[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
UNLEASHING AMERICA'S OPPORTUNITIES FOR
HIRING AND EMPLOYMENT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON EDUCATION AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD IN WASHINGTON, DC, MARCH 28, 2023
__________
Serial No. 118-2
__________
Printed for the use of the Committee on Education and the Workforce
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via: edworkforce.house.gov or www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
51-660 PDF WASHINGTON : 2023
-----------------------------------------------------------------------------------
COMMITTEE ON EDUCATION AND THE WORKFORCE
VIRGINIA FOXX, North Carolina, Chairwoman
JOE WILSON, South Carolina ROBERT C. ``BOBBY'' SCOTT,
GLENN THOMPSON, Pennsylvania Virginia,
TIM WALBERG, Michigan Ranking Member
GLENN GROTHMAN, Wisconsin RAUL M. GRIJALVA, Arizona
ELISE M. STEFANIK, New York JOE COURTNEY, Connecticut
RICK W. ALLEN, Georgia GREGORIO KILILI CAMACHO SABLAN,
JIM BANKS, Indiana Northern Mariana Islands
JAMES COMER, Kentucky FREDERICA S. WILSON, Florida
LLOYD SMUCKER, Pennsylvania SUZANNE BONAMICI, Oregon
BURGESS OWENS, Utah MARK TAKANO, California
BOB GOOD, Virginia ALMA S. ADAMS, North Carolina
LISA McCLAIN, Michigan MARK DeSAULNIER, California
MARY MILLER, Illinois DONALD NORCROSS, New Jersey
MICHELLE STEEL, California PRAMILA JAYAPAL, Washington
RON ESTES, Kansas SUSAN WILD, Pennsylvania
JULIA LETLOW, Louisiana LUCY McBATH, Georgia
KEVIN KILEY, California JAHANA HAYES, Connecticut
AARON BEAN, Florida ILHAN OMAR, Minnesota
ERIC BURLISON, Missouri HALEY M. STEVENS, Michigan
NATHANIEL MORAN, Texas TERESA LEGER FERNANDEZ, New Mexico
JOHN JAMES, Michigan FRANK J. MRVAN, Indiana
LORI CHAVEZ-DeREMER, Oregon JAMAAL BOWMAN, New York
BRANDON WILLIAMS, New York
ERIN HOUCHIN, Indiana
Cyrus Artz, Staff Director
Veronique Pluviose, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on March 28, 2023................................... 1
Statement of Members:
Foxx, Hon. Virginia, Chairwoman, Committee on Education and
the Workforce.............................................. 1
Prepared statement of.................................... 3
Scott, Hon. Robert C. ``Bobby'' , Ranking Member, Committee
on
Education and the Workforce................................ 4
Prepared statement of.................................... 6
Statement of Witnesses:
Akers, Jerry, Small Business Owner and Franchisee, Palo, IA,
on Behalf of International Franchise Association........... 28
Prepared statement of.................................... 30
Moore, Stephen, Distinguished Fellow in Economics, The
Heritage Foundation, Washington, DC........................ 53
Prepared statement of.................................... 56
Shierholz, Heidi, President, Economic Policy Institute....... 39
Prepared statement of.................................... 42
Spear, Chris, President and CEO of the American Trucking
Associations............................................... 8
Prepared statement of.................................... 10
Additional Submissions:
Bonamici, Hon. Suzanne, a Representative in Congress from the
State of Oregon:
Letter submitted by the AAFD dated December 7, 2022...... 111
Leger Fernandez, Hon. Teresa, a Representative in Congress
from the State of New Mexico:
Report from the Economic Policy Institute dated March 14,
2023................................................... 117
Questions submitted for the record by:
Thompson, Hon. Glenn, a Representative in Congress from
the State of Pennsylvania
Mclain, Hon. Lisa, a Representative in Congress from the
State of Michigan
Response to question submitted for the record by:
Mr. Spear................................................ 135
Mr. Akers................................................ 137
Mr. Moore................................................ 140
UNLEASHING AMERICA'S OPPORTUNITIES FOR HIRING AND EMPLOYMENT
----------
Tuesday, March 28, 2023
House of Representatives,
Committee on Education and the Workforce,
Washington, DC.
The Committee met, pursuant to notice, at 10:28 a.m., 2175
House Rayburn Building, Hon. Virginia Foxx, (Chairwoman of the
Committee) presiding.
Present: Representatives Foxx, Walberg, Grothman, Allen,
Banks, Comer, Smucker, Owens, Good, Miller, Kiley, Bean,
Burlison, Williams, Houchin, Scott, Courtney, Sablan, Bonamici,
Adams, DeSaulnier, Jayapal, Wild, McBath, Hayes, Stevens, Leger
Fernandez, Manning and Mrvan.
Staff present: Cyrus Artz, Staff Director; Nick Barley,
Deputy Communications Director; Mindy Barry, Chief Counsel;
Jackson Berryman, Speechwriter; Michael Davis, Legislative
Assistant; Tyler Dufrene, Research Assistant; Cate Dillon,
Director of Operations; Daniel Fuenzalida, Staff Assistant;
Sheila Havenner, Director of Information Technology; Taylor
Hittle, Professional Staff Member; Alex Knorr, Staff Assistant;
Trey Kovacs, Professional Staff Member; Andrew Kuzy, Press
Assistant; Marek Laco, Professional Staff Member; John Martin,
Deputy Director of Workforce Policy/Counsel; Hannah Matesic,
Director of Member Services and Coalitions; Audra McGeorge,
Communications Director; Ben Ridder, Professional Staff Member;
Kelly Tyroler, Professional Staff Member; Seth Waugh, Director
of Workforce Policy; Joe Wheeler, Professional Staff Member;
Kevin McDermott, Minority Senior Labor Policy Advisor; Jessica
Schieder, Minority Economic Policy Advisor; Scott Estrada,
Minority Professional Staff; Kyle deCant, Minority Labor Policy
Counsel; Bob Shull, Minority Labor Policy Staff; Ilana Brunner,
Minority General Counsel; Dhrtvan Sherman, Minority Staff
Assistant; Stephanie Lalle, Minority Communications Director;
Kota Mizutani, Minority Deputy Communication Director; Sam
Varie, Minority Press Secretary.
Chairwoman Foxx. The Committee on Education and the
Workforce will come to order. I note that a quorum is present.
Without objection, the Chair is authorized to call a recess at
any time. Good morning, everyone, and welcome to today's
hearing.
Our room this session seems to be plagued by all kinds of
problems. Our IT area was flooded, and so that's why we have
temporary mics, temporary cameras, and so today the air-
conditioning is not working, so we have some real issues, and
I'll just ask everybody to bear with us on things we have
absolutely no control over.
One of the most troubling consequences of pandemic related
closers and the left's failing policies, the decline of
America's workforce. The Democrats controlled the House for
three years of the pandemic and its aftermath. They oversaw the
greatest spending spree by any nation in world history.
When inevitable economic hardship followed, the American
people had questions that deserved answers from the Committee
on Education and the Workforce. What did the Democrat's
oversight look like? In the 116th and 117th Congresses,
Committee Democrats did not once conduct oversight of their
economic shutdowns or the implications for our workforce.
Did Democrats hold a hearing on inflation? The single
greatest concern for the plurality of Americans? Never. How
many times did Committee Democrats hold a hearing to address
directly the nationwide supply chain disruption? Zero times. In
response to the single, sharpest spike of unemployment in the
21st Century the Democrat controlled Committee chose to hold
hearings in support of closing Main Street small businesses,
padding the pockets of big labor union bosses, and advocating
for increased Federal spending and pandemic giveaways.
In fact, Democrats have doubled down on attempts to
eliminate opportunities for workers to choose how, when and
where they work. The consequences of this job killing agenda
are preventing small business owners and entrepreneurs from
putting more Americans back to work.
Instead of making the workforce system more responsive to
worker and employer needs, Democrats push one size fits all
registered apprenticeships while shuttering the industry
recognized apprenticeship program. According to a National
Association of Manufacturers survey, more than 62 percent of
manufacturing leaders thought the U.S. economy would officially
enter a recession in 2023.
In February, the National Federation of Independent
Business, NFIB, reported that expectations for better business
conditions remained low. I, for one, am not shocked that the
American public lost faith in Democrats to handle the economy.
You'll hear arguments today from the other side that downplays
the seriousness of the challenges we face and continue to face.
Charitably put, they are inaccurate.
To dispel just a few. While the unemployment figure is low,
it doesn't paint a full picture. Millions exited the workforce
during the pandemic. The economy has not recovered, and the
workforce participation still lags behind pre-pandemic rates.
All the while too many businesses are struggling to fill the
nearly 11 million open positions.
NFIB reported that inflation is the single most important
problem facing its members. In June, inflation reached 9.1
percent, the highest level since December 1981. More recently,
the inflation rate has slowed and is now closer to the
conditions experienced in the summer of 1982 and the winter of
1990, but these times are better known for their economic
downturns.
In short, Democrats have created conditions for future
unemployment through massive spending and increased
regulations. Forcibly increasing union participation will not
give this country a stronger workforce. Washington should not
be in the business of picking winners and losers in our
economy.
Whether it be through overturning every right-to-work law
in the country, eliminating independent contracting,
jeopardizing franchise businesses, or rewarding union bosses
with unchecked power by acquiescing to every item on their wish
list. House Republicans were given a mandate by the American
people to offer an alternative vision for our economy.
We'll put forward solutions to reduce unnecessary
regulations, control spending, offer more Americans
opportunities for skills development, and remove impediments to
hiring. Skills-based education is one pathway to prepare
students for the job market. By increasing work-based learning
opportunities and extending the Pell Grant to short-term high-
quality programs. We can help workers get the skills they need
for lifelong success.
I look forward to hearing from our witnesses today. With
that, I yield to Ranking Member Scott for his opening remarks.
[The statement of Chairwoman Foxx follows:]
Statement of Hon. Virginia Foxx, Chairwoman, Committee on Education
and the Workforce
One of the most troubling consequences of pandemic-related closures
and the Left's failing polices: The decline of America's workforce.
The Democrats controlled the House for 3 years of the pandemic and
its aftermath. They oversaw the greatest spending spree by any nation
in world history. When inevitable economic hardship followed, the
American people had questions that deserved answers from the Committee
on Education and the Workforce.
What did the Democrats' oversight look like?
In the 116th and 117th Congress, Committee Democrats did not once
conduct oversight of their economic shutdowns or the implications for
our workforce.
Did Democrats hold a hearing on inflation--the single greatest
concern for a plurality of Americans?
Never.
How many times did Committee Democrats hold a hearing to address
directly the nationwide supply chain disruption?
Zero times.
In response to the single sharpest spike of unemployment in the
21st century, the Democrat-controlled Committee chose to hold hearings
in support of closing Main Street small businesses, padding the pockets
of Big Labor union bosses, and advocating for increased Federal
spending in pandemic giveaways. In fact, Democrats have doubled down on
attempts to eliminate opportunities for workers to choose when, where,
and how they work. The consequences of this job-killing agenda are
preventing small business owners and entrepreneurs from putting more
Americans back to work. Instead of making the workforce system more
responsive to worker and employer needs, Democrats pushed one-size-
fits-all Registered Apprenticeships while shuttering the Industry-
Recognized Apprenticeship Program.
According to a National Association of Manufacturers survey, more
than 62 percent of manufacturing leaders thought the U.S. economy would
officially enter a recession in 2023. In February, the National
Federation of Independent Business (NFIB) reported that expectations
for better business conditions remain low. I, for one, am not shocked
that the American public lost faith in Democrats to handle the economy.
You will hear arguments today from the other side that downplay the
seriousness of the challenges we faced and continue to face. Charitably
put, they are inaccurate.
To dispel just a few:
While the unemployment figure is low, it doesn't paint a full
picture. Millions exited the workforce during the pandemic. The economy
has not recovered, and workforce participation still lags behind pre-
pandemic rates. All the while, too many businesses are struggling to
fill the nearly 11 million open positions.
NFIB reported that inflation is the single most important problem
facing its members. In June, inflation reached 9.1 percent-the highest
level since December 1981. More recently, the inflation rate has slowed
and is now closer to the conditions experienced in summer of 1982 and
the winter of 1990-but these times are better known for their economic
downturns. In short, Democrats have created conditions for future
unemployment through massive spending and increased regulations.
Forcefully increasing union participation will not give this
country a stronger workforce. Washington should not be in the business
of picking winners and losers in our economy-whether it be through
overturning every right-to-work law in the country, eliminating
independent contracting, jeopardizing franchise businesses, or
rewarding union bosses with unchecked power by acquiescing to every
item on their wish list.
House Republicans were given a mandate by the American people to
offer an alternative vision for our economy. We will put forward
solutions to reduce unnecessary regulations, control spending, offer
more Americans opportunities for skills development, and remove
impediments to hiring. Skills-based education is one pathway to prepare
students for the job market. By increasing work-based learning
opportunities and extending the Pell Grant to short-term, high-quality
programs, we can help workers get the skills they need for lifelong
success.
______
Mr. Scott. Thank you. Thank you, Dr. Foxx, and good
morning. I thought it would be helpful to show a chart of the
economy that was just described as disparaged. But this chart
behind me shows the average number of jobs per month in the
last five Presidential administrations, and we can see the
Biden administration's 495,000 jobs significantly higher than
any administration in the last 30 years, certainly higher than
the two Republican administrations in the last 30 years, but
that's the economy that was just described.
When President Biden took office, he inherited an economy
that was thrown into disarray by the previous administration's
mishandling of the COVID-19 pandemic. However, thanks to
investments made by the Biden Harris administration, and
congressional Democrats the economy has grown from the bottom
up, and the middle out.
Almost 3 years ago in April 2020, our Nation's unemployment
rate was over 14 percent. In January 2021, the beginning of
President Biden's term, the unemployment rate had fallen to 6.2
percent, and according to the most recent job reports, the
unemployment rate is now approximately 3.6 percent, one of the
lowest in recent, in modern history.
Additionally, the first 2 years of the Biden administration
were respectively the first and second largest job growth years
in American history. The economy under President Biden has
added more than 12 million jobs. Economists had predicted that
the jobs destroyed during the Trump administration would not be
recovered until the summer of 2026.
Instead, the economy bounced back to pre-pandemic levels by
June 2022, 4 years earlier than expected. Finally, President
Biden's economic policies have led to a historic boom for small
businesses. In fact, the first 2 years in office have been two
of the greatest years for small business applications on
record. This recovery did not happen by accident.
It is directly connected to the leadership of President
Biden and congressional Democrats. Through several COVID-19
relief packages, Congress delivered support to help workers and
their families pay their bills, stay safely on the job, and
access healthcare through the American Rescue Plan, which
you'll remember passed without a single Republican vote, House
or Senate. Congressional Democrats saved more than 1 million
retirees hard-earned pensions. Had we not acted these pensions
would have failed. Workers and retirees, from truckers to
bricklayers--would lose nearly everything they had worked to
save, and tens of thousands of participating employers may have
been forced to close or cut jobs. And the Federal Government
would have ended up paying more to have the pensions fail
because of safety net expenses than we spent saving the
pensions.
While price increases caused by supply chain disruptions
and global inflation forced many working families to stretch
their dollar further, record wage increases over the past 3
years have helped make up for these increased costs and
buffered families from price shocks.
Simply put, even in the face of rising interest rates,
Americans are back to work, and businesses are thriving thanks
to the Biden-Harris administration's economic agenda. President
Biden has done all of this while delivering on his commitment
to fiscal responsibility. In fact, President Biden cut the
deficit by more than 1.7 trillion dollars during his first 2
years in office.
Fiscal year 2022 decline in Federal deficit was the largest
one-year decline in American history, and with President
Biden's track record, it is no surprise that a recent navigator
poll shows that more Americans trust President Biden and
congressional Democrats in handling job growth and the economy,
than their colleagues.
So, when we invest in students, workers, and families,
America succeeds. At a minimum we shouldn't go backward and
return to the failed Republican policies that mishandled the
COVID-19 pandemic, prioritize regressive tax cuts for the
wealthiest Americans, and unleash harmful deregulation.
Unfortunately, during the House Republicans? first few months
in the majority, they've prioritized divisive legislation that
does nothing to help Americans get ahead.
They also continue to use our Nation's full faith and
credit as a bargaining chip to force devastating cuts in Social
Security and Medicare and key Department of Labor priorities
that protect our Nation's workers. By threatening to default on
our Nation's debt, congressional Republicans are gambling with
our fragile economic recovery in order to force through an
unpopular and dangerous agenda.
Furthermore, congressional Democrats remain focused on
solutions to help every American succeed in the modern economy.
That's why I reintroduced the bipartisan bicameral Protecting
the Right to Organize, or the PRO Act alongside 200 Members of
the House and Senate. Unions are essential for building a
strong middle class and improving the lives of our workers and
families.
The PRO Act will ensure that every worker can reap benefits
of a union, which means bigger paychecks, better benefits, and
safer workplaces. I'm also committed to improving our workforce
development programs by reauthorizing the National
Apprenticeship Act and the Workforce Innovation and Opportunity
Act, and expanding the Pell Grant Program for short-term
programs by which I believe we have good bipartisan support on
that legislation, as well as legislation, which is bicameral
and bipartisan called the Transformation to Competitive
Integrated Employment Act because strong labor standards open a
pathway to opportunity for all workers, but only if those
standards actually apply to all workers.
Taken together these priorities will help prepare workers
for the modern economy and ensure employers have access to
qualified candidates. So, I'm hopeful that all of our
colleagues will join us in rejecting the failed policies of the
past, and putting people over politics and delivering solutions
that actually help workers and employers succeed. Thank you
Madam Chair and I yield back
[The statement of Ranking Member Scott follows:]
Statement of Hon. Robert C. ``Bobby'' Scott, Ranking Member, Committee
on Education and the Workforce
Thank you, Dr. Foxx and good morning.
I thought it would be helpful to show a chart of the economy that
was just described as disparaged. This chart behind me shows the
average number of jobs per month in the last five Presidential
administrations. And we can see the Biden administration; 495,000 jobs,
which is significantly higher than any administration in the last 30
years-certainly better than the two Republican administrations in the
last 30 years. That's the economy that was just described.
When President Biden took office, he inherited an economy that was
thrown into disarray by the previous Administration's mishandling of
the COVID-19 pandemic. However, thanks to the investments made by the
Biden-Harris Administration and congressional Democrats, the economy
has grown from the bottom up and the middle out.
Almost 3 years ago, in April 2020, our Nation's unemployment rate
was over 14 percent. In January 2021, at the beginning of President
Biden's term, the unemployment rate had fallen to 6.2 percent. And,
according to the most recent jobs report, the unemployment rate is now
approximately 3.6 percent-one of the lowest in modern history.
Additionally, the first 2 years of the Biden administration were,
respectively, the first and second largest job growth years in American
history. The economy under President Biden has added more than 12
million jobs.
Economists had predicted that the jobs destroyed during the Trump
administration would not be recovered until the Summer of 2026.
Instead, the economy bounced back to pre-pandemic levels by June 2022-
four years earlier than expected.
Finally, President Biden's economic policies have led to a historic
boom for small businesses. In fact, his first 2 years in office have
been two of the greatest years for new small business applications on
record.
This recovery did not happen by accident. It is directly connected
to the leadership of President Biden and congressional Democrats.
Through several COVID-19 relief packages, Congress delivered
support to help workers and their families pay their bills, stay safe
on the job, and access health care.
Through the American Rescue Plan-which we will remember passed
without a single Republican vote in the House or Senate-congressional
Democrats saved more than one million retirees' hard-earned pensions.
Had we not acted, these pensions would have failed, workers and
retirees-from truckers to bricklayers-would havesmall business
applications on record.
This recovery did not happen by accident. It is directly connected
to the leadership of President Biden and congressional Democrats.
Through several COVID-19 relief packages, Congress delivered
support to help workers and their families pay their bills, stay safe
on the job, and access health care.
Through the American Rescue Plan-which we will remember passed
without a single Republican vote in the House or Senate-congressional
Democrats saved more than one million retirees' hard-earned pensions.
