Washington, D.C. - U.S. Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, today held a hearing titled “Small Business and the American Worker.”
A video of the hearing can be found here. A broadcast quality version of his opening remarks can be found here.
Key excerpts of the hearing are highlighted below:
Chairman Rubio: “Both in your opening statement and the book that has gotten a lot of attention, you make the fundamental argument that American policymakers have been hyper-focused on consumer prices, raising standards of living, and redistributing income. When, in fact and all this focus on just growing the economy at any cost, but that that focus is the wrong one. That instead our focus should be on creating dignified work that supports strong families and communities and that that ultimately is what leads not just to sustainable economic growth that is positive and raising standards of living and the like, but it also leads to long term prosperity. So I just wanted to give you a chance to outline. To a lot of people that is a different construct than they perhaps heard, certainly from my side of the aisle in many cases.”
Oren Cass: “Sure, thank you Senator, and thank you Senator Romney for that. You know, I’ve likened our situation our situation to the romantic comedy heroine in the generic trailer who has it all, or so she thought. You know, she has the car and the apartment, and yet something is missing. And what we’ve found, I think, if you look at our economic data, is that on the terms we’ve set of growing the economic pie of raising material living standards, we’ve succeeded. The economy has grown enormously, we redistribute more than ever to the lowest income households, and everyone’s material living standards have risen. And yet, in conjunction with that, we see all of these very serious maladies, whether you are talking about collapsing families and communities, declining personal health, declining life expectancy, exit from the labor force, and so on and so forth. And I think what we’ve lost is the recognition that what is ultimately most important to individuals and what provides the basis for our communities, for our families, and for the economy, ultimately, isn’t how much you can consume. It’s your opportunity to engage as a productive contributor in society. And I think in our single-minded focus on just consumption, we’ve actually managed to erode to a significant degree the health of the labor market that provides the real foundation for a healthy society and so, it comes down to a lot of choices we make on a whole bunch of different dimensions and trade offs that we face and that we need to take a hard look at if we want to really make sure that, first and foremost, we are giving everybody the opportunity to, I would say, achieve what truly is the American Dream, which isn’t in terms of how big your television is. It’s about being able to a lot of times grow up in the community that you grew up in, to stay there, to build a family, to support it, to contribute, to save for your kids, to set them on a path to success as well. And I think we are going to have to make some sacrifices elsewhere on the consumption front if we really want to put that front and center.”
...
Senator Josh Hawley (R-MO): “Thank you Mr. Chairman and Ranking Member thank you for calling this very important hearing. I just want to pick up right there. It seems to me something you just said Mr. Cass is very important, which is that, we essentially have at this point in this country an educational system and job system that pushes folks towards going to college, which is great. But if you do not come from the right background where you have advantages that get you there, then you are essentially left on your own. Too often I think we have an economy where increasingly we say to folks who have not gotten a four year degree “Good luck to you,” but you know, we can’t promise a good paying job, we can’t promise you’ll be able to find any good work, and we talked endlessly about getting better jobs for folks who have college degrees, but what about those who don’t have college degrees? And I come from a state in which most folks have not gotten a four college year degree but they still want good work and they still deserve good work, and our communities and families still depend on the availability of good work. So I think my question is, and I’ll just pose it to the panel and I’ll just start with you Mr. Cass and just go down the line, what should we be doing in order to ensure that we have a labor market that can provide good honest paying jobs for folks who do not have a four year college degree and who do not live in one of these metropolitan hubs on the coast, but who maybe come from a state like mine, that is majority rural or majority ex urban, who still want to have communities that are prosperous, who want to be able to support and raise a family, but who want to do that without having to move to someplace else, and for who a four year college maybe wasn’t available for them or not for them but yet they still want to have access to good, quality, meaningful work.”
