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Representative David Schweikert - Vice Chairman

JEC Examines Slowing Business Dynamism

JEC Examines Slowing Business Dynamism

WASHINGTON, D.C. — Joint Economic Committee Vice Chairman Pat Tiberi (R-OH) chaired a committee hearing entitled “Encouraging Entrepreneurship: Growing Business, Not Bureaucracy” on Tuesday. At the hearing, JEC members examined the importance of entrepreneurship in generating economic growth and propelling job creation and explored solutions to fostering a competitive business environment.

 

 

Vice Chairman Tiberi explained the current direction of the labor market:

“It is our role as federal policymakers to foster a free-market economy in which Americans enjoy ample opportunities for employment, and we must not forget that the private sector is the true driver of economic growth. Government can’t tax and regulate its way to American prosperity.

 Tim Kane, a fellow at Stanford’s Hoover Institute, illustrated the impact of declining dynamism in real terms:

“New companies create roughly 3 million jobs every year, while existing companies tend to shed one million jobs net. … The bottom line is that net job creation is literally nothing without startups.

He went on to explain what he sees as the causes of the slow down:

“Taxes are more complex. Regulations are thicker. Employment law is more dangerous.”

Rev1 Ventures CEO Tom Walker described his experience helping startups succeed and offered ways for government to encourage entrepreneurs including a competitive grant process to spur public-private collaboration and intellectual property protections:

“One of the biggest threats to entrepreneurs and those that invest in them is adequately protecting the intellectual property of start-up companies, and also continuing to make the process more streamlined.”

White Castle Vice President and Ohio Restaurant Association Chairman Jamie Richardsonoutlined a number of government imposed mandates that are hurting the restaurant industry:

“The ACA’s definition of full time employment as 30 hours per week is not in line with the traditional full-time employment standard of 40 hours per week. Many employees in our industry are already losing wages and hours, due to the law’s perverse incentives. …
"At the same time, the overtime regulations will have a negative impact on many employees that now benefit from the many advantages of exempt status.”

Vice Chairman Tiberi concluded that government has a role in helping encourage entrepreneurship, but should refrain from picking winners and losers:

We must continue to focus on ways to reduce the barriers to innovation, giving entrepreneurs the tools they need to succeed. That doesn’t come from picking winners and losers with direct subsidies or carved out tax breaks. Instead, that comes from preserving competition and removing restrictions that only serve to protect established companies and hinder startups with new ideas.
“We also need to remove barriers for those who want to invest in entrepreneurs and startups. My legislation, the Investing in Opportunity Act, will make it easier to invest in areas that need it most.

Watch the entire hearing here.

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