Had we not acted, these pensions would have failed, workers and
retirees-from truckers to bricklayers-would have lost nearly everything
they had worked to save, and tens of thousands of participating
employers may have been forced to close or cut jobs. And the Federal
Government would have ended up paying more to have the pensions fail-
because of safety net expenses-than we would have spent saving the
pensions.
While price increases caused by supply chain disruptions and global
inflation forced many working families to stretch their dollar further,
record wage increases over the past 3 years have helped make up for
these increased costs and buffered families from price shocks.
Simply put-even in the face of rising interest rates-Americans are
back to work and businesses are thriving, thanks to the Biden-Harris
administration's economic agenda.
President Biden has done all of this while delivering on his
commitment to fiscal responsibility. In fact, President Biden cut the
deficit by more than $1.7 trillion during his first 2 years in office.
The Fiscal Year 2022 decline in the Federal deficit was the largest 1-
year decline in American history.
With President Biden's track record, it is no surprise that a
recent Navigator poll shows that more Americans trust President Biden
and congressional Democrats in handling job growth and the economy than
their colleagues. So, when we invest in students, workers, and
families, America succeeds.
At a minimum, we shouldn't go backward and return to the failed
Republican policies that mishandled the COVID-19 pandemic, prioritized
regressive tax cuts for the wealthiest Americans, and unleashed harmful
deregulation.
Unfortunately, during the House Republicans' first few months in
the majority, they prioritized divisive legislation that does nothing
to help Americans get ahead. They also continue to use our Nation's
full faith and credit as a bargaining chip to force devastating cuts to
Social Security and Medicare and key Department of Labor priorities
that protect our Nation's workers. By threatening to default on our
Nation's debt, congressional Republicans are gambling with our fragile
economic recovery in order to force through an unpopular and dangerous
agenda.
Furthermore, Committee Democrats remain focused on solutions to
help every American succeed in the modern economy.
That's why I reintroduced the bipartisan, bicameral Protecting the
Right to Organize (PRO) Act alongside 200 members of the House and
Senate. Unions are essential for building a strong middle class and
improving the lives of our workers and families. The PRO Act will
ensure that every worker can reap the benefits of a union, which means
bigger paychecks, better benefits, and safer workplaces.
I am also committed to improving our workforce development programs
by reauthorizing the National Apprenticeship Act and the Workforce
Innovation and Opportunity Act, and expanding the Pell Grant program to
short-term programs-I believe that we have good bipartisan support on
that legislation-as well as legislation, which is bipartisan and
bicameral, called the Transformation to Competitive Integrated
Employment Act, because strong labor standards open a pathway to
opportunity for all workers, but only if those standards actually apply
to all workers.
Taken together, these priorities will help prepare workers for the
modern economy and ensure employers have access to qualified
candidates.
So, I am hopeful that all of our colleagues will join us in
rejecting failed policies of the past, putting people over politics,
and delivering solutions that actually help workers and employers
succeed.
______
Chairwoman Foxx. I thank the Ranking Member for his
comments. Pursuant to Committee Rule 8(c) all Members who wish
to insert written statements into the record may do so by
submitting them to the Committee Clerk electronically, in
Microsoft Word format by 5 p.m., 14 days after the date of this
hearing, which is April 11, 2023.
And without objection, the hearing record will remain open
for 14 days to allow such statements and other extraneous
material referenced in the hearing to be submitted for the
official hearing record.
I now turn to the introduction of our distinguished
witnesses. Mr. Chris Spear is President and CEO of the American
Trucking Association, ATA. Mr. Spear has worked in the
transportation energy labor and technology sector, and he
previously served as Assistant Secretary of Labor for policy
and as professional staff in the U.S. Senate.
Mr. Jerry Akers is a small business owner and franchisee
from Palo, Iowa. With his wife and two daughters, he operates
39 franchise locations in Iowa, Nebraska, and employs 220
workers. Mr. Akers is testifying on behalf of the International
Franchise Association.
Dr. Heidi Shierholz is President of the Economic Policy
Institute, EPI. Dr. Shierholz served as the Chief Economist at
the U.S. Department of Labor during the Obama administration.
Mr. Stephen Moore is a distinguished Fellow in economics at
the Heritage Foundation. Mr. Moore focuses on advancing public
policies that increase the rate of economic growth. He works on
budget, fiscal, and monetary policy.
We thank all the witnesses for being here today and look
forward to your testimony. I'd like to remind the witnesses
that we've read your written statements, and they will appear
in full in the hearing record. Pursuant to Committee Rule 8(d)
and Committee practice I ask that you each limit your oral
presentations to a five-minute summary of your written
statement.
I also would like to remind the witnesses to be aware of
their responsibility to provide accurate information to the
Committee. Before you begin your testimony, please remember to
press the button on the microphones in front of you, so it will
turn on and the Members can hear you. And I'll ask you to hold
those mics fairly close as I said we're dealing with temporary
things here and trying to make do. So, we want to be able to
hear what you have to say.
As you begin to speak the light in front of you will turn
green. After four minutes the light will turn yellow to signal
that you have one minute remaining. When the light turns red
your five minutes have expired, and we ask that you please wrap
up. Also, as a long-standing Committee practice, we'll let the
entire panel make their presentations before we move to Member
questions.
When answering a question please remember once again to
turn your microphone on and then off once finished. I first
recognize Mr. Spear for five minutes.
STATEMENT OF CHRIS SPEAR, PRESIDENT AND CEO OF THE AMERICAN
TRUCKING ASSOCIATIONS
Mr. Spear. Madame Chair Foxx, Ranking Member Scott, and
Members of the Committee, thank you for the opportunity to
testify today on behalf of the ATA. For 90 years, the ATA has
represented an industry that today employs nearly 8 million of
the hardest working men and women in America. That's 1 in 18
jobs where one of the top five jobs in 29 states is trucking
related.
They're husbands, they're wives, they're moms, they're
dads, they're family members. And they're behind the wheel of
every truck you see today. Throughout COVID, the global
pandemic, our drivers continued to climb into their cabs
delivering not milk, eggs, toilet paper, and fuel, but PPE,
test kits and life-saving medications, including the vaccine
itself.
Our workforce shouldered this responsibility with the
fortitude that being essential demands. And America was
grateful. With billboards and corn fields to banners hanging
off overpasses, all thanking a trucker. Our members, large,
medium, and small businesses have presence in every State and
congressional District in the country.
More than 80 percent of the U.S. communities rely
exclusively on trucking to meet their daily needs. Trucks now
move more than 70 percent of our country's domestic freight as
well as 73 percent of USMCA freight making trade and trucking
synonymous.
Over the next decade, trucks will be tasked with moving 2.4
billion more tons of freight than they do today. For that to
happen, we must continue to put safety and our workforce first.
Today the trucking industry invests more than 10 billion
dollars annually in safety, education, and employee
development.
And as innovation continues to shape our industry, the
experience needed to operate and service our equipment will
further benefit our workforce, both in terms of skill and
competition. This is a good story, one we at ATA like sharing.
Our workforce is committed to making a difference. To that end,
our written testimony submits four recommendations for your
consideration.
First, we need to shore up the growing shortage of talent.
Most notably 78,000 drivers and 41,000 technicians. Drivers on
average earn $70,000.00 plus full benefits without a college
degree and the debt that comes with it. That's up 19 percent
over the last 5 years, higher than any other mode.
We've launched initiatives to hire more veterans and
exiting military personnel, more minorities, especially from
urban communities with higher unemployment, and more women, a
goal made possible by IJA moneys being used for new, safe and
secure truck parking, and we're capitalizing on IIJ education
development and technology for 18-to 20-year-olds that cross
State lines, far exceeding all existing State requirements.
Second, we need to end the unfounded assault on the nine
decade-old independent contractor model jeopardizing not only
the jobs and lives of 350,000 truck drivers throughout the
country, but the millions of other American workers who
willingly choose this professional path.
Third, we need to untangle Federal and State regulations,
from licensing and credentialing to State legalization of
recreational marijuana and combatting opioid abuse. And last,
we need to double down on our workforce development. It's what
gives every employee job security and growth opportunities. A
post-COVID WIOA makeover would ensure our industry is defined
as essential, skilled, and in demand, and that local workforce
boards resource trucking accordingly.
And what gets us from here to there unites us all, not only
elevating our economy, but every employee involved. Addressing
these four recommendations would allow our workforce to safely
and responsibly meet consumer and economic demands over the
next decade. Do that, and you'll make a difference too. I thank
you in advance for your consideration, and I yield back.
[The prepared statement of Mr. Spear follows:]
Prepared statement of Chris Spear
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Foxx. Thank you very much. Mr. Akers, you're
recognized for five minutes.
STATEMENT OF JERRY AKERS, SMALL BUSINESS OWNER AND FRANCHISEE,
PALO, IA, TESTIFYING ON BEHALF OF INTERNATIONAL FRANCHISE
ASSOCIATION
Mr. Akers. Good morning, Chairwoman Foxx, Ranking Member
Scott, and distinguished Members of the Committee. My name is
Jerry Akers, and I own and operate with my wife and two
daughters, 39 Great Clip Salons and 5 The Joint Chiropractic
Clinics in my home State of Iowa, as well as Nebraska.
I appreciate the invitation to appear on behalf of the
International Franchise Association to share my story of small
business ownership and share the value proposition of the
franchise business format. It is a particular privilege to
testify at this time of year as Great Clips is the official
hair care provider of March Madness, one of the many benefits
of signing with a franchise brand.
After all, if I opened my own salons, there's no way that I
could afford to do March Madness for advertising. I have
experienced first-hand the impact of the remarkable franchise
model, and what it does to change the lives of aspiring
entrepreneurs, employees, and local economies.
Originally from Iowa, I grew up on a farm. Today, my wife
and I have established an enterprise that now employs 220 team
members, and as an area developer for the Joint Chiropractic, I
also assist fellow franchisees to generate sustained success
for their entrepreneurial journey.
Our business is impacting four generations of my family,
and up to three generations of employee's families as we speak.
Franchising democratizes business ownership, perhaps more than
any other business model in America. Around 26 percent of
franchises are owned by people of color, compared with 17
percent of independent businesses.
Further, black owned franchise firms generate an average of
2.2 times more in sales compared to black owned non-franchise
businesses. The COVID-19 pandemic battered all small businesses
in historic ways and caused us to permanently shut down five of
our Great Clips salons.
Our employees are literally a part of our family, and we
had to furlough them because we had no revenue coming in to
take care of them. During the early days of COVID, we held
daily check-in calls with our entire staff across two states,
with constant updates as to their potential return to work. We
provided health insurance to those who had health insurance
with us every day of the pandemic, despite our business being
threatened.
Being part of a franchise system helped us navigate the
pandemic. In franchising, we say you go into business for
yourself, but not by yourself. My fellow franchisees regularly
shared best practices and brainstormed ideas on how to reopen
and operate. Our systems help us access programs like the EIDL
and the ERTC as well as the PPP loans. Each week our brand
hosted weekly webinars to assist with operations, including how
to find personal protection equipment, and the most current
salon guidelines by recommendations of the CDC.
Our brands also cut down on franchise fees, so we were able
to focus more on the health precautions and safety for our
employees and customers. The economic uncertainty initiated by
COVID-19 pandemic has highlighted the many benefits of the
franchise business model.
According to a recent survey, 50 percent of franchisees
said they were better able to navigate inflationary pressures,
and other pandemic area business challenges thanks to the
support of their franchising network. While we are on a path to
recovery from the devastating effects of the pandemic, we still
have a long way to go. According to an IFA survey released
earlier this month, the availability of workers remains the
most important problem facing franchise businesses today.
We want to hire 70 more staff members, but despite the fact
we offer top wages, and exceptional benefits in comparison to
other businesses in our area, we cannot. We also offer our
employees an opportunity to pursue education at cosmetology
schools, but Iowa is a challenging State. The industry faces
some of the most onerous occupational licensing requirements of
any business model.
The unnecessary requirements to work in hair salons leaves
significant economic development on the table in many states.
Despite all these economic headwinds, if policymakers do no
harm, franchise businesses and all business lines will surely
accelerate the post-COVID economic recovery, but there is no
more significant and avoidable threat to small businesses than
the PRO Act.
As a hotel owner testified before the Senate in 2021, the
PRO Act is perhaps the single most anti-small business bill
ever introduced in Congress. That's because as soon as
legislation is signed into the law, the PRO Act's joint
employer, and independent contractor provisions would combine
to legislate away the ability to operate a franchise as a small
business owner.
There must be a better way to protect workers? rights that
doesn't come at the expense of small businesses. In the face of
the PRO Act in the National Labor Relations Board's forthcoming
Joint Employer Rule, small business owners need legislation
called the Save Local Business Act. This is the single most
important Federal legislation for the 800,000 franchised
businesses nationwide.
As it would certainly provide guidance for misguided
regulators who will legislate away the future of the business
model. In conclusion, franchise businesses possess the unique
ability to address the workforce challenges faced by our
Nation. Franchise businesses also offer unparalleled
opportunities for people of color, women, and veteran
entrepreneurs, promoting a more inclusive and diverse business
landscape. Thank you again Madam Chair for holding this
hearing, and I'm happy to answer questions.
[The prepared statement of Mr. Akers follows:]
Prepared Statement of Jerry Akers
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Foxx. Thank you, Mr. Akers. Dr. Shierholz,
you're recognized for five minutes.
STATEMENT OF DR. HEIDI SHIERHOLZ, PRESIDENT, ECONOMIC POLICY
INSTITUTE
Ms. Shierholz. Chairwoman Foxx, Ranking Member Scott, and
Members of the Committee, thank you for the opportunity to
testify here today. My name is Heidi Shierholz, I am an
economist and President of the Economic Policy Institute. To
talk about the State of the economy today, I want to start by
backing up to the end of 2020, the end of the Trump
administration.
Three-quarters of a year after the start of COVID. So, this
is after the initial rush of millions of jobs coming back as
businesses that have been locked down were coming back online.
By late 2020, the recovery was faltering. We actually lost jobs
in December 2020, and we still had a gap in the labor market of
10 million jobs.
At a similar point in the recovery from the Great Recession
of 2008 and 2009, Congress chose austerity. Starving the
economy of aggregate demand, a dynamic that Republicans in
Congress maintained until 2017. The result was an incredibly
weak and slow recovery. It took a decade after that recession
to get back down to the pre-recession unemployment rate.
This time, however, Congress and President Biden chose a
dramatically different path when the recovery was faltering.
Additional fiscal support was passed in December 2020, and
substantially more was passed in March 2021, with the American
Rescue Plan, and the payoff to those choices has been mind-
boggling.
We added 12.4 million jobs in the last 25 months. 2021 and
2022 saw the single largest job growth of any 2-year period in
U.S. history. In the past year, the unemployment rate has
gotten down to 50-year lows, and the prime-age labor force
participation rate is now back down to--now back up to where it
was before COVID hit.
Further, inflation-adjusted wage growth for low-wage
workers was far faster over the last 3 years than at the same
point in the recovery from any recession of the last 50 years.
These are huge policy accomplishments. Talk about unleashing
employment.
One question, however, that often arises is whether our
COVID relief and recovery measures, while clearly generating an
incredibly fast jobs recovery, also perhaps caused the high
inflation of the last 2 years, which has been a major challenge
for American families.
The answer to that is a resounding no. The acceleration of
inflation was overwhelmingly the result of mammoth shocks to
the economy by the pandemic, which caused both a dramatic
shift--a dramatic increase in the demand for goods as people
shifted spending away from face-to-face services, and toward
goods, and huge snarls in precisely those global supply chains
that need to function smoothly in order to meet the demand for
goods.
And then on top of that, the Russian invasion of Ukraine
spiked energy and food prices, and those shocks set off
substantial ripple effects throughout the economy, so employers
had to raise wages to get and keep the workers that they
needed, which is a very good thing, and firms also raised
prices opportunistically to boost their profits.
In this recovery, rising profits account for 40 percent of
the increase in inflation, whereas in normal times, profits
account for about a third that much. Basically, without the
strong jobs recovery, and the critical expansions of the safety
net created by our relief and recovery measures, the burst of
inflation still would have happened, but would have been much
more damaging to working families.
Imagine if we had faced that burst of inflation, but with
millions of more people out of work, and lower nominal wage
growth for those with jobs. It is worth noting that as the
labor market normalizes, job growth will slow to more normal
levels. Nominal wage growth is already back down to basically
where it was pre-recession, but we can lock in some of the
gains that workers have experienced through tighter labor
markets by enacting policies, like raising the minimum wage,
expanding overtime and joint employer protections,
strengthening unions, holding employers accountable for labor
violations like misclassification and wage theft.
The PRO Act is a crucial reform. The Independent Contractor
Rule, being finalized at DOL will provide much needed clarity
and reduced misclassification. The final thing I want to say is
that stronger labor standards and unions will not only make our
economy fair, they will make our economy stronger.
Neo-liberal policies and deregulation of the last 40 years
resulted in rising inequality over that period, and much slower
overall growth. Spending falls as inequality increases because
income is shifted away from low and middle-income workers, who
are the ones who have to spend most of what they get on
necessities, and toward higher-income workers who have the
luxury to save.
Inequality slows growth. Policies that help ensure that our
economy works for everyone are the very policies that will make
our economy stronger, more resilient and faster growing. Thank
you, and I look forward to your questions.
[The prepared statement of Dr. Shierholz follows:]
Prepared Statement of Heidi Shierholz
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Foxx. Thank you. And now Stephen Moore is
recognized for five minutes.
STATEMENT OF MR. STEPHEN MOORE, DISTINGUISHED
FELLOW IN ECONOMICS, THE HERITAGE FOUNDATION,
WASHINGTON, DC
Mr. Moore. Thank you, Madam Chairman, Chairwoman. It is a
great honor to be here. The big question for the American
economy right now is where are the American workers? Where are
the workers? If you ask any small businessman or woman, I bet
every one of you in your districts are facing the same issue.
Businesses are saying that they're having a very difficult time
getting workers back on the job.
Heidi is right that it's a strong jobs market right now.
The big problem is finding the workers to fill those jobs. Why
are Americans not in the workforce at the rate that they have
traditionally been? I would make two arguments. No. 1, real
wages have declined very sharply in the last 2 years, and this
is of course a result of the massive increase in inflation that
hit 9.2 percent.
So just to put this in perspective, the average worker in
America, since Biden came into office, has lost somewhere in
the neighborhood of $3,500 to $4,000 in annual income. That
means work isn't paying because you know, even though wages are
up nominally, as Heidi was saying, in real terms, people's
purchasing power has gotten killed. And that's the reason
you're seeing so much economic pessimism around the country.
People are feeling it every day.
The other problem is we're paying too much for people not
to work, and I hope that this Committee will address that as
one of the number-one problems in the country. In other words,
we are not making work pay, we're making not working pay with
the welfare benefits that have been provided.
So quickly, one of the big mistakes that we made during
COVID that led to--that accelerated the collapse in jobs,
obviously shutting down the economy as we did, especially blue
states, turned out to be one of the greatest catastrophes, I
think in American history economically. It didn't have health
benefits, but it sure did destroy small businesses and jobs for
workers.
What's happened since if you look at my testimony. If you
look at this figure on page 3 if you have it in front of you.
And this has been persistent for the last, you know, 30 months.
The blue states that locked down their economies had
persistently higher unemployment than the red states that
remained open. It's also true that these blue states like New
York and Connecticut and California, provide much, much higher
benefits to people for not working than red states do, and
that's caused the unemployment rate problem to be worse.
It's frustrating to me because you know, when you look at
2020, the beginning of 2020, the United States had probably the
best--in many ways, the best economy ever, ever in the history
of this country. We had the lowest unemployment rate for every
group, for blacks, Hispanics, Asian, single mothers, we had the
lowest poverty rate for blacks, Hispanics. Every demographic
group, and of course we had very rapid rises in income.