Oren Cass: “Well I think that's an excellent question, I would mention a few things. I think education certainly has to be on the top of the list and I liked how you described it, which is, people get the age 17 or 18 from whatever background they come from with the aptitudes and preparation that they have, and absolutely we should be talking about how to do better reform in society as a whole to make sure we get people to that level as prepared for success as possible. But to the extent that we are not, I think it's a mistake to just wish that we were and proceed from there. Given where people arrive at age 17 or 18 today, providing with them with more of the apprenticeship type pathway that we’ve heard I think is critically important. And frankly investing federal money that would otherwise go to the kids who are in college, I’d rather see us investing in the kids who aren’t headed for college, in a sense. So I think that is very important. And then one other thing I’d mention is just our regulatory infrastructure right now wildly undervalues working physical economy, whether farming, whether its infrastructure, construction, resource extraction, manufacturing and favors finance and technology. We shouldn’t surprised that that is where all the investment goes, and I think we need to recognize and put a much higher premium on the value of the work that people due in the physical economy.”
...
Chairman Rubio: “Mr. Cass, the strategy of productive pluralism that you described. I think could have some interesting implications for small business. If the primary focus of labor market policy is on connection, if that’s what we made it, connecting workers, especially young workers to productive employment that’s consistent and build skills, then it seems that might entail greater engagement with small business and entrepreneurs. I wonder if you could just discuss that because it sounds like that’s tailor made for connecting workers to the need of small businesses, start-up businesses in unique industries.”
Oren Cass: “Yeah, I think that’s right, I think there’s two things I would say about the special relevance to small business here. One is to recognize the role that small businesses play in the ecosystem of a local economy. You know, Dr. Stevenson rightly pointed out that a very small share of overall employment is in manufacturing, for instance. But when you step back, and look at what the ecosystem of a local economy and what you tend to have is few large employers, some of whom need to actually be sending something out to the rest of the world, and that then supports a much more robust and vibrant service sector around it. So I always say, we can’t all serve each other coffee. And so to have a vibrant small business sector, it can’t simply all be for instance, child care providers providing child care for each other, we need to make sure that the economy is one in which the types of business that small businesses are likely to engage in, can still connect to larger multinational, nationwide companies, and that is where a lot of their growth and productivity gains are likely to come from. So, small businesses as kind of a key component of local economies in particular is very important. And then the second thing I’d say and this goes back to what we were speaking about a moment ago with respect to education is that small businesses are in a tough place when it comes to training. You know, a small business might need to hire one person every year or two, they can’t run a gorgeous global training program with you know, three off-sites a year for their one worker per year. So, for small business in particular, it is really important to have structures at the local level that allow multiple small businesses to come together to collaborate with larger businesses, a little bit like Ms. York was describing, where you design the curriculum, maybe it is hosted at the community college, and then all the small businesses that need a particular skill set have access to those trainees. And so having small businesses being able to collaborate in that respect is critical to having them be able to take on new workers where they are not going to be able to invest in a full training program themselves.”
Chairman Rubio: “It’s really impossible to talk about work today without automation and when people think of automation they tend to think of a robot or computer that was going to replace their job entirely. You, and I guess I can open this up to the entire panel. I know you Mr. Cass have a different view on this, perhaps those of you have different views on this, but how should workers understand both the challenge and the opportunity embedded in automation and in technology which does, as always create the potential for displacement but it also creates the potential of increased productivity and thereby higher pay, and new fields opened up. As you talk to people particularly in the small business world, but even in larger firms and there's just a lot of fear among workers that they’re going to be replaced by a robot. So what’s the best way for us to focus on that, particularly as it impacts entrepreneurship and start-ups?”
