine and Iowa, I fully agree with
broadband. Bringing the ability to have broadband into rural
American. We have talked about it for many years.
And to Mr. Sullivan, from the Chamber's perspective, what
do you think broadband would do--reliable, high-speed broadband
to rural America--what do you think it would do to the
developing small businesses and the entrepreneurship?
Mr. SULLIVAN. Congressman, thank you for the question.
First of all, this is part of what we were talking about
earlier about infrastructure investment. A simple answer is we
believe that type of broadband deployment would have an
enormous positive impact on small business. And we are working
on finalizing a study that would help us put data and figures
to that sense that we have. And I would be happy to share that
with you. We expect that to be out in the middle of March.
Mr. STAUBER. Thank you.
And then can you reiterate to me what the Tax Cuts and Jobs
Act did for small businesses in relation to your role as a
member of the Chamber?
Mr. SULLIVAN. Sure. So when tax reform passed, we had a
survey out in the field. This is part of our quarterly survey
of a thousand small business owners. The survey firm is called
IPSOS. They do this every quarter. But the tax reform passed
right while that survey was out in the field and we saw the
highest spike in optimism that we had ever seen. That same
spike was recorded by the National Federation of Independent
Business that has been doing a monthly confidence survey, a lot
longer than we have been doing our quarterly index. So that was
the immediate.
Then what we saw, really, which was what the intention of
the tax cuts were, and that was to put stimulus immediately
back into the economy. And so we saw examples like a landscaper
in Jacksonville, Florida, buying a new landscaping truck.
I grew up just outside of Boston. We had a bakery in
Braintree, Massachusetts who bought a new oven specifically
from the savings from tax cuts. And I had mentioned earlier, we
have been trying to track this on a map, and we have hundreds
of examples of small business owners that not only were
grateful but they took those tax cuts and they reinvested them
into their businesses. And that means hiring new employees.
That means providing greater benefits, greater training, and
also buying new equipment, which is basically a double impact
because they are generally buying it from other small
businesses.
Mr. STAUBER. Thank you for that comprehensive answer.
I want to end, Madam Chair, by saying I really think it is
our role on this Committee to facilitate a business environment
that allows small businesses to succeed and flourish, and I
think far too long there have been rules and regulations put
forth that stymie, stop, or do not allow an individual to want
to pursue small businesses.
And I see my time is up. Thank you, Madam Chair.
Chairwoman VELAZQUEZ. Thank you. The gentleman yields back.
And now we recognize the gentlelady from Pennsylvania, Ms.
Houlahan for 5 minutes.
Ms. HOULAHAN. Thank you, Madam Chairwoman.
My name is Chrissy Houlahan. I am a freshman. I have only
been here just about 35 days but I have been a serial
entrepreneur in Pennsylvania, built a number of different
companies in the for-profit and non-profit space focused on
basketball apparel and manufacturing, all the way to early
childhood literacy, all the way to corporate social
responsibility. So fundamentally, I consider myself to be an
entrepreneur and very much about elevating small business
people.
My questions have to do with the Tax Cut and Jobs Act, and
specifically I would like to dig in a little bit on the data
that you, Mr. Sullivan, shared about your surveys. What I am
interest in, because I am also an engineer, is sort of the
inverse of your offering. You offered that 600-plus businesses
said that they initially had positive reaction or experiences
because of this tax cut. Were there several hundred or any that
responded in the negative, or did you ask them?
Mr. SULLIVAN. Thank you for the question, Congresswoman.
So first of all, they are two separate things. First, the
survey that we talked about is part of a quarterly index, and
this index does what most indexes do. It asks small business
owners in a random sample on a quarterly basis how did you do,
how are you doing, and how do you think you are doing? And in
that we saw an enormous spike.
Ms. HOULAHAN. Great. But I am asking about those 600 that
you offered for the record that had specific----
Mr. SULLIVAN. That is the second part.
Ms. HOULAHAN. Okay.
Mr. SULLIVAN. I said there were two parts to it. So first
is the survey. The second part are these small business owners.
We tracked newspaper reports and others who came to us and said
we would like to publicize our reinvestment. But no, we did not
ask small business owners, did you experience a negative impact
from taxes? No, we did not.
Ms. HOULAHAN. Thank you. And my next question has to do
with, of those 600 who responded, you mentioned that you had
the geography of them, can you, if you are able to, talk into
California, New Jersey, New York, Pennsylvania, those states
that are the state and local tax states that may have not
necessarily been as positively affected? Could you on a heat
map identify where those 600 were?