Subsequently, that has reversed, and so you're seeing these
declines in income that are making working not pay. Now, a
couple of other things that I'd like to point out quickly. One
is we have to do welfare reform. We have to get back to the
reforms that we put in place in 1996 under a Democratic
President, Bill Clinton, and a republican Congress. It was
headed by Newt Gingrich as the Speaker of the House.
One of the most successful programs in the last 50 years in
terms of social policy changes was that bipartisan welfare
reform. And at the heart of that reform was two things. One,
time limits on how long people could get welfare. We're not
saying get rid of the social net. We're a wealthy country,
absolutely safety net for people, but it should not be a way of
life. It should be a temporary assistance program.
So, we time-limited these programs, and the other thing
that is absolutely critical, every single welfare payment
program that you administer at the Federal level. Every program
should require work or training. It was a huge success, and the
benefits of welfare reform exceeded anybody's expectations. If
you look at what happened after 1996, we saw the most dramatic
decline in welfare--in people on welfare in the history of the
welfare State.
After welfare reform happened, what happened to those
people? They got into the workforce. What happened to them when
they got in the workforce, their earnings rose. It was a
tremendous success. The child poverty rate after welfare reform
was lower than it had ever been since the 1960's.
So, huge, huge benefits across the board from welfare
reform, not just for the overall economy, but the people who
are on welfare because there is dignity in work, and as there
is a lot of economic success on that.
Three quick recommendations other than welfare reform, just
for you all to think about. No. 1, we need more legal
immigrants in this country. We should be increasing legal
immigrant numbers very significantly. These are people who will
enter the workforce. Immigrants have very high labor force
participation rates.
Our immigration levels have--I'm talking about legal. We
need to increase that. No. 2, something to think about. You
know there's an old saying that age 70 is the new 50. If you
look at the social security program, there's a flaw in that
program. Benefits for people who continue to work after 70 are
not actually--so people are being punished in terms of working
after the age of 70. We have to correct that.
So, if somebody, you know, works to the age of 75 or 78,
their benefits for their lifetime should be adjusted, so
they're not reduced. Because you know what? We're an aging
population. We need older people to be working. And by the way,
people who work longer when they're old have higher life
expectancies.
And then finally, don't over tax investment. I know--just
one quick point. The Biden tax plan, if you were to put that
calamity into effect, the tax rate on investment would go to 80
percent. Who is going to invest in a small business at an 80
percent tax rate? OK. Thank you.
[The prepared statement of Mr. Moore follows:]
Prepared Statement of Stephen Moore
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairwoman Foxx. Under Committee Rule 9(a) we'll now
question witnesses under the five-minute rule. I'll wait to ask
my questions and therefore recognize Mr. Walberg from Michigan
for five minutes.
Mr. Walberg. I thank the Madam Chairwoman, and thanks for
the panel for being here today. And I would say to Mr. Moore
that welfare reform--I'm over here.
Mr. Moore. Oh sorry, I couldn't see you.
Mr. Walberg. Welfare reform began in Michigan, under
Engler.
Mr. Moore. It did.
Mr. Walberg. As an example, and it worked. Sadly, it's gone
today.
Mr. Moore. I believe John Engler was the Governor at that
time.
Mr. Walberg. Yes. I would like to discuss workforce
challenges. Unfortunately, Michigan recently repealed its right
to work law. The first State to do that in more than a half a
century to take such action. In a recent town hall, I spoke
with an independent electrical contractor who expressed her
concern over this misguided approach, which will increase
costs, and limit opportunity.
Unfortunately, some here in Washington have proposed
legislation that would nullify right-to-work laws in states all
across the country. Mr. Spear, can you please expand a bit on
how trucking industry uses the independent contractor business
model, and why it's worked so well for your members, and the
workers who willingly choose this professional path?
And then second, could you please describe the impact
legislation like the PRO Act would have on independent
contractors in the trucking industry?
Mr. Spear. Absolutely Congressman. I think the key word
that you used with regards to independent contractors is
choice. They choose that path for whatever reason. It could be
seasonal work, had another business on the side, whatever the
reason may be that's their decision, I think legislation
starting with the PRO Act to the NLRA, you know, we're seeing
AB5 in California, remove that choice.
And this is a 90-year-old supportive business model in case
law, and we want to remove that choice. Why? Because I think
union rates have been cut in half since 1983. We were at 20.1
public and private unions, we're down to 10.1 percent of the
workforce, public and private unions today.
And they want to bolster membership. They want to bolster
dues. But you don't change the law to channel more people into
unions. You want to belong to a union, belong to a union.
Mr. Walberg. Right.
Mr. Spear. But you should also have the right not to belong
to a union. And those laws have existed since 1935. So, you
know, I look at this assault on a 90-year-old business model,
like independent contractors. It would be ridiculously
impactful on our industry. We're already short 78,000 drivers.
This is 350,000 independent contractors that chose that path.
No one is forcing them to do it, they chose it. Talk to them.
Go out and talk to the actual independent contractors and
ask them is anybody forcing you to be in this category, so the
employer can avoid paying you more, or avoid benefits? The
answer is a resounding no. And for any abuse, we have laws in
place for over nine decades to deal with that.
The PRO Act would remove beyond the independent contractor
legislation and regulations, the PRO Act would be an all-out
assault, not just on independent contractors, but on states?
right to work laws. Your State just revoked it. That's their
decision. I don't agree with that.
Any State has the right to put that in place. The PRO Act
would eliminate half of the states in this country that have
the right to work laws on the books.
Mr. Walberg. And it's not as we found in Michigan, it
wasn't the workers, or the independent contractors asking for
the right-to-work law to be taken out, it was the union bosses,
and the legislature gave in there. Thanks.
Let me move on. Changing gears, franchises support nearly 8
and a half million direct jobs in the U.S. economy. In Michigan
alone, franchises support over 235,000 employees. Mr. Akers,
can you tell us about the FTC franchise rule, and how it would
continue to foster small business creation in the franchise
space?
Mr. Akers. Yes. Unfortunately, what those type of rules do
is they turn me into a general manager, as opposed to being an
entrepreneur. They put so much impact back on the corporate
group, so everybody ends up working for a large corporation,
rather than an independent person like myself, an entrepreneur.
This takes away everything that I've worked my life for to
try and build, and by the way, as with many things that come
out of these kinds of regulations, we take better care of our
employees than most of the rules end up putting in place anyhow
right now today. We don't need all of those kinds of things.
So, what that does is usurp the franchise model, which is
one of the largest drivers of small business in the economy in
the country today and puts us in a situation where we become
employees instead of entrepreneurs. Thank you for your
question.
Mr. Walberg. My time has expired. Thank you. I yield back.
Chairwoman Foxx. Thank you very much, Mr. Walberg. I now
recognize Mr. Takano from California for five minutes.
Mr. Takano. Thank you. Sorry, we're having trouble with it,
as you know the technology here. Great. It is abundantly clear
that the Biden administration inherited an economy in dire
straits. As Republicans vocalize falsehoods about what has put
the American economy back on track, the policies Democrats
pursued speak for themselves, even despite the unique
challenges global inflation has presented.
As we discussed policies Democrats can pursue to help, it
is imperative that we look at ways in which we can still
improve. The Fair Labor Standards Act established an overtime
compensation requirement for certain employees when they worked
more than 40 hours, and the Labor Secretary has the authority
to create the parameters relating to the white-collar
exemption, meaning that certain professional employees are not
eligible.
This week I will be introducing the Restoring our Overtime
Pay Act with Representative Adams and Senator Brown. The bill
seeks to codify an enhanced overtime salary threshold, at a
historic high of the 55th percentile of earnings of full-time
salaried workers nationwide.
This threshold would be at least $82,732.00 by 2026.
Overtime standards are long overdue for a meaningful update. It
is high time our country pursued powerful protections for
workers, especially in the wake of COVID-19. So, Dr. Shierholz,
would you agree that the current overtime standards are overdue
to be updated?
Ms. Shierholz. Yes. I would. And I thank you for that
question, and I'm really happy to answer it, but I want to take
1 second to just correct something that was stated earlier. The
PRO Act would not destroy the independent contractor model.
Anyone who is a bonafide independent contractor would not be
affected. Those who are misclassified as independent
contractors, the thing that they would be able to do is those
who would be impacted, those who are misclassified, who want to
be able to organize. That's what it does. It's not a wholesale
redo.
OK. Sorry for that divergence. So yes, we absolutely need
to increase the overtime threshold. Right now, the overtime
threshold is $35,568.00 a year, so basically anyone who makes
over $36,000.00 can be asked to work 60, 70 hours, without
getting any additional pay. It's really like the idea that
somebody who makes $36,000.00 a year has enough bargaining
power with respect to their employer, that they don't need the
protections to keep them from being exploited from overwork is
absolutely it's just I think everyone in this room would agree
that that's not the case.
Mr. Takano. Yes. It's my recollection that in the 70's the
overtime pay threshold was at a level that included 70 percent
of the salaried workforce. Is that right?
Ms. Shierholz. Yes. It was. Our calculations put it at like
63 percent of the full-time salary, of full-time salaried
workers, earned below the threshold. In other words, it was
high enough that it covered nearly two-thirds of full-time
salary workers. Now----
Mr. Takano. Those two-thirds, not 70 percent?
Ms. Shierholz. You got it. You got it.
Mr. Takano. But what is that percentage now of salaried
workers today?
Ms. Shierholz. I think--OK, I can make sure to check this
for you for the record, but I think it's around 15 percent.
It's a huge drop.
Mr. Takano. Wow. We go from nearly two-thirds of the
American workforce being covered by overtime pay. They were
eligible for overtime pay, in fact they had a right to it, but
that right has diminished from the 70's of two-thirds to 15
percent?
Ms. Shierholz. Yep.
Mr. Takano. That's an incredible figure. You know from
1938, I understand that a trucker who's paid $30,000.00 today--
which is lower, I mean I admit trucking salaries have gone up,
but they would not be able to earn overtime pay. Is that
correct?
Ms. Shierholz. If they----
Mr. Takano. They're exempt.
Ms. Shierholz. They're exempt. They're really open to
misclassification. So, you're supposed to still get overtime
protections if you earn $38,000.00 if you are, you know, if you
are not a bonafide manager, or sort of highly paid
professional, but there's a ton of misclassification. They're
extremely vulnerable to being exploited by over work.
Mr. Takano. So, if a trucker goes on an interState highway,
they're exempt from overtime pay protections. Is that right?
Ms. Shierholz. They likely wouldn't pass the duties test,
so you're supposed to be a bonafide manager, where you get
overtime even if you are paid over the threshold, but that is
violated all the time, which one of the reasons we really need
to raise the threshold in order to make sure that people have
the protections.
Mr. Takano. Well, I think with the shortage of truckers in
this country, I'm all for the training and improving that
industry, but I think it's high time that we stop exempting
truckers from the FLSA. I yield back.
Chairwoman Foxx. Thank you, Mr. Takano. Mr. Grothman,
you're recognized for five minutes.
Mr. Grothman. OK. Thank you. A couple questions. Some we've
kind of already gone over, but with regard to the trucking
industry, do you think we'd have more truckers if we would
allow people to get a CDL and drive interState with a CDL at
age 20 instead of 21.
Mr. Spear. You're asking me Congressman?
Mr. Grothman. Yes.
Mr. Spear. Listen, I think you have got to do a lot of
things to shore up the shortage. You're looking at 78,000
currently, 160,000 over the next 8 years. If this train
continues. To maintain current economic demand, we need to add
more talent behind the wheel. 18 to 20 is one of those
solutions. You need to train them to safely and responsibly
operate the equipment. Now 48 states currently allow an 18-
year-old to drive a Class A. You just can't cross State lines.
Mr. Grothman. What in the world would be an impossible
reason if that many states allow you to drive back and forth in
your State, to bar you from crossing State lines?
Mr. Spear. It's the difference between State and Federal
jurisdiction. We're saying that let's train them. Let's give
them the skillset.
Mr. Grothman. So, in other words we're saying that 48 State
legislatures are incompetent apparently. Is that what we're
saying?
Mr. Spear. No. I think that's their jurisdiction. You just
can't cross State lines. We cross State lines every day, so to
train somebody, to teach somebody how to operate this
equipment, it doesn't matter if you're running from Sacramento
down to San Diego, you should be.
Mr. Grothman. You know we're trying to help you.
Mr. Spear. Yep.
Mr. Grothman. We even say that 48 State legislators are
competent, and it's the U.S. Congress that's incompetent. We
could say that.
Mr. Spear. Well, we put 18 to 20 as a pilot in the IIJA. We
supported that.
Mr. Grothman. OK. Now we don't have somebody up here who
represents an airline, but I know a guy who does the annual
inspections for airline pilots to make sure they can keep
flying up to age 65. He doesn't know why that shouldn't be 67
or 68. Mr. Moore, would it do something to solve the pilot
shortage if we allowed the pilots to keep being pilots,
commercial pilots to 67 or 68 provided somebody signs off?
Mr. Moore. I think we just--hey look, I don't know the
specific situation with pilots, but we need to have a cultural
shift in America where Americans are rewarded for working more
years. You know, we're healthier than ever before, we have
longer life expectancies, and as I mentioned, please, please
address that issue with social security because it's just not
fair to people who work past the age of 70.
Mr. Grothman. OK. Mr. Akers, there are a variety of
programs that are phased out as people make more money. Earned
income tax credits starts going up, but I think it's obviously
the biggest impact on society. It's to discourage people from
making very much money, because you begin to make more money
over the earned income tax credits.
Low-income housing, food stamps, Medicaid, Pell Grants, are
other programs that discourage people from working, or you're
no longer considered poor. Do you see in your employees either
people not working because of the generosity of those programs,
or more likely want to stop working when they make say
15,000.00 to $20,000.00 so they aren't phased out?
Mr. Akers. Absolutely. And this has been going on for a
long time. Literally, all the stylists that have discussions
with me and they tell me they don't want to work full-time
hours. They can only work 19 hours because that's the threshold
where they lose some of the benefits.
Mr. Grothman. Exactly. All over the place. All of these
programs earned income tax credit, low-income housing, food
stamps, Medicaid, Pell Grants, are designed by somebody who
wanted to discourage people from working. And I'll point out
all those programs are also designed by somebody who wants to
discourage marriage.
Another program for you in general as I'm sure you have
tons of resumes cross your desk. Do people with psychology or
communication arts, political science degrees, even a master's
degree in business, do you view that as a positive when you're
hiring somebody, or is it just largely irrelevance?
Mr. Akers. It's largely irrelevant. I'm looking for skills
and talents and the ability to get along with people primarily.
We'll train them on the rest of it.
Mr. Grothman. OK. I heard one employer say that he didn't
like to hire people with master's degrees because by then
they've spent so long in college they had to be deprogrammed.
Do you know anybody else in your profession----
Mr. Akers. They don't know how to work anymore because
they've been in school for their whole life.
Mr. Grothman. My goodness. You're what one of my friends
said, in other words, you viewed some case a master's degree is
not only a non-existent qualification, but almost a minus. Is
that true?
Mr. Akers. Yes, I do. I'm sure it's great in their area of
expertise if they can get a job in that area, but if they're
trying to get a job anywhere else in another field it's a
detriment.
Mr. Grothman. OK. Well thank you very much.
Chairwoman Foxx. Thank you, Mr. Grothman. Ms. Jayapal,
you're recognized for five minutes.
Ms. Jayapal. Thank you, Madam Chair. Under Democratic
leadership the American economy rebounded from the pandemic,
achieving record low unemployment and healthy productivity. And
though we still face economic challenges, the answer is not
austerity and reckless deregulation, but rather we've seen so
much progress from investing in our future and strengthening
worker protections to build an economy that works for everyone.
In January, the Federal Trade Commission made a historic
stride toward this goal, announcing its plan to ban the use of
non-compete clauses. Contract terms prohibit employees from
later working for or starting a competing business. Non-
competes, which cover nearly 1 in 5 workers, prevent workers
from accepting a higher paying job in their chosen profession,
or pursuing their own dream of starting their own company.
By banning this course of practice, the FTC's proposed rule
will promote worker freedom, invigorate the labor market and
stimulate broad economic growth. The title of this hearing is
Unleashing America's Opportunities for Hiring and Employment,
so I want to just examine how non-competes unleash
opportunities.
So, Dr. Shierholz, do non-competes generally restrict or
expand employment opportunities for workers?
Ms. Shierholz. They absolutely restrict employment
opportunities. You literally cannot take a job in your field
for a certain period of time when you have to sign a non-
compete.
Ms. Jayapal. And those who defend the use of non-competes
give examples of top management executives who may have
sensitive information about their employer. Is this
representative of all the workers who are bound by non-
competes?
Ms. Shierholz. No. It is not. There are a lot of workers
who--there's just no way they have access to trade secrets, who
are also bound by non-competes. So, for example, EPI did a
study that showed, that looked at this and showed that a
quarter of workplaces where the typical employee education
level is a high school degree, everyone in that company is
covered by a non-compete agreement.
So, security guards, phlebotomists, factory employees, many
of the occupations that are subject to non-competes. In fact,
10 percent of food service workers are bound by non-competes as
well. So, the FTC's proposed rule will empower roughly 30
million workers to take new jobs that were previously off
limits to them, unleashing new opportunities for workers.
Dr. Shierholz, do you expect this rule to increase or
decrease wages?
Ms. Shierholz. The rule will absolutely increase wages for
workers, so one of the key ways a non-unionized worker,
essentially the only source of power they have with respect to
their employer, is the fact that they could quit and take
another job. Non-compete agreements cut that off, so it totally
suppresses wage growth for those workers.
The empirical evidence is really clear on this, banning
non-competes would increase wages.
Ms. Jayapal. And let's talk about employers for a second.
Do non-competes generally restrict, or expand hiring pools for
employers?
Ms. Shierholz. Yes. When an employer wants to hire a worker
in a certain field, the key pool of workers that they could
look at are workers who are working in that field. Non-competes
just make many of that, you know, that pool much, much smaller.
Ms. Jayapal. So, it's good for employers as well. What
about new startups and small businesses? Would the proposed FTC
rule restrict or support, or hinder the creation of new
startups and small businesses?
Ms. Shierholz. The empirical evidence is really clear
banning non-competes would increase business formation because
non-competes mean that you can't start a business in that
field. So, it inhibits innovation. It means, you know, if I
have an idea of how to do something better, I actually can't go
do that because I have signed a non-compete agreement.
Ms. Jayapal. So good for workers, good for employers, good
for wages, let's talk about the argument that non-competes are
necessary to safeguard trade secrets and other sensitive
information. But there's actually several laws on the books
already protecting firms like intellectual property laws, the
Uniform Trade Secrets Act, and the Economic Espionage Act.
Are non-competes essential to protecting a firm's trade
secrets?
Ms. Shierholz. They totally are not, and we can look at the
states that have made non-competes unenforceable, including
California, which includes Silicon Valley to say are we really
seeing this massive decrease in innovation because employers
are getting their trade secrets stolen. That is just not the
case. Employers can use these other intellectual property laws,
and also one thing that they can do is still do tailored, non-
disclosure agreements without doing non-compete agreements that
can also protect trade secrets.
Ms. Jayapal. This is really a bipartisan issue. Three
states, California, Oklahoma and North Dakota have all voided
non-competes, and five more, including my home State of
Washington, have significantly restricted them, and guess what?
The sky didn't fall. This is an important rule that will help
workers, help small businesses, and help employers. Thank you
so much. I yield back Madam Chair.
Chairwoman Foxx. Thank you very much. Mr. Allen, you're
recognized for five minutes.
Mr. Allen. Thank you, Madam Chairman, and I want to thank
our witnesses for being here today. I was a small business
owner for over 40 years. Obviously, small business is the
backbone of this economy. In fact, in the best economy in my
generation, which Mr. Moore mentioned, 70 percent of all new
jobs created were small business, and small business created
over, you know, with working about 50 percent of the workforce
at that time.
The Biden Department of Labor, and let's talk about the PRO
Act, and just clear this up a little bit. The Biden Department
of Labor proposed independent contractor classification rule
that would significantly muddy the waters on the standards used
to determine independent contractor status, and would
significantly undermine the independent contractor model, if
not destroy it entirely.