Oren Cass: “I will say one thing about it. I realize the more I talk about this that we have a real problem that we anthropomorphize robots. And so it sounds like it could make sense to say that a robot could take your job. But a robot is just a new form of technology, you would never say electricity took my job, that would sound ridiculous. You would never say many of the sort of technological breakthroughs that have made people more productive over time, took your job. It happens that the kinds of robots we are picturing look more like a worker. But at the end of the day, the effect is the same. As Dr. Stevenson said, rarely do they actually replace the person, they replace some portion of the person’s tasks. And so the key is going to be for workers to collaborate with technology, and to recognize that the technology is what makes the worker more productive. I think that one other thing we could focus on as we talk about it and as policymakers talk about it, is to realize that workers are actually the constraint on how quickly we can deploy the technology. That when we talk about these jobs with we can’t find the worker for the job, or we say jobs are going to change in these ways and workers are going to have to catch up, that’s not actually true. Jobs can only change as quickly as we have workers to fill them. And one way of understanding the skills gap and these other challenges we have right now, is that businesses have designed processes and tried to deploy technologies for which the workforce is not ready. So one effect of that is that it is going to slow down the rate at which automation actually happens. But second is to reconfirm the fact that this is going to accrued to the benefit of workers and really finding ways to design technology for the workers we have and equip workers to work with that technology is going to be the secret sauce for a labor market that thrives.”
John Lettieri: “Count me in as an automation apocalypse skeptic. I don’t think there’s evidence to back up many of the concerns that we hear thrown around about the rise of automation as it relates to replacing workers. To Oren’s point there are very few jobs that can actually be replaced in full by a robot of any form. I think the key is that we’re missing the kind of safety net that robust business dynamism used to provide. We’ve always had industries and jobs being phased out of our economy that’s always been true. Productivity gains by definition are displacing of some future potential worker as we get more efficient at doing certain things. The difference is we haven’t felt that in previous eras because we’ve had a more robust firm entry that’s caught more of those being left out of certain jobs or taken out of certain industries and brought them back into productive use. So areas of the country that are particularly undynamic are the ones not with high death rates of firms but with incredibly low birth rates of firms. That’s one of the major things that’s missing as we think about the worker piece of all this. We need to think about the entrepreneur as well. Incumbent business tend to shed jobs on net every year, as a whole, of any size. And where get net job creation is disproportionately from new businesses. When that fades that’s the engine of job creation, that’s the missing safety net for workers.”
A video of the hearing can be found here. A broadcast quality version of his opening remarks can be found here.
Key excerpts of the hearing are highlighted below:
Chairman Rubio: “Both in your opening statement and the book that has gotten a lot of attention, you make the fundamental argument that American policymakers have been hyper-focused on consumer prices, raising standards of living, and redistributing income. When, in fact and all this focus on just growing the economy at any cost, but that that focus is the wrong one. That instead our focus should be on creating dignified work that supports strong families and communities and that that ultimately is what leads not just to sustainable economic growth that is positive and raising standards of living and the like, but it also leads to long term prosperity. So I just wanted to give you a chance to outline. To a lot of people that is a different construct than they perhaps heard, certainly from my side of the aisle in many cases.”
Oren Cass: “Sure, thank you Senator, and thank you Senator Romney for that. You know, I’ve likened our situation our situation to the romantic comedy heroine in the generic trailer who has it all, or so she thought. You know, she has the car and the apartment, and yet something is missing. And what we’ve found, I think, if you look at our economic data, is that on the terms we’ve set of growing the economic pie of raising material living standards, we’ve succeeded. The economy has grown enormously, we redistribute more than ever to the lowest income households, and everyone’s material living standards have risen. And yet, in conjunction with that, we see all of these very serious maladies, whether you are talking about collapsing families and communities, declining personal health, declining life expectancy, exit from the labor force, and so on and so forth. And I think what we’ve lost is the recognition that what is ultimately most important to individuals and what provides the basis for our communities, for our families, and for the economy, ultimately, isn’t how much you can consume. It’s your opportunity to engage as a productive contributor in society. And I think in our single-minded focus on just consumption, we’ve actually managed to erode to a significant degree the health of the labor market that provides the real foundation for a healthy society and so, it comes down to a lot of choices we make on a whole bunch of different dimensions and trade offs that we face and that we need to take a hard look at if we want to really make sure that, first and foremost, we are giving everybody the opportunity to, I would say, achieve what truly is the American Dream, which isn’t in terms of how big your television is. It’s about being able to a lot of times grow up in the community that you grew up in, to stay there, to build a family, to support it, to contribute, to save for your kids, to set them on a path to success as well. And I think we are going to have to make some sacrifices elsewhere on the consumption front if we really want to put that front and center.”