Mr. SULLIVAN. We actually do have a heat map up online. It
is uschamber.com/tax-reform.
Ms. HOULAHAN. Perfect.
Mr. SULLIVAN. And I am happy to get you the state-by-state
data following this hearing.
Ms. HOULAHAN. That is perfect.
And my final question has to do with I was, and still am,
that person who sits at the table with my husband doing taxes.
Between us we have several degrees and have a very hard time
getting through it. And I know that businesses sometimes have
different fiscal years than an April reporting timeframe. But
have you had the opportunity to ask the question again of those
business owners, those small business owners after the first
tax cycle that they have gone through if they are still as
enthusiastic about the Tax Act?
Mr. SULLIVAN. So we are right in the middle of that cycle,
and I am glad that you raised that because taxes have always
been complex, and whenever there is a change to the Tax Code it
becomes more complex. We reached out to a lot of CPAs. We
actually found that the local chambers and CPAs who were
leaders in those local chambers had the best sense of how their
clients, who are also small business owners, were doing. We
have heard mixed reactions and we are really anxious in this
tax season, which is a month and a half away from us, on seeing
the data coming back. We are optimistic. We saw positive
reviews over the past year but this tax season I think will
give us a lot of valuable data on what we need to do even more
to reduce tax burden to help small businesses grow.
Ms. HOULAHAN. I am going to be interested in it, too,
because I think that it will be very telling as we come through
one cycle of this to see if really people remain as enthused as
they were initially.
And in my last minute of questioning, if you do not mind,
Mr. Conklin, I know that your testimony had something to do as
well with the inverse, which was that you would like to see the
Tax Cut and Jobs Act, in some cases I believe your testimony
said repealed. And I just would like your comments and
perspective on that.
Thank you so much, Mr. Sullivan, for your testimony.
Mr. CONKLIN. Yeah. First, it had no impact on us, positive
or negative. It was neutral. And that came straight from my
accountant. I cannot give you the specifics or the details.
My point is when we give these tax breaks to large
corporations and to the very wealthy, and I work for the
wealthiest people in the world and that is not hyperbole. We
are depriving the community where I work of the necessary
revenues to maintain the roads, to rebuild the tunnel under the
Hudson River that when it finally fails and collapses will be a
national disaster and will put 800,000 cars on the roads of New
York, New Jersey, and Long Island, and create one of the
biggest log jams that has ever occurred in commerce.
So going back to a question that was asked earlier about
delivering goods and services, yeah, we can create some real
problems by starving the government and starving our
communities of necessary revenue to do the maintenance and
upkeep.
Ms. HOULAHAN. Thank you very much for all of your testimony
and for coming here today.
Chairwoman VELAZQUEZ. The gentlelady's time has expired.
And now we recognize Ms. Davids from Kansas for 5 minutes.
Ms. DAVIDS. Thank you, Chairwoman.
Well, I am excited to hear and read about all the
priorities, and thank you to you all for taking the time to put
together your testimony.
Like so many of the folks who have already spoken, and this
is a great segue, Mr. Conklin, because I sit on the
Transportation and Infrastructure Committee as well, and there
certainly are a lot of intersections, pun intended, to the
points that you all are making about how small business can be
buttressed, supported, and see an increase if we are properly
investing in our infrastructure. And you know, I mean, in
Kansas, we are actually coming off of the Brown Bag Tax
Experiment and have seen a reduction in revenue, so I
appreciate your comments, Mr. Conklin.
We are in the middle of a new administration. Laura Kelly
came out almost immediately, our new governor, talking about
the need to invest in our infrastructure, and I was
particularly excited to be on this board because the Kansas
City metro area, the district that I am in, the Third District
in Kansas, particularly, we have entrepreneurship baked into
the DNA of the place that we are in. We have got great
organizations like the Kauffman Foundation, which supports a
lot of initiatives that you all have been talking about. And
Kansas has 13 SBDCs, Small Business Development Centers, and
Ms. Parsons, I was really excited to hear you talking about
Johnson County Community College--I am going to mention them--
about the role that community colleges can play in highlighting
and elevating SBDCs. But also, Mr. Conklin, it goes to some of
what you were talking about, about the technical trades.
Johnson County Community College and Kansas City, Kansas
Community College were just here visiting with me, telling me
about those exact programs. So I want you to know it is not
falling on deaf ears.
But Mr. Sullivan, I would like to ask you a question that
touches on the infrastructure piece, which is can you talk a
little bit about, in your testimony I know that you mentioned
that you all just had, you know, an extensive set of meetings.