This attack on independent contractors by a Democratic
administration is nothing new. We had the same challenge under
the last term of the Obama administration when I was first
elected to Congress. During the COVID pandemic we saw that 60
plus million Americans wanted more flexibility, and their
livelihoods depended on the flexibilities that being an
independent contractor provides.
My Employee Rights Act, which I have coauthored with Tim
Scott in the last Congress, would codify the common law
definition of an employee allowing independent contractors to
keep the flexibility they currently enjoy. Mr. Akers, under
this Labor Department rule, how would that impact your overall
business operations?
Mr. Akers. Excuse me. Dramatically impact it. We lose total
control over employees. They're driven by other guidance
outside of our sphere of influence. So, this takes away the
opportunity for me as an entrepreneur to change the lives of my
employees, to make, to give them a better existence, change the
lives of their children because one size fits all doesn't work
nationwide.
The economic situation in Iowa is completely different than
in other states.
Mr. Allen. Well obviously, bottom up is better than top
down. That's the way, you know, America runs is bottom up. And
we are a grassroots country and thank you sir for what you're
doing. Mr. Spear, what is your assessment on this proposed
Biden independent contractor rule, and how it would impact your
industry?
Mr. Spear. In about 350,000 independent contractors
nationwide. California, as mentioned, this AB5, 70,000
independent contractors in California. And every day we're
moving, you know, milk, eggs, bread, to vaccines. I mean if you
want the things that you need and want, you're going to need a
driver. We're already short 78,000. Now we're going to
exacerbate that number with another 350,000 by making the
requirements so vague that it literally, it makes the
independent contractor the 90-year-old model irrelevant.
This is about choice. Nobody is telling these people they
have to go down this path. There're laws in place and
enforcement to take care of any abuses that occur out there,
not just those laws, but we've got boards, we've got
commissions, Federal, State, local enforcement. That will be
handled accordingly.
Mr. Allen. And that's exactly why we wrote the Employee
Rights Act.
Mr. Spear. That's right.
Mr. Allen. Was to give the American people choice. And the
American people want choice, and I agree 100 percent with you.
Mr. Moore, thank you for your great work in analyzing in our
economic problems. I agree with you on workforce participation.
You know the last time we balanced the budget in this
country we had almost 70 percent workforce participation in
this country. That was 2001. And that was as a result of the
legislation that President Clinton signed to promote work in
this country. And to get people out of poverty and into the
workforce, and to move up the food chain as fast as possible.
And there are so many opportunities out there today. How do
we change this? I mean who is against giving somebody the
opportunity and the dignity to hold a great job and provide for
their family?
Mr. Moore. Well, thank you, Congressman. The evidence is
crystal clear that what we did back in 1996 was an overriding
success in every way. And a lot of the opponents said there
would be blood, and literally on the House floor in this
chamber, said there would be blood in the streets if we passed
welfare reform, and exactly the opposite happened.
And by the way, you know, the biggest beneficiaries were a
lot of the people who had been on welfare, who actually got in
the workforce. I mean look, you can't climb the ladder of
economic success if you're collecting economic benefits and not
working. So, it is really critically important to just restore
all of the rules that we had in 1996.
These work requirements began to be eviscerated under the
Obama administration, and then the Biden administration has
completely gotten rid of all of those reforms and work
requirements. We want a safety net, we want to make sure people
don't go homeless or hungry, but we want to help them get in
the workforce through training, and through they should be
either looking for a job, and training, or in a job.
Mr. Allen. That's what America is all about. Opportunity
for all. Thank you very much and I yield back.
Chairwoman Foxx. Thank you, Mr. Allen. Ms. Wild you're
recognized for five minutes.
Ms. Wild. Thank you, Madam Chairwoman. Everybody wants
people to be able to have good jobs that pay well and wants
opportunity for everyone. I think we on both sides of the aisle
absolutely agree on that. But this is about things that cost
working folks money quite frankly. And so, I want to ask you,
Dr. Shierholz, about the joint employer rule. Your organization
estimated that the Trump Department of Labor's joint employer
rule would have cost American workers 1 billion dollars.
And yet, some of my colleagues across the aisle continue to
advocate for legislation that would put this Trump era rule
into law. It would allow predatory companies to use
contracting, and subcontracting, basically as a get out of jail
free card. Can you tell us what that kind of legislation,
passage of that kind of legislation would mean for America's
working families?
Ms. Shierholz. Yes. Thank you so much for that question,
and I want to take another second first to correct something
that was just stated. The welfare reform of 1996 was not a
resounding success. It looked like a resounding success if you
only measure until the year 2000, because we had the strongest
labor market at that time than we have had until the last 2
years.
If you look past that, when the macro economy situation
deteriorates, it does not look even close to being a success.
That's just an important background that we need to have.
Ms. Wild. Thank you.
Ms. Shierholz. OK. On joint employer, yes, what the joint
employer rule that's being debated, or that's being----
Ms. Wild. Let me just reState because you answered
something else, and that's great. It was helpful. So, what I'm
really looking for, what would the consequences be of
implementing this Trump era joint employer rule for working
families?
Ms. Shierholz. For implementing the Trump era rule. So,
what that rule does is it makes it less possible for workers to
uphold all--to get all employers that control the terms and
conditions of their employment to the bargaining table. And
that means they can less effectively collectively bargain, and
that leads to lower wages, lower benefits.
Ms. Wild. So, I like to put things in really clean terms.
If you have multiple employers, it's really hard to get them
all to the table to negotiate pay.
Ms. Shierholz. Yes.
Ms. Wild. The right to organize, benefits, working
conditions, and other things. Is that fair to say?
Ms. Shierholz. That's exactly right. An employer who is not
the lead employer, if the union wants to negotiate over say
health insurance, and they're like no, that's controlled by the
lead employer, I can't negotiate over that. That means the
union is less able to effectively negotiate.
Ms. Wild. OK. Thank you for that. And I also wanted to ask
you about something about rulemaking that the NLRB initiated
last September to rescind and replace the Trump
administration's joint employer status standard. The Economic
Policy Institute estimated that if it was implemented the
NLRB's proposed rule would increase annual worker earnings by
over 1 billion dollars.
Again, I like plain talk. We would like working people to
make more money. Is that a fair statement?
Ms. Shierholz. Yes.
Ms. Wild. And how would this proposed joint employer status
rule empower workers?
Ms. Shierholz. It's the opposite of what happened with the
Trump rule. It would allow employees, workers who are in a
union, to bring all the companies who control the terms and
conditions of their employment to the bargaining table. That
makes the bargaining more effective and leads to higher wages.
Ms. Wild. So can I ask you this because I think sometimes
there is this concern by small businesses, and quite frankly
they are egged on by some of our colleagues across the aisle,
and being concerned that it's somehow going to hurt them if
they have this kind of rule. Can you tell us how small
businesses might benefit under this rule?
Ms. Shierholz. Yes. This is the thing that kind of boggles
my mind in this discussion. Small businesses, franchisees,
they're already on the hook for violations of labor law. I mean
it could be something that they're getting pressure from the
franchisor, or the lead company to violate labor law.
But if the joint employer--they are the only ones currently
who are accountable. If we have a strong joint employer
standard, then the lead company will also be accountable as
well. It strengthens the position of the small business.
Ms. Wild. So, it would in a way reduce the potential
liability of a small business?
Ms. Shierholz. Yes. It means it's more broadly shared, yes.
Ms. Wild. Thank you. With that I yield back Madam Chair.
Chairwoman Foxx. Thank you very much Ms.ld. Mr. Comer
you're recognized for five minutes.
Mr. Comer. Thank you, Madam Chair. Let's go back to 2015,
the National Labor Relations Board comprised entirely of
President Obama's appointees, created a broad definition of
joint employment that put the franchise model at risk, and
threatened to erode small business owner's control of their
operations.
This action cost franchise businesses 33.3 billion dollars
per year and prevented the creation of 376,000 jobs over the
next 5 years. Then during the time of soaring prices, we saw
the Department of Labor's Wage and Hour division rescind the
narrowly tailored joint employment rulemaking published under
the Trump administration and released a proposed rulemaking
reverting once again to the harmful Obama era joint employer
definition.
Reversing the previous administration's action has once
again upended business owner's stability and authority over
settling the essential terms of employment for their employees.
In my own State of Kentucky alone, any shift in the definition
of joint employment affects 10,971 franchise locations,
generating over 9.7 billion dollars.
Time and time again those on the other side of the aisle
have trampled on the rights of these small business owners and
failed to provide clarity for their employees. That's why the
Save Local Business Act is essential. Congress must codify a
tailored consistent joint employers standard to prevent
infringement from government bureaucrats on our Nation's
entrepreneurs and job creators.
To do this, I'm introducing the Save Local Business Act,
which provides a stable definition of a joint employer as one
which directly, actually, and immediately exercises significant
control over the essential terms and conditions of employment.
If this definition is not codified, franchisees across the
country may be subject to further interference by future
rulemakings, which could subject them to bargaining with unions
for another employer's workers, making them targets of union
dispute activities, or be held liable for another employer's
unfair labor practices.
Mr. Akers, can you explain how this legislation would help
you grow your business?
Mr. Akers. Absolutely. We choose whether we are going to
grow and add locations based on staffing. When you take that
opportunity away from us, why would we continue to grow when
somebody else is going to have oversight on those staff
members? The only way we can do this, and frankly, why would
somebody buy a new business, a new franchise, if they learned
that they're not going to be able to make decisions about their
employees?
Saving local businesses, especially through the franchise
model, it's critical to have that law put into place.
Mr. Comer. Mr. Spear, can you provide us some context about
joint employer relationships within the trucking industry, and
how the Save Local Business Act would impact those wishing to
franchise, or enter into a joint employer relationship?
Mr. Spear. I think we need flexibility. I mean we're trying
to attract more talent into the industry, and let's be really
honest why this is actually happening, and why you have to
introduce legislation like this. This is about increasing
membership and unions. This is about generating more dues, and
unions.
They've halved the amount of membership over the last forty
years, and yes, this is a concerted effort to change the rules,
change the laws, and channel more people into unions. And
eliminating flexibility is about the worst thing that you can
do right now in an economy that's trying to recover from COVID,
and trying to lead the world, candidly.
Our industry is essential. And it proved that during COVID,
and so any attempt to unravel our business models, eliminate
our workforce by removing choice, we're going to oppose that
rigorously. And just ask the employees. Just ask the
independent contractors why did they choose this path? You'll
get the answer that you're looking for, and I think your
legislation will be on track to preserving that.
Mr. Comer. Right. Well Madam Chair, someone who has had
ownership interest in a couple of different franchises, I could
tell you anyone who takes that significant risk of purchasing a
franchise, and understands the terms and conditions of that
franchise agreement, then they're blindsided by Federal
bureaucrats on just out of the blue rulemaking that has a
detrimental impact on their bottom line, and on the, you know,
the significant risk and the work that they put in this. It's
very unfortunate.
It's a disincentive to attract investment to create new
jobs to grow our economy. So, I look forward to working with
you, Madam Chair, on this legislation. I want to thank the
witnesses for being here and I yield back.
Chairwoman Foxx. Thank you, Mr. Comer. It's great when we
have Members who have a wide ranging of experiences themselves.
They can speak to the issues. Ms. Hayes, you're recognized for
five minutes.
Mrs. Hayes. Thank you, Dr. Foxx. Before I go into my
questions I just would like to flag for the Committee, I
represent the State of Connecticut, and I'd like to correct the
record on some comments that were made in openings.
Connecticut's unemployment rate is currently 4 percent as of
February 2023.
Our total unemployment in Connecticut is 16--I'm sorry,
76,000 people. In September 2022, Connecticut saw a 27 percent
decrease in unemployment, the third largest drop since 1987. As
of September 2023, 16,500 jobs have been created in Connecticut
since President Biden took office.
And 83,700 jobs have been created statewide. As of
September 2022, 1800 manufacturing jobs have been created in my
district--I'm sorry, in Connecticut. In my district, and 8,400
in statewide. In 2021, 27,000 workers in Connecticut were
employed in clean energy and emerging sectors, and 9,600
applications to start a new business were filed in Connecticut,
up from 6,100 the year before the pandemic.
So blue State shutdowns did not stifle the economy. In
Connecticut, it is an example of how we have used American
Rescue Plan Act funds and other incentives by the Biden
administration to stimulate our economy and get people back to
work.
Since President Biden took office, the economy has created
12.4 million jobs between 2019 and 2022. Low wage workers
experienced historically fast, real wage growth, and wages at
the 10 percentile grew 9 percent over the same 3-year period.
The actions of congressional Democrats in the Biden
administration have driven this wage growth.
However, our work is not complete. Connecticut has
recovered about 96 percent of the nearly 289,000 jobs lost
during the pandemic, and job openings remain above pre-pandemic
levels in Connecticut. Additional support from Congress can
help fully equip workers with the skills they need to be
competitive and provide employers with a highly productive
workforce.
Last year in Congress we passed the Workforce Innovation
and Opportunity Act, or WIOA. This included my bill, the Youth
Build for Futures Act, which would have provided 1 billion
dollars over 6 years for Youth Build, and improved program
support for vulnerable youth who are not in school or employed.
Dr. Shierholz, can you tell me what are the risks to State
and local workforce development programs without the passage of
an updated WIOA Act, and how will a lack of congressional
action affect current hiring and employment conditions,
especially as we try to file these new and emerging economies?
Ms. Shierholz. The making sure that we have a workforce
that's prepared for the modern economy is so incredibly
important. I also think about this as we shift to a clean
energy economy, we're going to be needing to make sure that
people are really trained. So, making sure these programs are
really, really like the top-notch programs is incredibly
important.
One thing I really think that we need to focus on is union
apprenticeship programs. Another key area is pre-apprenticeship
programs. Pre-apprenticeship programs are one key way that you
can get--that we can increase diversity in apprenticeships. You
can really attract more women, black youth, other groups that
may not otherwise end up in apprenticeship programs, and then
setting up a pathway--a clear pathway to good jobs is crucial.
Mrs. Hayes. Thank you. I really appreciate that because as
a teacher I always believe that if we can expose young people
to more opportunities much sooner, they would see all of the
choices that are available to them. In the conclusion of your
testimony, you emphasized the importance of expanding Federal
funding for apprenticeships and other workforce training
programs to create pathways to higher-paying jobs.
Can you tell us how can workforce training apprenticeship
programs provide more protection for workers, and what role can
these programs play in helping workers increase career
mobility?
Ms. Shierholz. It creates opportunity. It means it gives a
foot in the door. It creates the opportunity for being able to
get on a career path that can lead to a family sustaining job.
It's just a crucial step for a huge swath of our labor market.
Mrs. Hayes. Thank you Dr. Shierholz, you're going to help
me get a gold star. I yield back.
Chairwoman Foxx. Thank you. Mr. Owens, you're recognized
for five minutes.
Mr. Owens. Thank you. Thank you so much. Ms.ierholz, I just
have a quick question for you. Have you ever run a business?
Ms. Shierholz. Right now, I'm the President of an
organization that has around 50 FTEs.
Mr. Owens. No, no, I'm not talking about--a business, have
you ever invested, had shareholders you have to kind of deal
with, or look at your profit?
Ms. Shierholz. I have not, but as I said I now run an
organization with 50 FTEs.
Mr. Owens. We're talking about business owners here. And
I'll just say this because we do have people on this desk here
that are experts at what they do for decades. A little bit of
my history, and by the way there's nothing wrong with
government and business owner. Either one is OK. I think it's
important to understand there's a need for both.
I came out of the NFL after 10 years and started a
business, and 9 years failed totally big time. I went to being
a security guard and a chimney sweep. I never, ever thought
about being a government worker. I did decide--did get back in
a corporate environment, and always had a business on the side
as an independent contractor.
The reason why because I wanted a choice. I wanted to have
control, I wanted to have a dream path, another person's job.
Do you think that being in your position it would be healthy to
listen to other business owners, what they think since Mr.
Spears how long have you been in your profession?
Mr. Spears. I've been in this role 7 years, and 2 years
prior in our congressional office, so nearly 10 years.
Mr. Owens. OK. Franchise?
Mr. Akers. Yes. I've been in the franchise world for 17
years in corporate America running businesses for 30 years
before that.
Mr. Owens. Heritage, and Mr. Moore, how long have you been
doing what you're doing?
Mr. Moore. I run three non-profits, so I have not run a
private, you know, a private for-process business. But I take
your point. I mean this is, you know, one of the problems with
the Biden administration. We did this famous study that came
out 6 months ago that of the 75 top economic, financial,
transportation, energy officials in the Biden administration
the average number of years of business experience, median
number is zero.
Mr. Owens. OK. I think you made a good point. First of all,
a shout out to every business owner up here that's taken a
risk. For many people who don't understand our free market, our
great society, our great country, our freedom was built on our
middle class. Middle class are those folks that have empathy,
they have a vision, they want a good name, and they look back
and try to invest back in their community.
That middle class is powered by business owners. The
business owners and the middle class is what pays your salary.
Because it's excess, it is a profit. I think when you talk
about things like PRO Act, why don't you talk to the experts?
I'm trying to understand how government workers get to this
point where because you're good at one area, you're experts in
everything else.
We're telling you that this country's built on business
ownership, on taking risk. I've been risk--and again,
personalities, we have different personalities. Some are more
risk adverse. I happen to be one of those guys. So, I like
risk, because I think to get my dream I'll have to take some
more.
So, it's OK to not want to be a risk taker, but don't take
away the dreams and hopes and choices for those who do. This
country has always been built on business ownership, and we
need to make sure that we understand the threat to our Nation
today is this mentality that we have this central force that
knows everything, and can dictate every single step in our
lives, in terms of what we do and what we don't do.
What choices we have, and what choices we don't, and we
cannot afford to do that. I wanted to ask a real quick
question. Mr. Akers, you stated in your testimony that it was
790,000 franchise establishments employ 8.4 million workers. I
want to keep in mind it's not government who hires these
people. These are business owners.
A lot of business work to serve millions of customers and
help drive our economy. We need to ensure businesses like yours
can expand higher and serve customers. As a franchisee, what
specific regulations or policies do you believe are hindering
your ability to address workforce challenges?
Mr. Akers. Well, the No. 1 right now is the fear of the PRO
Act going through because we certainly won't be able to do
anything with that. We give better benefits and pay to our
staff than anybody else could regulate, and we will lose that
impact if we do this because it will be a one size fits all
thing.
And I thank you for what you're doing Mr. Owens.
Mr. Owens. I'll say this. I'm so thankful the American
people have given us an opportunity to stand for who they are.
The Republican conference stands for faith, family, the free
market, and education. It's the risk takers, and I could
promise you we'll do everything we can to make sure we do not
allow this PRO Act, this anti-American, anti-free market PRO
Act to go through, and we'll make sure we educate the American
people.
Let them know you dream, go for it. If you want to work for
the government, go for it. But do not stop those who empower
the middle class. And with that I yield back.
Chairwoman Foxx. Thank you, Mr. Owens. Ms. Leger Fernandez,
you're recognized for five minutes.
Ms. Leger Fernandez. Well, thank you so very much Ranking
Member Scott, and Chairwoman Foxx for putting together this
panel, talking today. You know, I spent 2 days ago I spent time
with Dolores Huerta, who as you know is such a champion for
workers? rights and human rights.
It was wonderful to be with her as she's 92 years old, and
still marching for workers? rights, and spending the time
talking to New Mexicans and others about the importance of
unions. Dolores and Cesar understood what we do when faced with
economic and income inequality. We give workers more power, we
pay workers what they deserve.
That's what we did with the billions of dollars in spending
in the Infrastructure Bill. We wrote into the law a requirement
that workers get paid what they deserve. Americans know that
this is the right thing to do as well. We have the highest rate
of approval for unions since 1965. 71 percent approval for
unions. Americans recognize the value of unions.