...
Senator Josh Hawley (R-MO): “Thank you Mr. Chairman and Ranking Member thank you for calling this very important hearing. I just want to pick up right there. It seems to me something you just said Mr. Cass is very important, which is that, we essentially have at this point in this country an educational system and job system that pushes folks towards going to college, which is great. But if you do not come from the right background where you have advantages that get you there, then you are essentially left on your own. Too often I think we have an economy where increasingly we say to folks who have not gotten a four year degree “Good luck to you,” but you know, we can’t promise a good paying job, we can’t promise you’ll be able to find any good work, and we talked endlessly about getting better jobs for folks who have college degrees, but what about those who don’t have college degrees? And I come from a state in which most folks have not gotten a four college year degree but they still want good work and they still deserve good work, and our communities and families still depend on the availability of good work. So I think my question is, and I’ll just pose it to the panel and I’ll just start with you Mr. Cass and just go down the line, what should we be doing in order to ensure that we have a labor market that can provide good honest paying jobs for folks who do not have a four year college degree and who do not live in one of these metropolitan hubs on the coast, but who maybe come from a state like mine, that is majority rural or majority ex urban, who still want to have communities that are prosperous, who want to be able to support and raise a family, but who want to do that without having to move to someplace else, and for who a four year college maybe wasn’t available for them or not for them but yet they still want to have access to good, quality, meaningful work.”
Oren Cass: “Well I think that's an excellent question, I would mention a few things. I think education certainly has to be on the top of the list and I liked how you described it, which is, people get the age 17 or 18 from whatever background they come from with the aptitudes and preparation that they have, and absolutely we should be talking about how to do better reform in society as a whole to make sure we get people to that level as prepared for success as possible. But to the extent that we are not, I think it's a mistake to just wish that we were and proceed from there. Given where people arrive at age 17 or 18 today, providing with them with more of the apprenticeship type pathway that we’ve heard I think is critically important. And frankly investing federal money that would otherwise go to the kids who are in college, I’d rather see us investing in the kids who aren’t headed for college, in a sense. So I think that is very important. And then one other thing I’d mention is just our regulatory infrastructure right now wildly undervalues working physical economy, whether farming, whether its infrastructure, construction, resource extraction, manufacturing and favors finance and technology. We shouldn’t surprised that that is where all the investment goes, and I think we need to recognize and put a much higher premium on the value of the work that people due in the physical economy.”
...
Chairman Rubio: “Mr. Cass, the strategy of productive pluralism that you described. I think could have some interesting implications for small business. If the primary focus of labor market policy is on connection, if that’s what we made it, connecting workers, especially young workers to productive employment that’s consistent and build skills, then it seems that might entail greater engagement with small business and entrepreneurs. I wonder if you could just discuss that because it sounds like that’s tailor made for connecting workers to the need of small businesses, start-up businesses in unique industries.”