The infrastructure portion was kind of the shortest section in
your testimony but I think it might be because you all were
just having this meeting. Could you talk to us a little bit
about the areas that infrastructure can play a pivotal role in
small business?
Mr. SULLIVAN. Thank you, Congresswoman. I apologize for
giving short thrift. I have with me the 35-page booklet of U.S.
Chamber priorities.
Ms. DAVIDS. I thought there might be something.
Mr. SULLIVAN. I had to cut somewhere.
The conference that I referenced last week was the U.S.
Chamber's kind of kickoff to what we see as a huge push to get
infrastructure legislature moving. And I do not mean to pass
the baton back to you, but we are convinced that if legislative
text is not moving before the summer, then we are going to be
in a lot of trouble. So that is kind of the setting that came
out of last week's conference. And it was encouraging to hear
from your colleague that our infrastructure team is up here on
Capitol Hill meeting with you all and trying to map out some of
the details.
As far as small business goes, I had mentioned earlier that
we see really a two-part benefit when it comes to
infrastructure investment. The first is that it makes it easier
for the small business owners to get to their jobs and to get
new jobs. I call it eliminating the hassle factor that is so
familiar to anyone who has to commute a long way, and then just
think of that times 100 when you are trying to actually do
business on those same roads and bridges.
The second are the small business owners who actually as
their business do public works projects. We believe that they
will receive an enormous benefit from jobs and work when
infrastructure investment becomes a legislative reality in this
Congress. And again, I do want to emphasize the positive here
and that is the bipartisan nature of support for infrastructure
reform. So to the extent that we can follow up with your office
after this hearing, we are all in, we are all ears, and we want
to work with you to make it a reality.
Ms. DAVIDS. Thank you. And I yield back the rest of my
time.
Chairwoman VELAZQUEZ. The gentlelady yields back.
I would like to go into a second round.
Mr. Arensmeyer, I serve on the Financial Services Committee
and I, too, am concerned about the fintech space as it relates
to lending for small businesses. I know that you have done some
research. In terms of rural areas, do you have any information,
either anecdotally or factual based that tells you there are
some concerns as it relates to transparency and online lending
to small businesses?
Mr. ARENSMEYER. Sure, Madame Chair. You know, there are two
sides to lending. One is the lack of access. So that creates
the market need for a greater number of products, and we agree
you cannot solve the transparency alone and solve the problem.
We have to deal with the access problem. So we start off in
rural communities. They have less access to resources, less
access to loans than other people. And so they are going to
naturally be attracted to online alternative lenders,
especially because they are online, so assuming they get
broadband they are able to access them. And so the Borrowers'
Bill of Rights that we put together that we think should be
enshrined in legislation, and we took the first step to that in
California this last year is, you know, there are six points--
the right to transparent pricing and terms; the right to
nonabusive products, meaning there is an expectation that the
loan is going to get paid back out of business revenues, not by
taking another loan or out of the person's personal pocket; the
right to responsible underwriting; the right to fair treatment
from brokers; the right to inclusive credit access; and the
right to fair collections practices. These are nationwide
concerns that we have and we really think that the Congress
should address, particularly the Financial Services Committee.
But they are particularly concerned in rural areas.
Chairwoman VELAZQUEZ. Thank you.
Ms. Parsons, would you like to comment?
Ms. PARSONS. Yeah, I would. My business serves millions of
entrepreneurs, and I could make money all day long partnering
with fintech who does not often seem concerned about the
effects of the types of loans they are giving small businesses.
Small businesses and entrepreneurs are sometimes in a position
where they will take anything, much to the detriment of their
own business, just the same way personal finance has needed
regulations so that people do not bankrupt themselves. And I
very much agree with we need to look at that. We need to give
small business protection. No one can recover from a cash loan
that is at a 40 percent interest rate, and it will put the
business out of business.
Chairwoman VELAZQUEZ. Sure. Thank you.
Mr. Sullivan, today's Wall Street Journal says, ``Small
business sentiment sours.'' So it makes reference to small
business optimism. And it says that it has declined according
to figures from NFIB in January, and consumer confidence has
declined as well for the third straight month of decline. Why
do you think that is?
Mr. SULLIVAN. I think that the dip in small business
confidence that NFIB's monthly survey picked up has to do with
the lack of certainty in the business environment. I think the
government shutdown was a shock to the system. I compliment
this Committee for having a hearing last week that brought that
shock into reality about what a shutdown means to small
business. We cannot have government not govern because it does
affect small business confidence. And I think that is one
reason.
