By Jennifer White, WIPP Government Relations
What is the number one thing small business owners want Congress to focus on this year? Is a lack of political certainty affecting America’s business environment? What can be done to better help women and minorities obtain capital to start their businesses? These are the questions the House Small Business Subcommittee on Economic Growth, Tax, and Capital Access discussed during a hearing entitled “State of the Small Business Economy,” giving the committee the opportunity to listen to testimony on concerns confronting small business owners in 2017.
To no one’s surprise, the committee heard that the most taxing issues to small business right now are healthcare deficiencies, tax reform, and regulatory reform. Chairman Bland posed the question, “In addressing these issues, where should we spend the most time?”
Holly Wade, Director of Research and Policy Analysis for the National Federation of Independent Business (NFIB), said you can’t pick just one. According to NFIB’s 2016 Small Business Problems and Priorities Survey, health insurance is the number one issue plaguing small business, directly followed by burdensome regulations and federal taxes. The small business economy, she said, has struggled to bounce back from the recession due to taxes, regulations, and health insurance, which consume valuable resources, including time and profits. To restore the small business economy, all three of these issues must take priority.
Another common denominator heard in each witness’ testimony was concern over lack of policy and regulatory certainty regarding the business environment. Steve Veuger, resident scholar from the American Enterprise Institute, said that despite measures such as passage of the Small Business Regulatory Flexibility Improvements Act, requiring more careful consideration of rules and regulations and how they affect small business, measures of uncertainty have spiked in the last few months. Mr. Veuger also pointed out that Congress must be careful in the repeal and replacement of the ACA; to move forward without a clear policy direction, he said, could cause individual and small group markets to unravel in a detrimental way.
Members of the subcommittee also asked about the difficulty women and minorities still face in regard to obtaining jobs and accessing capital. According to Victor Hwang, vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, an important part of that issue is that while the U.S. is increasingly becoming more racially diverse, the American entrepreneurial population does not reflect it. Today, 80.2 percent of American entrepreneurs are white and 64.5 percent are male. Mr. Hwang said that gap for racial minorities and women is costing the country millions of jobs and that the key to increasing diversity in entrepreneurship is overcoming social barriers such as race, gender, or a lack of a formal degree that can prevent individuals from turning an idea into a business reality.
Further, Bob Bland, CEO and founder of Manufacture New York, and the co-chair of the Women’s March on Washington, relayed her own struggles of accessing capital because of past credit. Even with great programs it can still be difficult for women to get loans, she said, because they still don’t qualify for low interest rates, and need something that provides for more risk like venture capital, which can be even harder to obtain. Mr. Hwang agreed that access to venture capital is not on a level playing field. He suggested that building more opportunities for connections at a local level based on trust would be a core way of getting obtaining capital to a level playing field.
“Being an entrepreneur is hard and there are risks associated–it’s the spirit of being able to take a loss that makes America great—what can we do to spread the risk so that everyone everywhere has the opportunity to be one?” asked Rep. Kelly as the final question of the hearing. We educate people on how to find jobs, not how to make jobs, answered Mr. Hwang. To understand the access issues entrepreneurs face, we have to focus on the people who are starting at the bottom with nothing.