The House Committee on Small Business Subcommittee on Oversight, Investigations, and Regulations held a hearing on Oct. 20 about the supply chain issues currently facing small-business owners. The witnesses all testified that worker shortages were one of the greatest challenges to their businesses being able to survive and thrive.
“I begin by placing a spotlight on our workforce. My business faces a dire shortage of workers. At 200 employees we are down roughly 100 from our optimal number of staff. Since December of 2020, we have instituted a 36 percent hourly salary increase, and we still have trouble recruiting workers,” witness Christine Lantinen said.
The members of the subcommittee, including Chairman Dean Phillips (D-Minn.) and ranking member Beth Van Duyne (R-Texas), said they wanted to help small businesses mitigate the economic effects of the pandemic lockdowns and broader supply chain issues that were unearthed by the events of the past 18 months.
“As I mentioned, the COVID-19 pandemic has exposed cracks that have long been present at nearly every connection point in our global supply chain, and this is adding considerable economic stress to small businesses already suffering from the economic fallout of the pandemic,” Phillips said.
Lantinen is a U.S. Army veteran and president of Minnesota candy company Maud Borup, which she took charge of in 2005. The company is currently facing a variety of supply chain issues.
She told the committee that there aren’t enough worker development programs that are helping to train the type of skilled workers her company needs.
“Certified truck drivers, welders, and other specialists are not producing workers fast enough for businesses like mine to hire them,” Lantinen said. “To put it directly, the biggest and most immediate challenge to my business’s supply chain is a lack of workers.”
Business activity in recent months has grown at its slowest pace, with supply chain hold-ups and capacity shortages hampering growth.
“The pace of U.S. economic growth cooled further in September, having soared in the second quarter, reflecting a combination of peaking demand, supply chain delays, and labor shortages,” Chris Williamson, chief business economist at IHS Markit, said in a statement.
John “Chuck” Fowke, president of Homes by John C. Fowke, testified on behalf of the National Association of Home Builders, telling lawmakers that shortages of labor and materials are severely affecting the housing market.
Fowke implied that excessive unemployment benefits enacted in 2021 made it less appealing for workers to look for jobs and affected the ability of builders to find workers.
“Well, if you pay a man to not work, why would he work? The headwinds that we see in the near future for the home building industry is the lack of labor. So, it’s simple. We need to get people back using their hands, showing up to work, helping us produce materials, helping us get jobs done in the field. And if we have to incentivize people to get them to work—whatever we’ve got to do—the supply chain issue is not going to resolve itself. It’s going to take some effort to get people back out to work,” he told the panel.
While worker shortages have been felt recently, the witnesses also agreed that many of the supply chain issues existed pre-pandemic and that COVID-19 has just called attention to them. Chris O’Brien, chief commercial officer for C.H. Robinson, a third-party logistics company that provides freight transportation, transportation management, brokerage, and warehousing for businesses of all sizes, said the truck driver shortage has been a long-time issue within the supply chain.
“Our industries have been dealing with the shortage of truck drivers that predates COVID by decades. Policymakers can help [the] truck driver shortage by focusing on driver quality of life investments like truck parking, driver recruitment, and training,” O’Brien said.
In his written testimony, Fowke also referenced pre-pandemic woes and reported to the committee that the supply chain issue for the U.S. homebuilding industry has existed for some time.
“Supply chain disruptions have affected the homebuilding industry profoundly from record-high lumber prices to severe shortages of other building materials. The result has been lengthy delays or postponed projects, and dramatic price increases. This is further harming housing affordability,” he told the committee.
“The COVID-19 pandemic merely exposed those structural weaknesses in our building materials supply chain. If Congress is serious about addressing the growing housing affordability crisis, part of the solution must be addressing the many and varied challenges currently plaguing our building materials supply chain.”
Phillips urged the subcommittee members to support the bipartisan infrastructure bill that will be up for consideration later this month, as he said it will improve the infrastructure needed for the smooth running of the nation’s supply chain and create new jobs.
“There is no magic solution. I was hoping we might come here today and find that magic wand that we could just solve this problem. The truth is, I didn’t hear one actionable solution that we could implement today to solve the problem. We have to make investments, long-term, strategic, thoughtful, and intentional, by both Democrats and Republicans,” he said.