I would like to try to give a little bit more of a positive
though. We did see a Gallup Poll 2 days ago that looks at
consumers' attitudes towards personal finance. And what they
found is that actually for the first time in 16 years, 69
percent of Americans believe they will be better off
financially at this time next year. So I am a ``glass half
full'' type of guy. I take some optimism from that survey but I
will admit, as you pointed out, that confidence has taken a
dip. Hopefully, we will not have another shutdown and that we
will continue to see confidence go back up.
Chairwoman VELAZQUEZ. And it has nothing to do with the
fact that maybe some small businesses now are focusing on the
Tax Code and the tax cuts and finding out that some of those
are temporary, and will not be made permanent for them?
Mr. SULLIVAN. I think there have also been news accounts
that echo what you had just said. I think my response is that
we have a year of information from small business owners who
have said that they have reinvested savings from tax cuts. And
so I would much rather rely on that year of testimonials than 1
week of discussion of whether or not folks are going to get as
big of a tax refund a month and a half before taxes are due.
Chairwoman VELAZQUEZ. The gentleman Ranking Member will be
recognized for 5 minutes.
Mr. CHABOT. Thank you, Madam Chair.
I would just note the nonpermanence of those tax cuts were
a result of the Senate rules, not because of anything the House
did or wanted to do. We wanted to make them all permanent but
they have got rules over there that they have to comply with.
And as in the Bush tax cuts, ultimately, I think most people
think that the tax cuts for individuals, et cetera, will be
made permanent. It would be very unpopular not to do that but a
lot of the statements out there about talking about the rich
got it or the middle class did not or individuals did not get
it are based upon assuming that the tax cuts are going to go
away in 10 years for a lot of people which I cannot imagine
that that would happen unless we have an extremely
irresponsible Congress at that time. So I do not expect that,
although Congress is certainly capable of being irresponsible
at times.
Let me, just one question, one final question, Mr.
Sullivan. A number, some of our witnesses today have talked
pretty glowingly about the ACA, the Affordable Care Act, or
what some people refer to as the Unaffordable Care Act, or most
people over time have referred to it as Obamacare, but that is
what we are talking about here. So pretty glowingly about it.
Now, none other than Bill Clinton famously said that it is,
referring to Obamacare, said it is the craziest thing in the
world. People's premiums have doubled and they are getting half
the coverage. And you talked to, in your position at the
Chamber and with the Small Business Council, I know you talk to
a lot of small business folks from all over the country there.
Has that been your experience relative to Obamacare? Have they
been pretty big fans of it or have they had real concerns about
it? Or what do you hear with all the small business folks you
talk to?
Mr. SULLIVAN. Thank you, Congressman, for the question.
Reiterating my attitude of being a ``glass half full'' type of
person, we actually hear very positive things about the
availability of association health plans that are just being
rolled out across the country. There was a study released 2
weeks ago by a healthcare expert in Nashville, Kev Coleman. And
he actually talks about the 28 association health plans that
have been offered through state and local chambers of commerce,
and also industry associations. And he actually paints a very
positive picture of this.
Mr. CHABOT. Not to interrupt you but I know I am. When you
say association health plans, you are talking about small
businesses getting together and negotiating with the insurance
companies to keep the rates down; is that correct?
Mr. SULLIVAN. Congressman, yes. There was a rule issued by
the Department of Labor this summer that under the construct of
the Affordable Care Act, and the pooling arrangements under the
Affordable Care Act, the Secretary of Labor determined that
those same types of poolings can be utilized for small
businesses to join together for better buying power through
association health plans and our local chambers of commerce
have really jumped at the chance of offering these. And this
study actually shows that a sharp rebuttal to some inaccuracies
about noncoverage of preexisting conditions or skimpy plans, in
fact, his analysis of these 28 plans showed that they were
comprehensive and resulted in savings upwards of 20 percent. So
there are 13 states who are allowing chambers of commerce to
offer these, one of them being Ohio, and we are encouraged, and
we hope that this is something that Congress looks at favorably
and perhaps shines some light into really addressing a key
issue. I think John Arensmeyer was right that health care is a
huge issue for small business. I just take a ``glass half
full'' view that these association health plans are part of the
equation of solving that challenge.
Mr. CHABOT. With the little time that I have left I would
just note that that was one of the aspects that I know
Republicans were very supportive of was association health
plans, as well as allowing insurance companies to sell their
products across state lines so that would increase the
competition so that consumers, including small businesses,
could get health care at lower rates.