Oren Cass: “Yeah, I think that’s right, I think there’s two things I would say about the special relevance to small business here. One is to recognize the role that small businesses play in the ecosystem of a local economy. You know, Dr. Stevenson rightly pointed out that a very small share of overall employment is in manufacturing, for instance. But when you step back, and look at what the ecosystem of a local economy and what you tend to have is few large employers, some of whom need to actually be sending something out to the rest of the world, and that then supports a much more robust and vibrant service sector around it. So I always say, we can’t all serve each other coffee. And so to have a vibrant small business sector, it can’t simply all be for instance, child care providers providing child care for each other, we need to make sure that the economy is one in which the types of business that small businesses are likely to engage in, can still connect to larger multinational, nationwide companies, and that is where a lot of their growth and productivity gains are likely to come from. So, small businesses as kind of a key component of local economies in particular is very important. And then the second thing I’d say and this goes back to what we were speaking about a moment ago with respect to education is that small businesses are in a tough place when it comes to training. You know, a small business might need to hire one person every year or two, they can’t run a gorgeous global training program with you know, three off-sites a year for their one worker per year. So, for small business in particular, it is really important to have structures at the local level that allow multiple small businesses to come together to collaborate with larger businesses, a little bit like Ms. York was describing, where you design the curriculum, maybe it is hosted at the community college, and then all the small businesses that need a particular skill set have access to those trainees. And so having small businesses being able to collaborate in that respect is critical to having them be able to take on new workers where they are not going to be able to invest in a full training program themselves.”
Chairman Rubio: “It’s really impossible to talk about work today without automation and when people think of automation they tend to think of a robot or computer that was going to replace their job entirely. You, and I guess I can open this up to the entire panel. I know you Mr. Cass have a different view on this, perhaps those of you have different views on this, but how should workers understand both the challenge and the opportunity embedded in automation and in technology which does, as always create the potential for displacement but it also creates the potential of increased productivity and thereby higher pay, and new fields opened up. As you talk to people particularly in the small business world, but even in larger firms and there's just a lot of fear among workers that they’re going to be replaced by a robot. So what’s the best way for us to focus on that, particularly as it impacts entrepreneurship and start-ups?”
Oren Cass: “I will say one thing about it. I realize the more I talk about this that we have a real problem that we anthropomorphize robots. And so it sounds like it could make sense to say that a robot could take your job. But a robot is just a new form of technology, you would never say electricity took my job, that would sound ridiculous. You would never say many of the sort of technological breakthroughs that have made people more productive over time, took your job. It happens that the kinds of robots we are picturing look more like a worker. But at the end of the day, the effect is the same. As Dr. Stevenson said, rarely do they actually replace the person, they replace some portion of the person’s tasks. And so the key is going to be for workers to collaborate with technology, and to recognize that the technology is what makes the worker more productive. I think that one other thing we could focus on as we talk about it and as policymakers talk about it, is to realize that workers are actually the constraint on how quickly we can deploy the technology. That when we talk about these jobs with we can’t find the worker for the job, or we say jobs are going to change in these ways and workers are going to have to catch up, that’s not actually true. Jobs can only change as quickly as we have workers to fill them. And one way of understanding the skills gap and these other challenges we have right now, is that businesses have designed processes and tried to deploy technologies for which the workforce is not ready. So one effect of that is that it is going to slow down the rate at which automation actually happens. But second is to reconfirm the fact that this is going to accrued to the benefit of workers and really finding ways to design technology for the workers we have and equip workers to work with that technology is going to be the secret sauce for a labor market that thrives.”
John Lettieri: “Count me in as an automation apocalypse skeptic. I don’t think there’s evidence to back up many of the concerns that we hear thrown around about the rise of automation as it relates to replacing workers. To Oren’s point there are very few jobs that can actually be replaced in full by a robot of any form. I think the key is that we’re missing the kind of safety net that robust business dynamism used to provide. We’ve always had industries and jobs being phased out of our economy that’s always been true. Productivity gains by definition are displacing of some future potential worker as we get more efficient at doing certain things. The difference is we haven’t felt that in previous eras because we’ve had a more robust firm entry that’s caught more of those being left out of certain jobs or taken out of certain industries and brought them back into productive use. So areas of the country that are particularly undynamic are the ones not with high death rates of firms but with incredibly low birth rates of firms. That’s one of the major things that’s missing as we think about the worker piece of all this. We need to think about the entrepreneur as well. Incumbent business tend to shed jobs on net every year, as a whole, of any size. And where get net job creation is disproportionately from new businesses. When that fades that’s the engine of job creation, that’s the missing safety net for workers.”