We know that they are key to achieving fair pay, to
maintaining safe working conditions, to recognize the dignity
of each person's work. That is key to our country's success.
Dr. Shierholz, your organization has repeatedly found evidence
that unions shrink both racial and gender wage gaps, while
raising wages for all workers.
The drop in union membership since the late 1970's as
you've shown us, taking $58.00 a week out of the paycheck of
non-union working without a college degree, so it's across the
board. Can you tell us a bit more how collective bargaining
levels the playing field for workers, especially those without
a college degree?
Ms. Shierholz. Thank you for that question. So, unions, the
empirical evidence is just clear, unions--workers who are in a
union make about 10 percent more than similar workers who are
not in unions. They have higher benefits. They have better
working conditions, better scheduling, more likely to have
vacation, healthcare, retirement benefits, like the sort of
list is endless.
They have a voice on the job, so if there is an issue at
work, they actually have a mechanism to be able to communicate
to their employer, which can make the employer, make the
workplace safer. It can provide real innovative ideas for the
workplace. So, it is the--what they do is just provide some
countervailing power to workers to sort of the inherent
employer power, make the economy better off.
Ms. Leger Fernandez. Thank you so very much. And you know
the other major concern we have is protecting our babies,
protecting our children. And many of whom are migrants from
Latin America fleeing the worst horrors of egregious labor
conditions. Dr. Shierholz, a new report from your organization
finds that the number of minors employed in violation of child
labor laws has increased 37 percent in the last year and
skyrocketed 283 percent since 2015.
Chair Foxx, I seek unanimous consent to enter this report
into the record.
Chairwoman Foxx. Without objection.
Ms. Leger Fernandez. So, I want to get to thanking Mr.
Spear in your testimony for highlighting the safe driver
apprenticeship program, and the Women of Trucking Advisement
Board. Thank you very much for noting those. Both of these
programs, I will note, were created by the Infrastructure
Investment and Jobs Act, as you pointed out, correct?
I will note that not one of our Republican colleagues on
this Committee voted for those important apprenticeship
programs. But going back to you, Dr. Shierholz, how have recent
State level rollbacks and child labor protections exacerbated
the issue of child labor?
Ms. Shierholz. There have been in ten states bills passed
to roll back child labor standards over the last 2 years alone.
It's just remarkable that we are now having this debate about
whether 14-year-olds should work in meat packing plants, like
that we're going back to this idea of children in factories is
actually kind of mind-boggling.
It's the idea that people are saying we need this is
because of labor shortages. But the economics tells you there
is a hard and fast way to solve a labor shortage. You raise
wages. That's how you attract workers. So, the idea that
instead of raising wages for grownups, we would instead use
what is inevitably the most vulnerable, economically precarious
youth to fill those roles. It's just--it's absolutely
unthinkable.
Ms. Leger Fernandez. Thank you very much Dr. for that, and
I would also note that we have passed the last session, the
Congress, the House passed immigration reform, the Farm Worker
Modernization Act, and various other acts that would also allow
for immigrant workers to participate, which has impacted our
labor force.
It would be a 1.4 trillion dollars economic benefit if we
did that. My time has passed, and I yield back.
Chairwoman Foxx. Thank you very much. Mr. Williams, you're
recognized for five minutes.
Mr. Williams. Thank you, Madam Chairman. You know before I
entered here today, I actually was concerned about our economy,
and concerned about inflation. I was concerned about real
wages. I was concerned about a lot of things, but some of the
testimony I've heard, and questions I've heard, we're living in
the greatest economic time in history.
And with practically full employment, and it's practically
a worker's paradise. And I'm also ashamed to say that my
children have held jobs since they were 16 of their own
volition, and it's too late now to go back and stop them from
the enormous success that they're having in academics, and in
their professional lives to prevent the scarring that obviously
was done by this terrible tragedy.
So, my own personal experience is actually quite different.
Mr. Moore, we've heard this celebration of the unemployment
rates, and yet it seems maybe not all is well. Can you talk
about the employment participation rates, and what your
observation has been, and why that's important please sir?
Mr. Moore. Just a word about what you said about people
working at younger ages. You know, the statistics are pretty
clear that the earlier you start working the more successful
you are in your life. When I worked for 10 years at the Wall
Street Journal, we had so many successful people come in. Every
area of life, whether it was music, arts, finance, business,
and I'd always ask them what did you do when you were growing
up.
And I was struck by how many people grew up on farms
because if you're someone like my wife who grew up on a farm,
you start working when you're 7, or 8, or 9 or 10 years old.
And you work, you establish a work habit. I'm not saying I'm
for child--against, you know, getting rid of child labor laws.
I'm just saying you're right. 13, 14, 15-year-olds probably
should be doing after schoolwork and things like that to
buildup their skills to be more successful in life. Look, the
economy is--I'm with the, you know, 67 percent of Americans who
just think this economy is really fragile.
The labor market is strong. The job market is strong today.
There's no question about it. It's about as strong as I've
seen. The problem is people are getting poorer. Every month
that Joe Biden has been in office the average Americans get
poorer and poorer and poorer and poorer.
Because when you have inflation running, you know, at 15
percent over the last 2 years, in other words over that whole
period, and wages are only up by 10 percent, guess what? Your
purchasing power declines. It's exactly what happened in the
1970's by the way. And then the economy collapsed. So, I don't
think Americans are feeling the love for this economy, and I
think we have to do real reforms, and you know, the main point
is let's encourage people to get into the workforce.
You're not going to get out of poverty if you don't have a
job. And the jobs are out there. So that's my take on where we
are, and I--look, if we continue to spend and borrow as we've
done with this 6 trillion-dollar massive increase in our debt,
and I find that to be incredibly dangerous. I think we will
have a financial crisis in this country if we don't start
balancing our budget right away.
Mr. Williams. This is a true statement. It doesn't matter
what side of the aisle you're on. You can't lie to the American
people about the economy. They live it every day. The truth is
working Americans have fallen 10 years behind in wages, in real
wages, and that's a shame. And it's because of inflation, it's
because of the policies, particularly the last 2 years, but not
exclusively the last 2 years.
Right now, 63 percent of Americans live paycheck to
paycheck, and with the rising costs that are rising faster than
their wages, they're falling further and further behind through
no fault of their own. And we, Members of Congress, and
yourselves, even as business owners, or policy experts, really
deserve, or really owe working Americans an answer on why
that's true.
And there's a certain compact that we've made with working
Americans. If you finish high school, if you get a job, if you
show up, if you continue to add skills, you're going to be OK.
And you're going to be able to support a family. You're going
to be able to have maybe a nicer car than your neighbor.
Maybe you can get a few toys along the way. This is really
what people in my district live for. And God bless them for it.
And through no fault of their own, because of our energy
policies, this goes is sliding further and further away. And
they want to know what happened. They're not political
activists, they're not Ph. Ds in economics.
They didn't go to Wharton. And they really want some
answers, and they want some actions. Right now, we are telling
ourselves fibs about the economy. We are saying that we're
bridging to a new golden carbon free economy that will
impoverish the middle class.
We're saying that there's a worker nirvana just over the
horizon, if we just had more regulation, and that is not true.
And it's been proven false throughout all of history. So, I
appreciate your comments, and I appreciate your standing up
here and speaking the truth about the economy, where it can be
discerned. Thank you. I yield back Madam.
Chairwoman Foxx. Thank you, Mr. Williams. Ms. Stevens,
you're recognized for five minutes.
Ms. Stevens. Thank you, Madam Chair, and thank you to our
distinguished panelists for being with us here this morning on
the Education and Labor Committee hearing for this topic of
Unleashing America's Opportunities for Hiring and Employment.
It is something that is quite acute to us in southeastern
Michigan, Oakland County, where I represent a manufacturing
destination with 2 and a half percent unemployment.
We got a tight labor market, and frankly, I believe that we
have the best practice example of American Rescue Act dollars
at play. And look, we have been through a tumultuous season,
with the COVID-19 pandemic. We've also had economic turbulence,
for markers throughout this century, if it is the great
recession which took us time to dig out of.
You know, it wasn't until April 2014, when total employment
reached its pre-recession level, and that was after actions
that we took with the Recovery Act. This is work that we heard
from at the local level where it said, hey, it's time to invest
right? We've got to invest fully to fully be able to recover.
And certainly, on this Committee, we're looking at and
evaluating the experience of our low wage workers, our lower
wage workers, and how to lift people out of poverty, and bring
people into the middle class, which is why many of us have
pushed for a long time to raise the minimum wage.
But Dr. Shierholz, we recently marked the 2-year
anniversary of President Biden's American Rescue Plan. I know
we're talking about this in today's hearing. And I wanted to
just directly ask you that in terms of the harm to workers that
was avoided because of the important investments that were made
in this package, we believe, and many of us in this Committee
believe, tie people to jobs, right?
Let's make sure that people stay tethered to jobs. Let's
not leave people in long-term unemployment. But could you speak
to the experience of workers in harm that was avoided because
of the steps that were taken with the American Rescue?
Ms. Shierholz. I totally appreciate this question, and I
just want to quickly correct something that was just said
before I do that. That this idea that U.S. workers have fallen
10 years behind in real wages, that's just empirically false.
If you look since 2019, workers at every point of the wage
distribution have higher wages now than they did then.
And those at the very bottom of the wage distribution have
wages now that are 9 percent higher than they were then, so.
Ms. Stevens. So, people are making more money.
Ms. Shierholz. They are making more money than they did
pre-COVID. I'm not saying inflation wasn't a big hit, but over
that period wages--nominal wages have grown enough to make up
for that. OK. ARPA. So, I think this question, we only have to
look to what happened after the great recession to show what we
just avoided, by passing ARPA.
In the aftermath of the great recession, it took 10 years
to get back down to the pre-recession unemployment rate. Weak
recoveries, which is what we saw then, they churn out
inequality. They churn out racial inequity, they churn out lost
opportunities. ARPA kept that from happening. Like the scale of
the inequality that didn't widen, the racial inequities that
didn't get worse, like the opportunities that were not lost are
just pretty staggering to think about.
Ms. Stevens. And we're utilizing ongoing ARP investments to
rebuild the State and local private sector workforce. You know,
it's just a place where we've partnered with AFSCME and heard
from AFSCME very directly on. And so, are there other examples
of how ARP has supported lower wage workers, particularly of
the State and local level to continue to grow that workforce?
Ms. Shierholz. Yes. That's actually, that's a mixed bag,
right? Like and when we look at the private sector has just
gone like gangbusters over the last 2 years. The public sector
is growing, but not as fast of a rate, in that there's still a
really big gap, so State and local governments, particularly,
some of them are using the relief that was in the American
Rescue Plan to raise pay and hire those workers back.
But others aren't doing that as much and should be doing
that more. You know, it's K through 12. It's teachers. Those
are the--we absolutely----
Ms. Stevens. Stabilizing our schools?
Ms. Shierholz. Yes. We need schools.
Ms. Stevens. Are you familiar with the statistic that our
country rebounded economically the fastest of any nation coming
out of COVID-19?
Ms. Shierholz. You know, I haven't looked at the global
stuff, but you can look at history in the U.S., and that is
true for past recessions in the U.S. Like what we did now it
was just an unbelievable policy achievement.
Ms. Stevens. Thank you. Unbelievable policy achievement.
And with that, I yield back Madam Chair.
Chairwoman Foxx. Thank you very much. Mr. Banks, you're
recognized for five minutes.
Mr. Banks. Thank you. Mr. Spear, Indiana is one of the most
active trucking industries in the United States. In late 2021,
the ATA put out the following press release on the Biden
administration's vaccine mandate, and how it would threaten the
trucking industry, and cripple the Nation's supply chain. Can
you elaborate more on those mandates, or even just the threat
of those mandates, and how they impacted your industry and our
supply chain?
Mr. Spear. I'm quick to point out that the Trump
administration, President Trump, Biden administration,
President Biden didn't create the global pandemic. OK. You play
the hand you're dealt, and you know, when you're trying to
recover economically, you're trying to navigate the pitfalls of
a pandemic like this, get people vaccinated, keep it from
spreading.
You don't make it worse. And this is an administration that
well exceeded the statutory authority of the Occupational
Safety and Health Act of 1970. OSHA does not have the authority
to regulate vaccine mandates. So, when this was put out, we
joined a number of others in suing, took it through two Federal
District Courts to the Supreme Court, and got a 6-3 decision,
and bounced it.
Because we knew they didn't have the authority. We knew
this was semantics. But this wasn't going to solve the problem.
Our drivers, by the way, throughout COVID, got in the truck and
delivered everything that we need, including the vaccine, the
PPE. We did that. You know, you're welcome. You're welcome.
So, to put out a mandate for people that are getting in the
cab that are isolated largely, from being exposed to COVID, and
are keeping our economy glued together had to be one of the
most ridiculous policy ideas I have ever heard. And they
deserve to get bounced to the Supreme Court, and we as an
industry, will continue to exercise our legal rights when we
see it's warranted.
Mr. Banks. Well, I agree with you. It remains unclear if
the border vaccine requirements for non-U.S. citizens coming to
the United States is going to end on May 11. The Canadian
Trucking Alliance has said this mandate has affected thousands
of unvaccinated truck drivers in Canada and Mexico, by
preventing them from entering the United States.
If the Biden administration's border vaccine requirements
remain in place, and truckers from Canada and Mexico remain
unable to come to the United States, how will that affect our
trucking industry and the supply chains throughout North
America?
Mr. Spear. It's a dramatic impact. Removing literally 73
percent of the USMCA freight, so we were supporting NAFTA, and
now USMCA there isn't really anything that we don't eat, drink
or wear that doesn't come off a truck. There's a driver behind
the wheel to make sure that happens, and yes, we rely on
Canadian and Mexican drivers to support that.
To support the supply chain. So, these mandates matter, and
it really comes down to diplomacy. Work with your Canadian
counterparts and your Mexican counterparts, so that we can
maintain seamless policies with respect to vaccinations that
don't have an adverse impact on the economy. It's not that
difficult, but we're not communicating with our counterparts,
and that's a big problem where you have these disparities.
It has a measurable impact on trade and the economy, and
we're the ones to bear it as an industry. We feel it first
before anybody else.
Mr. Banks. It seems like common sense. We appreciate all
you do to represent Hoosier truck drivers. With that, Madam
Chair, I yield back.
Chairwoman Foxx. Thank you, Mr. Banks. Mr. Mrvan, you're
recognized for five minutes.
Mr. Mrvan. Thank you, Chairwoman Foxx. Dr. Shierholz, some
70 percent of Americans have a favorable view of unions and
some 48 percent of workers who are not in unions, would like to
belong to one. However, union density is only at about 10
percent. Why is there such a wide gap?
Ms. Shierholz. Yes. That's--oops sorry. I got it. Thank you
for that question. I think it's really important. There is just
that gap between the share of workers who want to be in the
union, and the share of workers who are actually in a union.
That's policy. That gap is policy. That is policy that has not
kept up with employer aggressiveness in fighting unions, that
has really undermined workers' actual right to be in a union.
Mr. Mrvan. OK. So, I represent Northwest Indiana, heavy on
industry, manufacturing, and have a strong union presence. And
the ability to collectively bargain and create a safe workplace
is extremely important. And so, from my perspective there is
absolutely a role for union.
And of course, there's a role for small businesses also.
And I just also want to say as a local elected official, I was
a North Township Trustee, and we were in charge of emergency
poor relief. I did that for 15 years. And one of the programs
that we worked with, with Ivy Tech, which is a community
college, this was in 2006. It was to train and operate people
to get their CDL license, to have a pipeline so people would
come into our office, and we would try and find people instead
of giving out direct aid, try and help them find a job.
But the trucking industry in 2006 was in great need of
drivers. So, when you, Mr. Spears, utilized the 78,000 drivers
needed now, and 136,000 needed 10 years down the line, that is
actually really a cycle that has existed for a long time. The
trucking industry has been in great need of drivers at least
since 2006. Is that correct?
Mr. Spears. That is correct. We like to say post-COVID,
welcome to the show. We've been short for a very long time.
Mr. Mrvan. Right. And there are multiple things that get in
the way of CDLs, and those opportunities, which is a phenomenal
career path for those individuals. And I guess what my point is
today is we do all have to work together in order to shore up
the workforce to be able to create synergies that allow people
to get into the CDLs and to drive, so that our freight is able
to maneuver around.
And when it comes to unionized labor, there is a role in
our country because there has been exploitation of workers, and
our history has shown that. And that's why it's so vitally
important within my district to be able to protect working men
and women. And just taking this opportunity also, closing the
wage gap for African American and women, unions have done a
great job in that.
Union women who are of color make 93 cents on the dollar,
where those who are non-union make about 78 percent, 78 cents
on the dollar. So as a father of two daughters, I want to make
sure that there's equality throughout all of that, and unions
have helped do that. And so, part of this Committee's ability
is to make sure that we are, or our mission, from my view, is
to make sure that we have equality and opportunity for all
workers.
So, I thank you all very much for your testimony, and with
that I yield back Chairwoman Foxx.
Chairwoman Foxx. Thank you, Mr. Mrvan. Ms. Miller, you're
recognized for five minutes.
Mrs. Miller. Thank you for yielding and thank you to all of
our witnesses for being here today. My first question is for
Mr. Moore. Mr. Moore, my constituents are very concerned about
the collapse of the U.S. dollar. How do you think President
Biden's proposal to spend 82.2 trillion dollars over the next
10 years including 2.5 trillion in new mandatory spending, is
going to impact the dollar in the long run?
Mr. Moore. Well, Congressman, inflation is by definition a
reduction in the purchasing power of the dollar, and that's
what your constituents are seeing, month after month after
month. It is not true that real wages are rising. Real wages
have fallen in the last 2 years. There's a lot of different
estimates, but the kind of median one that we looked at, at
Heritage, is that the average worker has lost about $3,500 to
$4,000 in 2 years.
And look if you're making $70,000 a year, that's a lot of
money. That's a lot of money that people are losing because
of--and I think the inflation is a direct result. It's like the
sun rising in the east and setting in the west. If you spend 6
trillion dollars you don't have, you're going to get inflation
right?
We predicted it would happen and it did happen. It went up
to 9.1 percent in the summer of 2020. Fortunately, it's come
down to 6 percent. I think it's going to continue to drift
down, but the damage has really been done. So, there's been
long-lasting negative effects to this 6 trillion-dollar
spending spree.
We will, in my opinion, Congresswoman, be spending decades
to undo the damage that has been done in the last 2 years.
Mrs. Miller. We need to add the study of economics into our
required courses. Maybe that will help us there. Thank you.
Could you tell us how President Biden's reckless spending and
foreign policy incompetence could lead to the Chinese currency
replacing the U.S. dollar as the world's reserve currency?
Mr. Moore. I'll answer your question this way. I think I
would love it if every decision that you made here in Congress
on both sides of the aisle was about how do we make the United
States and the American workers the most competitive in the
world. We all agree in this room we want the American workers
to be the highest paid workers in the world.
And the most skilled workers. Frankly, we're not taking
competitiveness seriously right now as a country. When you're
running a 6 trillion dollars in debt, do you think that makes
America more competitive? Obviously not. When you dismantle a
lot of American energy we get 75 percent of our energy folks
from fossil fuels, oil, gas, and coal. That's how we provide
the power that keeps our trucks running, and our factories
running.
You know, look, we're not going to run a 23 trillion
dollars economy on windmills. It's just a stupid idea, and it
just plays into the hands of our enemies. So, who has benefited
from these anti-American energy policies? Well let's see,
China, Russia, the OPEC countries and so on.
So, one of my frustrations, having worked in the Trump
administration, you know the last 6 months I mean look the last
6 months that Trump was in office the economy grew by 11
percent. The economy was booming. We saw huge, huge, nobody
thought the recovery could happen a quickly from when we shut
down the American economy.
So, if we just stuck with the Trump policies, I happen to
think the U.S. economy, we wouldn't be talking about you know,
the high inflation. We wouldn't be talking about massive
increases in debt. We wouldn't be talking about these problems
with small businesses.