And finally, with the 5 seconds that I have got left here,
to note that we were very much for making sure that preexisting
condition coverage was there as well, so.
And I yield back my time even though it has been exhausted.
Chairwoman VELAZQUEZ. Mr. Golden is recognized for 5
minutes.
Mr. GOLDEN. Thank you, Madam Chair. I appreciate it. I know
that we are bumping up against the end of this but I just
wanted to follow up a little bit on my earlier questions. I
want to thank the Chairwoman and the Ranking Member for having
this hearing. I think it is a great opportunity to sit here and
talk with small business owners. I want to thank every member
of the panel for coming in and being a part of this as we look
forward for what I hope is 2 years of really productive work on
this Committee.
But earlier, Mr. Sullivan, we talked a little bit about
infrastructure. I know you have a lot of members. It is hard to
prioritize and, you know, you are spread out across the entire
country, but we cannot always do everything, particularly not
at once. And I think it is important to push you a little bit
on it.
You know, back home when I was in the Maine State
Legislature, the first thing I did when I got elected in 2014
was do a small business tour and ask people, you know, what are
your top priorities? Now, where I come from and the town that I
represented, at that time they prioritized work force, then
infrastructure and energy costs, and then they talked a little
bit about taxes and regulation. It could be different, I know,
in different areas in different parts of the country, but
again, just circling back to infrastructure, for the entire
panel, if you could just, a short answer, specific to rural
areas and small businesses, if this Committee and the
Subcommittee that I am going to be chairing, we are looking at
infrastructure, what would be the area of infrastructure that
you would prioritize particularly to help spur growth?
Something like broadband. Is it investment in rail? Just pick
one. There is no right or wrong answer here.
Mr. SULLIVAN. Thank you, Congressman for the question.
My quick answer is that whatever infrastructure bill
Congress gets moving, which I hope it does, make absolutely
certain that the user fees go to infrastructure.
Mr. CONKLIN. I think we need to strengthen public
transportation. I think in the concentrated areas, the nonrural
areas, that are often the customers of rural areas, when we get
jammed up, you get jammed up. Earlier we heard about a person
who took 5 hours to get something delivered. We are 20 minutes
from New York with no traffic and 2-1/2 or 3 hours from New
York when there is traffic and there is always traffic. And one
of the reasons there is traffic is because there are too many
cars on the road. And one of the reasons there are too many
cars on the road is because our public transportation system is
collapsing. And so these extraneous effects of disinvestment
and misguided investment have far-reaching effects and they do
have a direct impact on our bottom line. So that is one of the
things we really need to focus on.
Mr. GOLDEN. Mr. Sullivan, you want to get the money to the
projects. You are saying invest in public transportation
including in rural areas.
Ms. Parsons?
Ms. PARSONS. I would really have to support broadband to
rural communities. We are failing our rural communities. They
are falling behind. We are not able to train workers and give
them access to online education, online tools. The world is
moving into, you know, technology is what is going to drive
innovation and we cannot leave rural communities behind.
Mr. GOLDEN. Thank you.
Mr. ARENSMEYER. I agree with everything that has been said,
particularly the broadband into rural areas. I think something
this Committee has jurisdiction over is we need to make sure
that when the infrastructure bill is implemented that the
procurement is focused very much on small business, that the
small business rules are followed, the women-owned business
rules are followed. You know, that is a great source of growth
for entrepreneurship in all of our communities and this
Committee can really take the lead in making sure that those
contracts are focused on small businesses, making sure that
small businesses, and particularly women and minority-small
businesses are at the center of that, and rural-owned small
businesses in rural areas. So I am not sure. You know, there
are a host of projects that need to happen, broadband, and then
a lot of physical projects but we would like this Committee to
make sure that they track the procurement on that.
Mr. GOLDEN. Thank you. I yield back.
Chairwoman VELAZQUEZ. The gentleman yields back.
Mr. GOLDEN. Thank you, Madam Chair.
Chairwoman VELAZQUEZ. Well, let me take this opportunity to
thank all of you for being here today and helping us craft a
small business priority going forward. Small businesses are
critical to the success of our country, whether it is the small
technology startups or advanced manufacturing, these firms
generate tremendous economic activity and provide employment
opportunities for our communities. As we move forward in this
Congress it is critical that we listen to and prioritize their
needs to ensure their future success.
I would ask unanimous consent that members have 5
legislative days to submit statements and supporting materials
for the record.
Without objection, so ordered.
And if there is no further business to come before the
Committee, we are adjourned. Thank you.
[Whereupon, at 1:09 p.m., the Committee was adjourned.]

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