MSGI Congressional Hearing Recap - House Small Business Committee Hearing "Jobs! Jobs! Jobs!"

MSGI Congressional Hearing Recap

Committee: Committee on Small Business Subcommittee on Innovation, Entrepreneurship, and
Workforce Development

Hearing Title: Jobs! Jobs! Jobs!

Subcommittee Chair: Representative Jason Crow (D-CO)

Ranking Member: Representative Young Kim (R-CA)

Date: June 30, 2021

Witnesses

Mr. John R. Dearie
President
Center for American Entrepreneurship
Testimony 

Dr. J.D. LaRock
President and Chief Executive Officer
Network for Teaching Entrepreneurship
Testimony 

Ms. Denyse Airheart
Business Pathways Director
Mi Casa Resource Center
Testimony 

Mr. Craig Etkin
President and Chief Executive Officer
Intelligence360
Testimony 

Main Issues Discussed

Reaching Underserved Communities

• Chair Crow (D-CO) Questions: 
• Ms. Airheart, what is the primary barrier that entrepreneurs face when starting a business
• Response: Systemic issues in the community. For example, the Latinx population want to work together, but there is a lack of leadership. We work to shepherd individuals through training, looking at access to capital. Many individuals in underserved areas do not see leaders who look like them. 
• Can you expand on "support ecosystems?” 
• Response: Yes, they can be modeled in different ways, such as peer to peer connection. Ultimately you want to see the stickiness: they can hire locally, invest locally, retain local talent. Support ecosystems build the steppingstones. We are looking for business not to leave distressed communities but reinvest in them. 
• Rep. Phillips (D-MN) Question:
• Only 3 urban areas in the country account for 80% of all venture capital investment: Silicon Valley, New York City, Boston. Mr. Dearie, what role can Congress play to help with distribution of this funding to areas that are starved of it?
• Response: We hear this problem at every roundtable. There is not an equitable distribution of venture capital funding. I suggest the provisions found in the New Business Preservation Act. It creates a program where public funds are matched with private dollars in a 1 to 1 match in heartland states. 
• Dr. LaRock, what specific steps can Congress take to inspire young people for entrepreneurship?
• Response: The foundational concepts of the Next Generation Entrepreneur Corps Act (NextGen). I also think that our education system, including high schools and middle schools, need to start integrating career exploration. There needs to be more funding for youth entrepreneurship. 
• Rep. Newman (D-IL) Question: 
• Mr. Dearie and Dr. LaRock, what are the top 3 issues that Congress can address?
• Response from Mr. Dearie: First, entrepreneurship remains white and male. As a pathway to economic empowerment, we need to place priority in making entrepreneurship more inclusive. Following that, access to capital and access to properly skilled people.
• Response from Dr. LaRock: Focus effort on disparities that exist, we must build in equity. I also believe that mentorship is vital, as well as opportunities in the education system, such as community colleges. 
• Rep. Bordeaux (D-GA) Question:
• Ms. Airheart, are there things that we could be doing to help with minority owned businesses better access programs?
• Response: Yes, we must create awareness of what is available. Funding for programs like the women’s business centers is critical because these programs are accessed by the new builders of the new America. 

Problems with Job Creation

• Ranking Member Kim (R-CA) Question: 
• There has been difficulty finding workers for jobs. Mr. Dearie, can you elaborate how we can increase worker’s skills and help them develop new ones?
• Response from Mr. Dearie: Access to skilled workers is equally as important as access to capital. The U.S. educational system is failing to produce sufficient workers. STEM education is important as is the great underused education system: community colleges. There needs to be more communication between businesses and educators. 
• Response from Dr. LaRock: Career and technical education is important.

Burdens on Entrepreneurs

• Chair Crow (D-CO) Question:
• Ms. Airheart, what barriers should we remove, and what would that look like? 
• Response: Many entrepreneurs must make the choice between going to college or starting a business because of student loan debt. Costs and lack of access to childcare are also incredibly challenging to women. Also, financial education: many people lack the skills and confidence to pursue capital investment.
• Rep. Garbarino (R-NY) Question: 
• Many of the businesses in my district have left because of bad infrastructure, Mr. Dearie, what do we start with?
• Response: Physical infrastructure is very important, but so is childcare. In WW2 we had a national childcare system because women were working, this led to a booming economy. 
• Mr. Etkin, costs of goods are high, what are we hearing about inflation from small businesses
• Response: It has been shocking to see the price differences on lumber and steel. Our timelines are disrupted, but this is a complex issue – not based only on one policy.
• Ranking Member Kim (R-CA) Question:
• How will sharply increasing taxes hinder small businesses from growing or hiring people?
• Response from Mr. Dearie: The broad consensus is that we need to invest more in infrastructure, but the tax issue we hear is on tax complexity rather than marginal rates. People struggle with the constant uncertainty. 
• Response from Mr. Etkin: I get feedback that now is not the time to handcuff business and job creators with taxes. We need to focus on critical infrastructure - when you move outside of that, you put into question the priority of bringing back jobs.
• Dr. LaRock, what price pressures would you like to see eliminated?
• Response: The proliferation of regulation. More than taxes, regulatory burdens, and administrative burdens. 

SBA Role in Reversing the Decline of Entrepreneurship

• Rep. Bordeaux (D-GA) Question:
• Mr. Dearie, can you elaborate on why the decline in entrepreneurship is happening?
• Response: The research shows the decline on new businesses is pervasive- happening in all 50 states, all but 50 metro areas, all industry sectors. We don’t understand why this is happening. 
• Chair Crow (D-CO) Question:
• Mr. Dearie, how is access to SBA capital better for entrepreneurs than access to traditional/commercial lenders? 
• Response: Banks are not the ideal source of capital for startups. Banks don’t want to damage the balance sheets. SBA bridges the gap between venture capital and angel investment type of funding and banks by assuming some of the risk.