So, the policies worked that we put in place in Trump. I'm
a little biased. I helped put those in place, but as I said you
know, earlier, we had the best economy ever right before COVID.
And we've got to get back to the things that work.
Mrs. Miller. If the Chinese currently does replace the U.S.
dollar, what kind of risks are we looking at if that actually
happens?
Mr. Moore. It's a security crisis. It's an economic crisis.
It is incredibly important for the whole security of the world,
not just the United States. And the economic well-being of the
world that the United States retain its world economic
superpower status, and that the dollar remains the dominant
currency.
Now I don't think there's an immediate danger of some other
country, like the Euro or the you know, or the Yuan, or these
other countries taking over the United States currency, but if
we continue to rack up our debt--because as you know,
Congresswoman, we're up to--we're headed to 50 trillion dollars
in debt in less than 10 years.
If that happens, then I think that America's status as the
world reserve currency will be put in great danger.
Mrs. Stevens. Thank you. Moving on. Mr. Spear, given the
workforce challenges your industry is facing, can you offer any
specific ideas or suggestions to this Committee and Congress
might consider that would make the workforce development system
and overall pipeline for the next generation of American
workers, more efficient for them and their employers?
Mr. Spear. Yes. I appreciate that Congresswoman. In brief,
I can provide more detail on what our recommendations with WIOA
and reauthorization. Let's try to turn COVID into something a
little more positive. This is a global pandemic. None of us
have ever experienced it. And we witnessed something, you know,
tragic, but also pretty phenomenal. We saw a lot of sectors of
our workforce come together and support our economy. Got us
through the pandemic.
Isolate those, work with your other fellow committees to
understand what segments of our workforce really contributed
when it mattered most. Yes, I'm pretty darn proud of our 3.8
million drivers, getting into their cabs, getting the food, the
toilet paper where it needed to be, but also the vaccines, the
PPE, the test kits.
We did all of that. And it's a remarkable contribution. If
you look at the nurses, the doctors, the EMTs, the people that
went to people's doors and helped them get to the hospital and
get the care they needed. These are segments of our workforce
that contributed when it mattered most. We've identified them
and rewarded and incentivize them.
Chairwoman Foxx. I'm going to have to ask you to wrap it up
Ms. Miller, because your time is over.
Ms. Miller. OK, thank you and I yield back.
Chairwoman Foxx. Mr. Courtney, you're recognized.
Mr. Courtney. Thank you, Madam Chairwoman. Dr. Shierholz,
when we're talking about protecting the U.S. currency, the 600-
pound gorilla right now is the approaching default, in terms of
the full faith and credit of our paper. Last January, the
Treasury Secretary notified the world that we actually had hit
the debt limit cap, and that special measures are the only
thing that right now protects the dollar and protects our paper
from really getting degraded and down valued, which is exactly
what happened in 2011, when the brinksmanship was played here.
I was around for that and remember it well. So again, if
you could just sort of clarify that. If we're talking about,
you know, protecting the currency of this country, which is a
very valid concern because China would like to take over as the
dominant currency, allowing this country to sleepwalk into a
full default is the quickest way to have that nightmare occur;
is that correct?
Dr. Shierholz. That's right. Defaulting on the debt would
be just an absolute catastrophe, for sure cause a deep
recession. Like there's no question that that would be an
unbelievably, an unbelievably catastrophic self-inflicted
wound. Making, making, cutting a big deal to keep that from
happening also would be a big self-inflicted wound like we did
in 2011, where like that 2011 deal to increase the debt
ceiling, but at the same time impose massive austerity was the
thing that led to the incredibly weak and slow recovery that we
had from the Great Recession.
Mr. Courtney. And thank you for mentioning that, because
you're right. The sequestration agreement that was put into
place again suppressed growth in terms of both the defense and
non-defense portions of the Federal budget, and as a result
depressed growth. Ironically, when President Trump was elected,
one of the first things that the Republicans did was to lift
sequestration, which again--there again crisis that they
created back in 2011, you know, that's where the fingerprints
were in terms of putting that into place.
But actually, lifting sequestration benefited the economy,
as you I think noted in your testimony.
Dr. Shierholz. Yes, absolutely. It was like Republicans
held the austerity stance until Trump was in office, lifted
that and it actually provided substantial stimulus to the
economy in the final years of the Trump administration.
Mr. Courtney. And as long as we're talking about those 4
years, we actually voted as a Congress really with no drama in
terms of lifting the debt limit three times, to the tune of $8
trillion. Again, I think, you know, we should have a legitimate
debate in this country about reducing the deficit. But using
the lever of default as a way of basically, you know, putting
this country at gunpoint, in terms of having to adopt policies
that fall outside the appropriations process and the
authorizing process, is again another recipe for again
suppressing growth in this country, isn't that correct?
Dr. Shierholz. Yes, and the debt limit makes no economic
sense. Like it is not empirically correlated with any measure
of actual fiscal health in the economy. It is just an
absolutely arbitrary number. To have so much be at stake
because of such an arbitrary level, it's just--it's just
unthinkable. But that's how we--but that's where we are.
Mr. Courtney. And again, so to me there's just no question
that, you know, if we really want to do something to help this
country, is we need to fix this problem, because the Chinese
would love to de-dollarize the world economy in terms of being
again, the international standard, in terms of every
transaction, whether it's energy, trade, I mean you name it.
Again, talking about how we deal with the labor
participation rate in this country, which is--I think that's a
valid concern that everybody, regardless of party, should be
focused on. I would note, to followup Mr. Moore's kind of
rabbit punch on Connecticut, actually our labor participation
rate is higher than other parts of the country.
Again, I represent a district which is very defense heavy.
We have Electric Boat shipyard, which right now because of the
Biden defense budgets over the last 2 years, actually has a
stable horizon in terms of submarine production. Last year they
hired just shy of 4,000 workers. The total shipyard is at
19,500 workers. This year's projected hiring rate is 5,750.
Those are metal trades, design, engineering, and
administration.
Again, they are doing great with job fairs. There's one
tomorrow actually in New London. If anyone's listening, you
know, you're welcome to stop in, and they also are using the
WIOA Workforce Board Pre-apprenticeship training pathway, in
terms of connecting people, and again increasing the
participation rate in the region.
Ten weeks for a welder, 8 weeks for an electrician, 8 weeks
for a CNC machinist. And again, if we're talking about ways to
try and raise participation rate, there's a skills gap that is
definitely holding people back. That is precisely what domestic
spending and the Department of Labor through WIOA actually
addresses. Maybe you can comment on that.
Dr. Shierholz. You know what? That just made me think of
another, because I totally agree with what you said, and then
another key reason if we really want to raise the labor force
participation rate, is we need to do things like maternity
leave, paternity leave, childcare, paid leave. Like those are
the things that are keeping people out of the labor force when
they aren't, when they're not there, particularly women.
Like women's labor force participation rate in the U.S. is
falling so far behind our peer countries, who have all of those
things and that's the difference. So that's another--like
they're both avenues to really get, in the long run get labor
participation up.
Mr. Courtney. So again, there is just no question that if
we increase the number of slots for pre-apprenticeship training
in the metal trades, you know, we would hit that goal this year
of 5,700 hires. I would just note, because I just was the
speaker at an apprenticeship graduating class 3 weeks ago,
which again it was folks in the metal trades. It was very--I
mean I've been to UConn, go Huskies, you know, commencement
ceremoneys, to you know, a lot of other universities that are
there.
Going to an apprenticeship graduation ceremony in some ways
is the most inspiring, to see how people have transformed their
lives using a pathway out of sort of traditional education and
connecting to high value, good-paying jobs that can support
themselves and their family and do something really important
for our Nation. I yield back.
Chairwoman Foxx. Mr. Courtney, I want to note that we
failed to turn the clock on when you began, so you had about
seven and a half minutes. OK. Ms. Houchin, you're recognized
for five minutes.
Ms. Houchin. Thank you, Madam Chair. Thank you all for
coming to testify before us today. We appreciate your time. As
you may know, Indiana's State motto is the Crossroads of
America. Hoosiers take pride in the fact that Highways 40 and
41 were part of the original Federal highway system in 1926,
and today 724 million tons of freight travels through our
State, making us the fifth busiest State for commercial freight
traffic.
Mr. Spear, I want to thank the trucking industry for what
our American truckers did to contribute a great deal during
COVID, to get products on store shelves and to our homes. I
want to express our thanks for the hard work of truckers
working through the pandemic, to make sure that things were
delivered. It wasn't perfect. Supply chain issues persist, but
the trucking industry did not let us down during COVID, and we
thank you.
Mr. Spear, in your written testimony you mentioned a talent
shortage of nearly 78,000 drivers and 41,000 of the severe
workforce challenge to the trucking industry. Those numbers are
a bit shocking, particularly considering that drivers in
Indiana now average about $60,000 a year and can access full
benefits. So, could you touch on some of the other factors that
contribute to your workforce challenges?
Mr. Spear. Yes. As we said earlier, we've been dealing with
the shortage of talent for a number of years, certainly
predating COVID. It certainly got worse post-pandemic, as fewer
people were returning to work across all sectors of the
economy, and trucking was certainly not isolated from that. So,
it inflated from about 50,000 drivers to 78,000. Our technician
shortage is from 29,000 to 41,000. We're even short on
dockworkers. It is very difficult to get people to come back
into the workforce.
Pay has gone up over the last 5 years for drivers, 19
percent higher than any other mode, any other mode in
transportation. So, you don't have to have a college degree.
You don't carry all the debt that comes with it. You know, we
really need to make this an attractive place for all ages, 18
to 20. If you're in your latter years, we have an aging
workforce, higher than the national average. We need to provide
wellness programs.
We provide the health benefits. We provide the paid leave.
We provide all of that, and yet we're still short of talent.
So, this is problematic. Training, certainly investing in
education and workforce development is going to be key. We're
going to be really focused on WIOA and helping you design a
bill that really focuses on the segments of our workforce that
not only contributed through COVID, but are instrumental for
our supply chain, our economy, and the ability to get those 40-
year highs in inflation down.
Ms. Houchin. So, recognizing there's no silver bullet, a
couple of things that may help would be the Drive Safe Act, or
one thing that has been discussed during my time in government
is transferring military CDLs to a civilian CDL. So those are
some of the things, would you agree, that would be helpful?
Mr. Spear. Absolutely. I mean this is one of many things,
but the 18 to 20 populace, I said earlier, in exchange 48-49
states allow an 18-year-old to drive. They can't cross State
lines. We want them to do that, but we want them to do it
safely and responsibly. So, the training and the technology
that was in IIJ is something we support, but we need to do it
responsibly.
But looking at the military, I mean nobody in Congress I
have heard is arguing against sending an 18-year-old over to
protect our freedom, yet we do it all the time. The key there
is teaching young people how to do their job safely and
responsibly, and that's no different than what the trucking
industry is asking for with respect to that talent pool.
Ms. Houchin. OK, thank you. With my remaining Mr. Akers,
Iowa has been a right-to-work State since 1947. Indiana has
been a right-to-work State since 2012, and we were the 23d
State in the Nation to be right-to-work. The Bureau of Labor
Statistics reported that in Indiana, manufacturing employment
increased by 13.5 percent following right to work, compared to
an average of just .5 percent during the same period for non-
right to work states.
When we provide workers with fundamental free choice rights
through right to work, aren't we opening up economic
opportunity, and if we had something like the PRO Act, wouldn't
we stifle economic opportunity in your opinion?
Mr. Akers. Absolutely, absolutely. Our workers move all the
time. We're in a business where they can go down the street and
get another job right now. So frankly, they are making more
money than they ever made before. Our wages are up close to 30
percent. So, the PRO Act really just adds a regulation.
Frankly, the cost of regulation to small business comes from
employees and customers, because we have to pay for that
somehow, that's where it's going to come from. Thank you.
Ms. Houchin. Thank you. I yield back.
Chairwoman Foxx. Thank you very much. Mr. DeSaulnier,
you're recognized for five minutes, if you're good you get a
gold star.
Mr. DeSaulnier. Thank you, Madam Chair. I'm still waiting
for my last gold star, but I trust you. Dr. Shierholz, I was
taken by you alluded to John Kenneth Galbreath's
``Countervailing Institutions,'' which I'm a big believer in.
And so, from a historical perspective, it's frustrating that we
get into these arguments and, you know you don't have to read
all of Thomas Piketty to accept that an accurate objective
analysis, there's going to be a balance. We're not looking at,
I mean, and I get frustrated with free market as designed in
this building, institution, that we live in a mixed market.
We've gone a long way from people are going to get sick of
me using the Eisenhower quote, where he said, at the greatest
expansion period in the history of this country or probably any
economy, when we had a vibrant middle class during his
administration. And he said, President Eisenhower said only a
fool would try to stop an American man or woman from attempting
to organize if they choose.
So, I agree with the other people. It should be a choice,
but we have to have these countervailing institutions. I worry
about this economy, and I agree with Mr. Moore on the
purchasing power of middle-class people. But my perspective is
the causes are different, which I believe you share. So how do
we deal with the inequality in terms of capital versus wages,
that has gotten worse in the last 3 years?
And that's the way I perceive President Biden's
initiatives. It's not trying to get, empower unions for the
sake of unions. You need these countervailing institutions in
order to get real purchasing power up, that hasn't been up
since the ?70's.
Dr. Shierholz. You said it perfectly. Like I think--like
when you think of an employer, an employer has inherent power
of an individual worker. The employer loses the worker, it's
just one worker. The worker loses the employer, loses their
job, that's their livelihood. There's just an inherent
imbalance of power. Things like unions, things like minimum
wages provide a countervailing power to workers, to create more
balance, to create a fair and stronger growing economy. But the
sort of neo-liberal deregulatory policies of the last 40 years
has really broken that down, and we have seen the result.
Skyrocketing inequality and much slower growth, because we
didn't have that bottom-up, middle-out growth that really fuels
strong growth. And so, we can kind of--we know the playbook,
right, like to reverse the things that were undone to create
the scene we're in now. So, raise the minimum wage, raise
overtime protections, change labor laws so workers who want to
join a union are able to join a union and on and on and on.
Those things will make a massive difference.
Mr. DeSaulnier. And for the middle class and for consumers,
I'm sorry that my colleague isn't still here, but having owned
small businesses for 35 years, a restaurant business that has
amongst the higher mortality rates, I always looked at my
employees being paid well, but I had to be competitive for
people who are playing by the rules.
Sometimes in California, almost a third of the small
businesses were in the underground economy. So, we knew that
they weren't paying their sales tax, they weren't paying it.
Well, I had to compete with them, and it drove this dynamic.
But my question is, consistent with what Nobel prize-winning
Mr. Stiglitz says, you've got to have enough money for your
employees to go out and buy the product. It's the Ford rule,
right?
If my workers can't buy the Model T, I'm not going to be
successful. So again, could you respond to that?
Dr. Shierholz. Yep, it really is that getting money in the
pockets of people who are very likely to spend it, low-and
middle-income workers. That is--that makes our economy
stronger, more resilient, faster-growing. That is where we need
to go from here, to sort of reverse, halt, and reverse some of
the trends of rising inequality and weak growth that we've seen
over the last 4 years.
Mr. DeSaulnier. Mr. Moore, you have had some controversy in
things that you have said vis-a-vis the labor laws. There is a
lot of information. I think the New York Times, or the Post is
doing stories now about the tension, where more and more young
people are working. I won't remind you of your quote, but I
could give it to you that you did at the 2016 GOP Convention.
How do we keep a balance here? I don't disagree with
everything you say, but clearly that quote, you've got to make
sure that people are protected as well. Would you care to
respond to that?'
Mr. Moore. Well, one of the things that we were proudest of
in the Trump administration was the record high expansion of
middle-class income. So median household income prior to COVID
hitting; COVID changed everything. Median household income grew
by $6,200, which was almost twice as much as in 8 years under
Obama.
So, we kind of know what works. I completely agree with
what you're all saying, that yes, let's build a middle class--
--
Mr. DeSaulnier. Mr. Moore, I was asking about the
disenfranchising of the labor laws, taking away of the labor
laws. So, I'll remind you of your quote. ``I'm a radical on
this, and I'd like to have 11-year-olds be able to work.''
Mr. Moore. Sir, I would defer to my colleagues. They know
much more about that issue than I do. I'm not an expert on that
by any means.
Mr. DeSaulnier. Artfully done. I yield back, Mr. Chairman.
Chairwoman Foxx. Thank you, Mr. DeSaulnier. Mr. Burlison,
you're recognized for five minutes.
Mr. Burlison. Thank you, Chairwoman Foxx. Mr. Spear, I want
to point you to I think it is what is my new constituent.
Mr. Spear. Dee Sova.
Mr. Burlison. Her name is Dee Sova, and I'm proud to have
her as a constituent because if you look at her record, it's
impeccable. This is a person who has 27 years of driving
experience, over two million accident-free miles, and she
established the Divas Rock organization to encourage more women
to get in the trucking industry, which is--she's just a real
leader.
But sadly, she made the news, and this is why I know about
her, she made the news because she left California and moved to
southwest Missouri, God's country, to work with Prime Trucking.
And tell me about why did she do that?
Mr. Spear. Well, I guess California's loss is Missouri's
gain. She's a wonderful contributor to the economy, certainly
to Prime. But she's an independent contractor. She's an
independent contractor. African American, mother, putting her
kids through college. She understands what it takes to be
successful, not just as a mother but as a businessperson.
And she left California simply because of the regulatory
headwinds that were put on independent contractors, this AB5
included, and relocated to Missouri, because she knew she could
have a successful business model working for Prime, raising her
kids, being responsible. But that was her choice. Nobody told
her to do that, to pay her less or to deny her medical
benefits. She got all of that in spades.
She also knows that her work satisfaction, her pay, her
benefits are actually higher under the business model she chose
than if she drove as a fleet. It works for her, and it should
be her decision, not the government's.
Mr. Burlison. Right, but we in government like to think
that we're smarter than folks like Dee Sova, right. We'd like
to think that she shouldn't be doing this. She should be a
captive employee and pay--so that she can probably pay dues.
Mr. Spear. Well, it's certainly to bolster the union
membership and dues. I think that's--this is pandering. I mean
these bills are designed for that purpose alone. If you talk to
Dee Sova, it's her choice. If she wants to be in the union, she
can be in the union. She could certainly make that decision on
her own.
Mr. Burlison. And she couldn't have made the choice to
become an employee and stay in California and receive those
benefits, because they were offered. That's a path that was
fully available, that she chose, like many people. What has
been the impact of California? We're talking about the
anecdote, but what is the full----
Mr. Spear. Oh, the bottom line. When you're short 78,000
drivers nationwide, 350,000 drivers in the country are
independent contractors. If AB5 goes forward, that's 70,000
independent contractors in California. You almost doubled,
doubled just from that bill becoming law, the number of drivers
we're short. She wants to be successful. It's her choice. She's
very savvy. She's an America's Road Team captain. We pick them
every 2 years. They're the best of the best. They have the best
safety records of any drivers out there.
She is a success story, and like many drivers, owner-
operators, independent contractors and fleet drivers, some of
the smartest businesspeople you will ever come across.
Mr. Burlison. Thank you, Mr. Spear. I'm actually looking
forward hopefully to meeting her someday. Mr. Moore, I think in
Congress we have a lot of what I would call economic science
deniers, right? At the end of the day, economics is a study.
It's a scientific field; correct?
Mr. Moore: You know, that's a good question. Is it a
science or a theology? I think a little bit of both.
Mr. Burlison. So let me ask you this question. Can we end
poverty by raising the minimum wage? Let's say we wanted
everyone in America to make $50 an hour. Certainly, that would
end poverty, would it not?
Mr. Spear. You know look. My opinion on the minimum wage is
the best way to get wages up in America is to have better-
skilled, better trained, better educated workers. We have the
highest paid workers in the world because, you know, we do have
highly skilled workers and we need to--and by the way, the
other thing you need that really hasn't been talked enough
about at this hearing is you need vibrant, small businesses.
One of your colleagues was saying that 65-70 percent of all
jobs do come from businesses with less than 100 employees. So,
we need to make sure that all the policies are not just
oriented toward labor, but also the people, the employers who
actually provide the jobs in the first place.
Mr. Burlison. Thank you. My time has expired. Thank you.
Chairwoman Foxx. Thank you. Ms. Manning, you're recognized
for five minutes.
Ms. Manning. Thank you, Madam Chairman. Mr. Spear, let me
just start by agreeing with you on one thing, and that is that
the American people do want choice. I believe that was
evidenced by the last election. It's just that you and I, I
think, have a different understanding of what kind of choice
the American people want.
So let me move on, Dr. Shierholz, in my district, we have
seen a surge of jobs growing in advanced manufacturing and
other industries that require skilled labor. In the previous
Congress, I was proud to support bills to expand and streamline
registered apprenticeship programs like the National
Apprenticeship Act. I was also proud to secure funding for
North Carolina A&T State University to implement educational
and training opportunities for people who are not full-time
college students but want to secure education and training in
the STEM fields, so they can fill some of the good, good-paying
manufacturing jobs out there.
What additional steps do you believe we should be taking to
expand access to skilled training and apprenticeship programs?
Dr. Shierholz. So I think things--I'm not a, I'm not a
workforce expert, but I will say things like making sure that
we have good access to union apprenticeships, pre-
apprenticeship programs, which really help with diversity, is a
way to get like women, people of color into the pipeline,
making sure that there's good pathways to--make sure there's
good pathways to good jobs following the apprenticeship.
Then can I say just one other thing? When I think about--
when I think about increasing labor force participation, it's
not just about skills. It's also about making people who have
care responsibilities, have them taking--like an ability to
take care of them so that they can work. So, things like
childcare, paid leave, paternity leave, maternity leave are
also just a crucial like stool, of like what is it called, leg
of that stool to increase our labor force participation.
Ms. Manning. So those wraparound services are things that
make it possible for people to work, and is it--is it true that
we saw more women fail to come back into the workforce during
the pandemic and at the end of the pandemic, and do you
attribute it to those kinds of factors?
Dr. Shierholz. Yes it--you know what? I'm not sure exactly
where it is right now, but we definitely saw that at least at
one point in the pandemic, where you saw women's labor force
participation drop more. Basically, labor force participation
now is essentially back to where it was pre-pandemic, but it
really kept people out during that period, and those with the
care responsibilities were the ones that were hardest-hit. As
we know, that tends to fall on women.
Ms. Manning. So, no matter where I go in my district, from
hospitals, to schools, to farms, to restaurants, I have
employers tell me they simply cannot find enough workers to
hire. Do you believe the lack of pathways to legal immigration
and the virtual shutting down of immigration by the prior
administration has had a negative impact on our workforce?
Dr. Shierholz. It definitely has. You can just see the
numbers, and I think I agree with Mr. Moore here, who also said
that like in order to increase our labor force, one of the
things that we really need is immigration. Like that's a core
part of meeting U.S. workforce needs.
Ms. Manning. Thank you. Let me ask you about another area,
and that is the mental health crisis that millions of Americans
are facing in today's environment. The demand for mental health
services has steadily increased due to--due to the awareness of
COVID-19 pandemic, the opioid crisis. We've had all kinds of
factors attributing to mental health crises, and of course,
we're seeing, particularly with young people, the impact of
social media.
According to the Health Resources and Services
Administration, our national shortage of psychiatrists,
psychologists, and addiction counselors will be extremely
exacerbated by 2035. Can you describe what the economic effects
would be if workers couldn't access the mental health services
they need, and what can we be doing to attract more people to
go into these critical fields?
Dr. Shierholz. That's a fine question, and I'll just say
that we need to make sure that all kinds of health care, mental
health services, other kinds of health care that make it
possible for people to work, that that is there. So it's just
absolutely important that we invest in those things. I think of
the decline in State and local government jobs around this,
where we know that a lot of that is teachers, but a lot of that
is people who provide other services, including things like
mental health services.
We need to make sure that the pay for those jobs is good
enough that it's really attracting people in.
Ms. Manning. Thank you so much. My time is about to expire.
I yield back.
Chairwoman Foxx. Thank you very much. Mr. Kiley, you're
recognized for five minutes.
Mr. Kiley. Dr. Shierholz, you were the chief economist for
the Labor Department during the Obama administration; is that
correct?
Dr. Shierholz. Yes.
Mr. Kiley. And you are a supporter of the PRO Act. You
testified today that it is a crucial reform; is that correct?
Dr. Shierholz. Yes, yes.
Mr. Kiley. And you also testified that anyone who is a bona
fide independent contractor will not be affected by the PRO
Act. Was that your testimony?
Dr. Shierholz. That's right.
Mr. Kiley. So, as you're aware, the legal standard for
independent contracting that is part of the PRO Act has already
been implemented in California under State law, the law known
as AB5. It contains the same ABC test. So, in reaching your
conclusion that anyone who is a bona fide independent
contractor will not be affected by the PRO Act, did you speak
with the independent contractors who have been affected by AB5
in California?
Dr. Shierholz. I did not, but I can look at what the AB5,
the ABC test actually does. It's a three-pronged test that----
Mr. Kiley. I understand.
Dr. Shierholz [continuing]. a bona fide contractor really
would fit under.
Mr. Kiley. My question was whether--I understand. But my
question was whether you spoke with anyone who was affected by
AB5 in California as an independent contractor, and your answer
was no, is that right?
Dr. Shierholz. That's true.
Mr. Kiley. So, I have spoken with many of these folks. I'm
from California, and as a matter of fact, shortly after that
law went into effect, we compiled a whole book of their stories
about how they have been affected by this law. AB5 Stories:
Testimonials of Californians Who Have Lost Their Livelihoods.
This was just in a few days after the law was out there. You
could fill many more volumes by this point.
And so, since you didn't have the opportunity to speak with
those who have been affected in reaching your conclusion that
those who are bona fide independent contractors will not be
affected by the PRO Act, I thought maybe I'd share with you a
few of their stories.
For example, here is testimony from Colleen. Colleen says
``I am a court reporter in California that does depositions. I
do work for many different firms. Two firms have already
notified me that they can no longer give me work. I am the one
who supports my family, and I have been doing this work for
over 30 years. I'm not sure what to do now.''
Dr. Shierholz, does the testimony of Colleen in any way
change your conclusion that anyone who is a bona fide
independent contractor will not be affected by the PRO Act?
Dr. Shierholz. It does not, because one of the things
that's core, is does Colleen want to organize, because that's
what will be affected under the PRO Act. What it does is, it
means that people who are misclassified as independent
contractors, who are not independent contractors will--the only
way it affects them is if they actually want to organize.
That's the thing. So, if there's people who are--yes. If
Colleen wanted to organize, then I could say maybe that would
be an impact.
Mr. Kiley. OK. So, here's another person, Esther. She says
``I help people who don't speak English communicate with
medical providers. I'm a proud senior, independent and self-
sufficient. AB5 leaves me out of work, unprotected and
isolated. It takes away my pride. It was passed without taking
people like me into account.'' Does the testimony of Esther
affect your conclusion that anyone who is a bona fide
independent contractor will not be affected by the PRO Act?
Dr. Shierholz. Not by the PRO Act.
Mr. Kiley. This is from Jody. ``I worked years to gain my
skills in American Sign Language interpreter. It was my goal
since I was 9 years old. After AB5, I lost all three of my
agencies. The dream I worked for is lost. I can't provide for
my family and thousands of California deaf won't be serviced.''
Does the testimony of Jody affect your conclusion that anyone
who is bona fide independent contractor will not be affected?
Dr. Shierholz. I have heard anything that what is going on
in the PRO Act is going to affect those folks.
Mr. Kiley. The PRO Act contains the same ABC test as AB5,
does it not?
Dr. Shierholz. Yes, but it doesn't affect like wage and
hour law. Like it is only for--it only affects your status vis-
a-vis the NLRA.
Mr. Kiley. This is from John. ``I am a guest orchestral
conductor. Because of this bill, I just lost my first scheduled
job with an orchestra, $9,000 that would have been a dent in my
student loans or help pay my insurance, or pay for food and
shelter is now gone, all because of AB5.'' Are you still sure
that adopting this legal standard for independent contracting
on a nationwide basis either for the PRO Act or the Department
of Labor's proposed rule is not going to affect any bona fide
independent contractor?
Dr. Shierholz. Again, we're talking--the PRO Act, the
Department of Labor's rule, the proposed rule that they just
put out, does not implement the ABC rule. So that's not what
we're talking about. We're talking about the PRO Act, which
does implement the ABC rule only for the NLRA and none of the
examples that you have given me----
Mr. Kiley. Thank you.
Dr. Shierholz [continuing]. have had anything to do with
labor laws.
Mr. Kiley. Mr. Spear, you've testified as the head of the
American Trucking Association about the potential losses of
livelihoods from the PRO Act. What were the numbers that you
gave?
Mr. Spear. Well just on ICs alone, you've got 350,000
drivers operating under that model nationwide, 70,000 in
California alone. We're right now short 78,000 drivers. So, you
want to continue inflation at 40-year highs? Start getting rid
of more of our drivers. I guarantee you you're going to pay
double if not triple what you're paying at the shelf right now.
Mr. Kiley. And so, despite whatever limitations Dr.
Shierholz just tried to tell us, you think that these impacts
would be felt as a result of----
Mr. Spear. You've got a live rulemaking over at the
Department of Labor right now that deals with this. So, it's
not just the PRO Act. This is an all-out assault on a 90-year-
old case law supported business model. Why is that? Why is
that? It's because union rates have dropped to half of what
they were in 1983. They're struggling for membership; they're
struggling for dues. So, what better way to change that than to
change the laws, change the rule so you can channel more people
into unions.
I don't care if you're a union member or not. You should
have the right to belong or not belong. That doesn't--just
because you're struggling to organize doesn't mean you get to
change the rules in your favor. These laws have been around for
90 years. NLRA was passed in 1935. FSLA 1938, relatively
unchanged. Why? Because they maintain the balance between
employers and employees.
This is a concerted effort to change that, and the only
reason I can see doing so is to up membership and dues. That's
it.
Mr. Kiley. Thank you. I yield back.
Chairwoman Foxx. Mr. Spear, Mr. Kiley, I'm hoping to get
this hearing done before 1:30 and the votes are coming. So, I'm
going to ask people to please stay within their time. Ms.
Bonamici, you're recognized.
Ms. Bonamici. Thank you, Madam Chair. I'm really
appreciative of the Committee's focus on workforce development.
But I have to say I'm disappointed that many of my colleagues
seem to be decoupling workforce development from workforce
protections, and I really see finding solutions to grow the
workforce and implementing fair labor standards should not be
mutually exclusive. I think that those fair labor standards,
fair wages, safe working conditions, the right to organize,
those should be part of workforce development.
You know last Congress, we passed the Infrastructure and
Investment in Jobs Act and the CHIPS and Science Act, both on a
bipartisan basis. We continue our commitment to American
workers by creating pathways to good-paying family jobs. The
Inflation Reduction Act, for example, lots of jobs there. We
also advanced the bipartisan National Apprenticeship Act
reauthorization in the House, and Committee Democrats also
advanced a comprehensive reauthorization of the Workforce
Innovation Opportunity Act.
So, I just want to note quickly they had a lot of
conversations about apprenticeships, and I know Dr. Shierholz
you mentioned pre-apprenticeships. Those are really critical
too in conversations I've had with pre-apprentices, a huge
deal. Mr. Spear, you correctly described the important role
that truck drivers fill in our economy by delivering critical
goods relied on by families in my State of Oregon and around
the country. So, thank you for keeping our economy moving
forward.
And I'm also glad to see in your testimony you are
recognized as a--you are a registered apprenticeship program
sponsor. Registered apprenticeships are good for workers and
employers because of the high-quality training standards and
strong protections, but also provide a return on investment.
So, your testimony mentioned there were delays in the
registration process.
Well, the bipartisan National Apprenticeship Act helped
streamline that registration process, actually requires that
the Department of Labor give provisional approval within a
month and final approval within a year. Would that be helpful
in access to registered apprenticeships, would it to help fill
the truck driver shortage?
Mr. Spear. Yes. It's instrumental. It's one of the things
that we've promoted and advocated for several years throughout
the Trump administration, Biden administration. Finally got it
done, finally got it done. And by the way, it's an
apprenticeship program. There are union apprenticeship programs
and there are non-union apprenticeship programs.
Ms. Bonamici. Right. I appreciate that, and I want to ask a
question of Mr. Akers. I just wanted to make sure that that
provision was going to be helpful.
Mr. Spear. Absolutely correct.
Ms. Bonamici. Mr. Akers, in my former life I was a
practicing lawyer, and I represented franchisees. So, I very
much appreciate the franchise model. I had a lot of clients who
are franchisees. So, your testimony claims that this PRO Act's
joint employer standard and the standard that the NLRB is
considering reinstating would undermine the franchise
relationship.
But in reality, the joint employer standard was around for
years before, and holds companies accountable only if they
control the employment relationship of another employer's
workers. The wages, the hours, the working conditions. So, I'd
like to ask you a few questions. These are yes or no questions.
Does your franchisor control the hiring and firing of your
employees?
Mr. Akers. No.
Ms. Bonamici. And does your franchisor set your employees'
wages?
Mr. Akers. No.
Ms. Bonamici. And does your franchisor set your employees'
schedules?
Mr. Akers. No.
Ms. Bonamici. OK. So, Mr. Akers, to the best of my
knowledge, the NLRB has never issued a decision finding a
franchisor to be a joint employer of its franchisees'
employees, because that's not the kind of relationship. And in
fact, if your franchisor does not control your employees'
working conditions, does not control those issues, the wages
and schedules, then the joint employer standard doesn't affect
you or other franchisees.
In fact, a strong joint employer standard actually protects
you, because it makes it more likely that franchisors won't try
to control your practices and your employment practices, and if
they do, they'll be on the hook for liability. So that's why
the American Association of Franchisees and Dealers, which is a
franchisee organization, supports the PRO Act's joint employer
standard and supports the current rulemaking that would restore
the Browning-Ferris decision.
So, Madam Chair, I request unanimous consent to enter into
the record letters from the American Association of Franchisees
and Dealers into the record.
Chairwoman Foxx. Without objection.
Ms. Bonamici. Terrific, and I just want to reiterate the
importance of these workforce protections, the right to
organize, the right for fair wages, the right for safe working
conditions, and we have had a conversation today. One of my
colleagues talked about how, you know, wages haven't kept up
with costs. We need to raise the minimum wage. $7.25 is our
national minimum wage, and that's unacceptable, so that's
something we should be talking about as well.
I hope we can work together Madam Chair and Ranking Member
Scott on bipartisan solutions like we did with the National
Apprenticeship Act. I hope we can get that over the finish line
in the House and the Senate, because it's really going to make
a difference not only to the people who go through the
apprenticeships, but also to their families and set a good
example of getting people back to work. So, with that Madam
Chair, I will submit the letters and yield back the balance of
my time.
Chairwoman Foxx. Mr. Good, you're recognized for five
minutes.
Mr. Good. Thank you, Chairman Foxx. Thank you to all of our
witnesses here today, and my questions will be primarily
directed to Mr. Moore. Mr. Moore, I think perhaps the most
under-appreciated in terms of its harm of all Democrat
legislation in the last Congress was the PRO Act, what it would
do to just destroy the gig economy, subcontractors, independent
contractors, you know, require--eliminate secret ballots,
eliminate right to work, I mean force the payment of union dues
from payroll deduction and so much more.
At 10 percent for all sectors on average, the Nation's
union membership is declining thankfully. It's at its lowest
level ever, thankfully. But that is skewed because it's 33
percent for public sector employees, and it's about 6 percent
for private sector. I would submit that public sector union
membership should be illegal. It's contrary to the interests of
the taxpayer, the country and the citizens that we are supposed
to serve, and not to mention the fact that public sector
employees have, you know, highly desirable salaries and
benefits, retirement programs, and job security compared to the
private sector.
Our President promised to be the most pro-union president
in history. He kept that promise, along with his promise to
eliminate reliable energy, his promise to open the border, not
to mention the bonus of the unprecedented spending. The
administration is trying to follow through, is trying to take
action through NLRB and the Department of Labor to implement
provisions of the PRO Act because it hasn't been able to
successfully become law thankfully.
What do you think is the impact of these pro-union
policies, the administration putting their thumb on the scale,
trying to force union membership increase in the private
sector? What do you think is the--what are your concerns on
that impact primarily on businesses and employers?
Mr. Moore. Congressman, I agree with everything that you
just said, that the real problem is public sector unionism. The
problem is you don't have anybody protecting the taxpayer
interests, you know, in the negotiations of the contract.
That's why, you know, most public employees, with respect to
how they compare with their private sector counterparts,
depending on the State or whether it's Federal, get 20 percent
bonus in terms of salaries and much, much higher benefits.
That's not fair to the people who are paying their salaries.
I just want to make it very clear. I don't think anybody in
this room is against unions. Are you against unions?
Mr. Good. I am against unions, yes sir.
Mr. Moore. OK. Well, I mean I----
Mr. Good. I worked in a union shop in college.
Mr. Moore. I believe in the First Amendment, that people
have a right of association. Unions are associations.
Mr. Good. I am not against the right to unionize, but I
think it's a terrible decision when you do.
Mr. Moore. OK, well that's it. But my point is look, I'm
very much--if people want to form a union, if six people want
to get together and collectively bargain, that's your right as
an American. I'm just outraged by the idea that anyone in
America should be forced to join a union.
Mr. Good. That's right.
Mr. Moore. Yes, why? Why should someone be forced to join a
union if they don't want to. I mean pro-choice. So, and just
one last point about this. I mean the evidence is crystal
clear, undeniable. We have half the states in the United States
are right to work states, and half the states are forced union
states. Guess where all the jobs are going, you know? Twice as
many jobs are being created in the states that have right to
work laws.
When I worked at the Wall Street Journal, as I was saying
earlier, we talked to, you know, major employers all the time.
They said you know what? If a State is a forced union State, we
don't even think about putting a factory there and so on. The
tragedy unfortunately, what happened to Michigan just a week
ago, which had been a right to work State and has now turned
into a forced union State, and that's going to really hurt the
great State of Michigan.
Mr. Good. Yes. Businesses and citizens are voting with
their feet and fleeing these terrible blue State, blue
Democrat-run blue states and these pro-union states and going
to right-to-work states, as you said. I would submit that
unions have far outlived their usefulness and this us against
them mentality is just a terrible thing in the workplace, and
again I experienced that as a college kid working in an auto
factory.
I want to switch gears for a moment and talk about the
labor participation rate. You know, the Biden administration
likes to talk about low unemployment. We've got an estimated
seven million able-bodied men ages 25 to 54 not in the
workplace, 11 million open jobs, lowest historical labor
participation rate. How have the elimination of work
requirements and enhanced unemployment, all of that? What are
your thoughts on the policies that have caused the low labor
participation rate over the last couple of years in particular?
Mr. Moore. So, I'm so glad you asked that, because there's
been some misinformation here about the work requirements that
were put in place in 1996, which I said the greatest social
policy achievement we've made in 50 years. So, I'm just going
to really just quickly rattle off the four effects of that
after 8 years, OK, and then you can decide whether you think it
was a success or not.
And these are based on, you know, scientific studies. One,
welfare caseloads were reduced by 60 percent, 60 percent after
welfare reform and work reform was put into effect. Two, 60 to
70 percent of those who left welfare went into jobs.
Mr. Good. How about that?
Mr. Moore. It went into jobs. They got a paycheck. Third,
the CBO and the Congressional Budget Office says that those
reforms saved taxpayers and the Federal Government $50 billion.
In today's dollars, that would be a saving of $100 billion. And
fourth, and maybe most importantly, child poverty fell every
year. Child poverty fell every year after we passed welfare
reform. Somebody tell me how that's not----
Mr. Good. The case is clear. I'm past my time. Thank you,
Mr. Moore. You're exactly right. Thanks for sharing that. I
yield back, Chairman.
Chairwoman Foxx. Thank you very much. Ms. McBath, you're
recognized for five minutes.
Mrs. McBath. Thank you, Chairwoman Foxx and Ranking Member
Scott and your staff, and all of you that are giving testimony
for us today. I'd like to say to my Republican colleagues, if
you truly want to unleash America's opportunities for hiring
and employment, the solution is not to villainize and victimize
our unions and our working people, because oftentimes, you
know, their only real voice is in the workplace.
The real solution to this problem is empowering and
investing in our workers and our workforce development system.
And I look forward to doing that very thing with my Republican
colleagues at the earliest point that we're able to find that
we have an opportunity to do so. However, the solutions that
are being touted by Republicans today will do nothing more than
to solve the major--do nothing to solve the major issues that
are facing our employers.
They'll do nothing to reverse the decades-long trend of
declining public investment in our workforce development
programs and initiatives across the country. Instead, they will
only do more to tip the scale even further against working
families and everyday Americans, who are punching the clock
just to get by. Since it was signed into law in 2014, the
Workforce Innovation Opportunity Act or WIOA has assisted
millions of American workers in learning more about obtaining
the skills and training required to succeed in today's economy.
While this was an important bipartisan step in the right
direction, WIOA has unfortunately never been fully funded and
able to live up to its full potential to serve the American
public. In fact, the Federal Government spends significantly
far less today on workforce development programs than it did
over 20 years ago in 2001.
So, it's vitally important that we reauthorize WIOA and
ensure that this program gets the secured funding necessary to
fulfill its intended purpose. And my bill, the Train for a
Better America Act, which was included in the WIOA Act of 2022
that passed the House last Congress, would assist community
colleges and technical training schools and connecting recent
and upcoming graduates with local employers in high demand
fields, by codifying the Department of Labor's Strengthening
Community Colleges Training Grant Program.
It would take real tangible steps to fix our workforce
pipeline and make it easier on companies that are looking for
talent, and on workers that are seeking to better themselves
through hard work and education. So instead of playing politics
and sending messaging bills to die on the--die with the Senate,
we can expand upon these programs and efforts like this.
Programs that are already on the ground and proven to help
fill the very real workforce shortages in areas like
construction, which we're talking about today and nursing, that
we all hear about when we meet our constituents back in our
districts. I talk to people in my district all the time that
talk about all of the really difficult ways that they're being
able to find work. Well, when they take the time away from
their families to fly up here and to sit in these hearings and
to tell us the same stories.
So, Mr. Spears, I mentioned in my remarks we've seen a
declining investment in our country's workforce programs for
decades. Because of these funding shortfalls, many local
workforce boards are forced to cap the funding mechanisms that
they use to train workers, and this is also, you know, the
ITAs. So, should Congress expand funding to ITAs to help cover
the full cost of these training programs?
Mr. Spear. I think there's a role to play as you consider
reauthorization too, you really have better alignment and
cohesion between the Federal, State and the local workforce
boards, identifying those pockets of need, where those dollars
are going. They're valuable dollars, and they need to be going
to employment sectors that are going to not only to support
that local economy, but State and national economy.
So, I think the alignment and cohesion between Federal,
State and local boards is absolutely essential. Channel that
money as wisely as you can down, and making certain it gets to
people that not only get a job, but a job that's going to
contribute, you know, to the economy going forward is really,
in my view, the essence of WIOA.
Mrs. McBath. And so, the ITAs are only worth about $2,000.
Is that sufficient? Is that enough money to enhance training
for workforce development?
Mr. Spear. We have everything that could cover. You know, a
lot of our training does take more than just that amount. I do
think we have a lot of employers that want to support covering
the cost of employees that, you know, get their CDL, get that
training.
You know, I think there is prioritization at the workforce
boards of truck drivers, for instance, the skills they're going
to need, designating them as essential skills in demand, and
reimbursing them for the cost that it takes to get those CDLs.
Those costs have gone up, and I think the bill needs to reflect
that.
Mrs. McBath. Well, thank you. My time is up. I yield back
the balance.
Chairwoman Foxx. Thank you. Mr. Smucker, you're recognized
for five minutes.
Mr. Smucker. Thank you, Madam Chair. I appreciate the
opportunity to hear from each of our witnesses today regarding
the opportunities that we have to unleash our workforce and get
our economy back on track. Two years into the Biden
administration, we're still facing significant problems
encouraging American workers to return to work.
And in fact, as some of our witnesses have pointed out,
there are roughly ten million open jobs in our country today,
and only about five million people, are looking for employment.
We heard earlier from one of our witnesses that our labor force
participation rate seems to have reached its highest, seems to
be higher than the highest participation rate just prior to the
pandemic.
That same idea was presented by Secretary Yellen at a Ways
and Means Committee hearing. But this chart shows otherwise,
and this chart shows labor force participation rate prior to
the pandemic. You'll see the high. Top is women and men. It
shows that in both cases, we have not achieved the labor force
participation rate that we'd seen prior to the pandemic. This
by the way is millions of workers who haven't returned to work.
We really need more people entering the workforce, rather
than leaving. I do believe there are multiple reasons for this,
but one of the reasons is the Democrat policies that are
disincentivizing work. In fact, as we heard in Mr. Moore's
testimony, if you add up normal unemployment benefits, health
insurance benefits, unemployed individuals in the State that I
represent, Pennsylvania, would receive a benefit equal to an
earned income of $82,888. Now tell me how that encourages work?
You can make a great living just by staying home apparently.
And as I travel around my district and I've heard from all
of you here, workforce shortages are the No. 1 issue that I
hear about from small business owners, followed by inflation
and also supply chain issues. During the pandemic, Democrats
enacted policies in the bloated American Rescue Plan which paid
workers more to stay home than to return to their jobs. In
Pennsylvania, that was about 42 percent, literally could make
more staying at home than returning to their jobs.
I don't fault anyone for making that decision. I've often
said it was a deeply unfair position for the Federal Government
to put families in, to tell workers that to stay home is a
better way to provide for their families. I was encouraged by
some of the comments from my Democrat colleagues, talking about
we all understand the need to return people to work. We
understand the best way out of poverty is to provide an
individual, help an individual connect with a great-paying job.
There's an inherent dignity in that work and it provides
that first rung in that upward ladder of mobility. The current
workforce shortages that we're facing, as I said, are directly
tied to Democrats' failed pandemic-era policies that closed our
businesses, closed our schools and shuttered our economy. All
of our witnesses have agreed that skills development is a
necessary component of our economic recovery, and I believe
that we should enact policies that put job creators and
businesses in the driver's seat, because local businesses know
best what kind of workers and qualifications, they need to fill
those open positions.
I want to just mention a bill I recently reintroduced, the
USA Workforce Tax Credits Act, which would create a new tax
credit for charitable donations to community-based
apprenticeship initiatives, career technical education and
workforce development programs. This legislation is modeled,
it's similar to a K through 12 EITC program in Pennsylvania
that works very effectively, creates strong partnerships
between local businesses and in this case K through 12
programs, and leads to direct benefits for our communities.
For far too long at the Federal level, we focused all of
our dollars only on those individuals who are attending
college. We've encouraged everything to do that. We need to
rebalance that. This would be a way of doing that, while
utilizing those partnerships between businesses and those who
provide those services.
I also want to mention, proud to co-sponsor the Pell Act
legislation, which would expand Pell grant eligibility to high
quality, short-term educational credentialing opportunity.
There is bipartisan support for that. These two pieces of
legislation will expand opportunities for Americans to get
training, so they can start in-demand careers with family
sustaining wages, grow our economic output and our GDP. I think
I'm already out of time. I was looking forward to getting some
questions, but I took all of my time. Thank you for being here.
Chairwoman Foxx. Thank you, Mr. Smucker. Mr. Moran, you're
recognized for five minutes.
Mr. Moran. Thank you, Madam Chair. Mr. Akers, I want to
address you for a few minutes and ask some questions, but
before I do, I just want to thank you for being here on behalf
of the International Franchise Association. I also was a
franchise business owner before I came to Congress and was
privileged to be in the staffing company business and
understand a lot of what's being said today firsthand and have
a lot of great concerns about what I see in the PRO Act, and
what I see with the proposed NLRB rule for joint employers.
It gives me great concern, and it did before I came to
Congress. As a small business owner, what I found out pretty
quickly was if I had good control on the local level, and if my
business was able to do better, I had better opportunity, more
opportunity to do better for my employees. In fact, that's what
we did. Whether it was through rent assistance or clothing or
pay advances or frankly even purchasing automobiles for people
so they can have reliable transportation.
As the employer of record, I wanted to do that for my
employees because I could build into them, and then that
created a partnership between my employees and me, and it
created longevity in that relationship. I didn't need the
government to tell me what a minimum wage should be, because
frankly the market set that. I wanted to pay folks enough so
that they could stay, and they would stay and be loyal to me,
and provide a great service to our community.
As a result, we would place hundreds of people in work
daily in multiple states, and I was proud to be able to do
that. So, I want to go back to you and talk to you about your
statement and your written statement that says, ``Franchising
is perhaps the most important business growth strategy in
American history.'' Tell us a little bit about what you've seen
firsthand, about what that franchise business model allows you
to do for your employees and for your clients?
Mr. Akers. Oh, great question. Thank you for that. We love
our employees. Our employees are part of our family. We take
care of them like they are family members. My wife's title on
her business card is chief hugs officer, and every month she
goes around to all the salons and talks to the staff. So, we
pay above normal wages. We've got--I've got stylists that
barely graduated high school that are making 65 to 80 thousand
dollars a year plus a full slate of benefits including 401(k),
which I contribute to, and recently we went out and bought a
daycare so we could subsidize daycare for our single moms and
so on.
So, we really believe we give them the best we possibly
can. We do lend money, do payroll lending. We allow them, we
allow them to buy products that they can pay over a period of
time for, you know, tools and things like that. We have loaned
literally hundreds of thousands of dollars to our staff for
those short-term issues with rent and things like that. I mean
it really is a big family where we're helping each other out.
When you put more regulation on that as I mentioned before
that money got to come from somewhere. Truthfully, the same
thing happened with Obamacare, because we were giving amazing
care to our staff, and we had to take--we didn't take it back,
but we were forced into a pigeonhole with what was offered,
that didn't meet what we were already doing. But by law, we
were regulated to do it.
Mr. Moran. So, if we take away this franchise business
model, who is it that's going to be harmed the most, and who is
it that benefits? Because I think that that informs really the
behind-the-scenes motivation for this push.
Mr. Akers. Well, you're going to stifle the growth of
business. Why would people buy a franchise when they're going
to be under that kind of regulation? But mainly you're going to
hurt employees, because we create jobs. We've created hundreds
of jobs in the last few years by opening new locations and so
on, and there is really no incentive to do that once you put
this in place.
I was a proud union member when I was very young for about
6 months, and I discovered I could go down the road and get the
same job for the same money or more money, and frankly right
now there are jobs available on every corner in Iowa and
Nebraska. So, if somebody wants a better-paying job, even if
they're not skilled in that area they can go down the road. Our
staff stays with us long term, because they can't find what we
offer anywhere else.
Mr. Moran. And Dr. Shierholz earlier said, and I wrote this
quote down. We need to ``get more minorities into the pipeline,
the pipeline of owning businesses.'' Do you think that the
franchise business model provides those opportunities for
minorities, for women, for veterans to start a business and to
begin a business and to grow a business?
Mr. Akers. The percentages are clear. IFA did a study a
couple of years ago, Oxford Economics. The percentages are much
higher. I think it's 25 percent owned by people of color, as
opposed to 19 percent in the normal world we look at in
business. Profitability is higher, revenue is higher, and it
allows people who couldn't go out and open their own business a
pathway to do that, which is why there's a much larger
percentage of the underserved population going into the
business world.
Mr. Moran. Well Mr. Akers, I certainly appreciate what
you've done for your employees, for your clients, and your
testimony here today. I completely agree with you. I think this
business model's imperative to allowing folks an easier way
into owning their own business down the line.
Mr. Akers. And if I could tag on that, this FTC franchise
rule is the No. 1 way you protect business owners when they're
looking at becoming a franchisee, that you know what the
revenue is, you know what the profits are because of the
guidelines that are covered under the FTC franchise rule. So as
an entrepreneur, I can make a logical decision about buying a
business or going to another one.
Mr. Moran. Thank you, Mr. Akers. I yield.
Chairwoman Foxx. Thank you very much. Mr. Scott, you're
recognized for five minutes.
Mr. Scott. Thank you, Madam Chair. A lot has been said
about the PRO Act, and how it makes the--undermines the right
to work law. The PRO Act does not require you to join a union.
It does require you to pay your fair share of the expenses
generated, the things you benefit from when the union hires
lawyers and accountants, and you get higher pay or if you get
individual representation, because they provide individual
representation to union members.
Those costs cost money and the PRO Act just requires you to
pay your fair share of those expenses. Not the cost of the
holiday party or the union cookout in the middle of the summer
or voter registration activities. Those things that you're
actually benefiting from, but you're not required to join the
union.
Ms. Shierholz, on independent contractor we've heard a lot.
If you're misclassified as an independent contractor rather
than an employee, do you lose you right to minimum wage and
overtime?
Dr. Shierholz. Yes, you do.
Mr. Scott. Do you lose your right to unemployment insurance
if you lose your job?
Dr. Shierholz. Yes, you do.
Mr. Scott. And worker's comp if you get hurt on the job?
Dr. Shierholz. You lose that too.
Mr. Scott. So, who is actually choosing to classify people
as independent contractors?
Dr. Shierholz. It's a good----
Mr. Scott. We hear that--it sounds like the employees are
choosing, wanting to be independent contractors. Is that the
case?
Dr. Shierholz. What we see is that workers, when they are
misclassified as independent contractors, lose thousands every
year like truckers. We did an analysis, I can put it in the
record, that truckers lose 11 to 18 thousand dollars a year
when they're misclassified as independent contractors. It is
not a model that works for workers.
We don't have any workers on this panel. If we asked the
workers, we know what they know that they lose, and then the
other thing that I just wanted to make sure to correct, because
there were some mistakes talked about. There was a comment that
the joint employer rule, that the NLRB joint employer rule
would cost franchisors $33 billion. That was an IFA study that
was terribly designed. It had a sample size of 54 and they were
all IFA members.
So, we did a really rigorous analysis showing that the NLRB
joint employer rule would raise wages for workers by $1
billion.
Mr. Scott. Thank you. We've heard social supports. People
don't work because they're getting social support. Was there a
study done about the impact of some states eliminating the $600
plus up for unemployment compensation, and other states not
doing it? What was the result?
Dr. Shierholz. Yes, that's one of the things. If it were
true that pandemic unemployment insurance benefits really were
keeping people out of the labor force en masse, then you should
have seen a flooding back into the labor force once those
things expired, and that did not happen. If you look at like a
time series of what happened with the labor force when pandemic
unemployment insurance expired, you can't see a blip. It just
does not show up. It did, it was not the thing that was keeping
people out of the labor force. It was the pandemic.
Mr. Scott. Is there any evidence that raising the minimum
wage gradually costs jobs?
Dr. Shierholz. What we know from the vast evidence in labor
economics of what the economic impacts of increasing the
minimum wage is that they raise wages, they reduce inequality
and they do not cause substantial job loss.
Mr. Scott. Now we've heard a lot of disparaging comments
about today's economy. I'd just refer people to the chart
behind me, the pre-pandemic economy versus the post-pandemic
economy. Can you make any comments, and I'll also point out
that President Biden produced almost 500,000 jobs a month
during a pandemic, when President Trump was losing a record
number of jobs during the pandemic, and he did it--President
Biden did it while he was lowering the deficit? Can you make
any comments about the relative economy?
Dr. Shierholz. Yes. One of the things that we've heard is
that the Trump--the economy going like at the end of the Trump
administration was really strong. That's actually true, but it
wasn't because of Trump policies. Trump inherited an
unemployment rate that was steadily going down, an employment
rate that was steadily going up.
If you look at those time series, you can't see where Trump
took office. Nobody gets to take credit for just sustaining an
existing trend. Then what we do know is that the Biden
administration, with like the American Recovery Plan,
absolutely drove the incredibly strong jobs recovery that we
have.
Mr. Scott. Thank you, Madam Chair. Yield back.
Chairwoman Foxx. Thank you very much, Mr. Scott. Mr. Spear,
with nearly 11 million unfilled jobs in the United States, many
critical industries are facing a significant shortage of
skilled workers. Yet only a third of individuals in the WIOA
program are participating in skilled development activities,
with some local workforce boards spending less than 20 percent
of their funding on reskilling workers.
Do you agree that WIOA must place a greater emphasis on
skills development if we're going to address our Nation's
worker shortage?
Mr. Spear. I do. I do, Madam Chair. I'm very fond of this
law. I actually worked on it back in 1998 when it was called
WIA, Workforce Investment Act, and it's an evolution. This is a
law that needs to reflect the latest trends in your workforce.
Just keeping up on innovation is tough enough for Congress.
It's happening so fast.
You know, we didn't predict that we'd have a global
pandemic, and it caused a lot of shifts in our workforce, and
our business model in trucking for that matter, and how we
serve people that order everything now from home, and they want
it in less than 2 days. So, these shifts are really recent. So,
updating this law and empowering those local workforce boards
to really focus on the segments of the workforce that got us
through the pandemic, that matter most, that pay well with
benefits.
We're not paying minimum wage in trucking. We're paying
nearly 70 grand plus benefits, and we're talking paid holidays,
paid leave, lodging, meals and incidentals, life insurance,
health insurance and retirement plans. This is a good
occupation.
Chairwoman Foxx. Thank you. Thank you, Mr. Spear. Mr.
Akers, very quickly, because I'm running out of time. Very
quickly, our economy needs small business owners like yourself,
and many of your franchisees. Give me two of the most
significant workforce challenges you face as a franchise owner.
Just name them.
Mr. Akers. Two. Staffing, No. 1. No. 2 is regulations that
we're already putting in place ways to deal with.
Chairwoman Foxx. Right. Thank you very much. Mr. Moore,
just now my colleague from Virginia, has talked about pre-
pandemic and post-pandemic job numbers. By the chart, they've
compared the jobs record of the Trump and Biden administration.
At the beginning of the hearing and now again, what are your
thoughts about their characteristics of the Biden and Trump
administration, in terms of the job record?
Mr. Moore. Well, I'm looking at the chart. You know, the
problem of course is we lost, I don't even know how many. How
many jobs did we lose during the pandemic? I mean it was in the
millions of jobs. So, you know, obviously that changed
everything. Trump had a very, very positive jobs record until
COVID hit.
So, I guess that's my attitude. Look, I do think that if
you look at what happened, there were two factors that really
affected employment. One was obviously the shutting down of the
economy, and the blue states remained closed much longer than
the red states did, and the other factor is the supplemental
unemployment benefits and other benefits that were five or six
additional--if you look at my testimony, you'll see during that
period, people could make like well over $100,000 in all the
benefits that we were providing for people not work.
One piece of evidence that it really mattered was that when
red states got rid of the supplemental benefits faster than
blue states did, their unemployment rates went down, and the
blue states' benefits stayed high.
Chairwoman Foxx. Thank you very much. I also want to point
out that in your testimony, you talked about there being
dignity in work. I cannot agree more. I believe that work is
inherently dignifying. However, too many Americans were
encouraged to stay out of the workforce following the pandemic,
and I think it's important that we now encourage people again
to get back into the workforce, because the long-term benefits
of work, as you pointed out with the welfare reforms that were
made in the 1990's--under the Clinton administration in 1996, I
think it changed people's lives for the better. I yield back my
time.
I want to thank our witnesses again for taking the time to
testify before the Committee today. It's been a very energetic
set of testimonies and questions. Without objection, there
being no further business, the Committee stands adjourned.
[Additional submission by Ms. Bonamici follows:]
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[Additional submission by Ms. Leger Fernandez follows:]
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[Whereupon, at 1:38 p.m., the hearing was adjourned.]
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