House Subcommittee Explores IIJA Impact On Small Businesses

House Subcommittee Explores IIJA Impact On Small Businesses

February 18, 2022  | Jonathan Hammond

To paraphrase the classic musical “Annie Get Your Gun,” there’s “no business likes small business.” At least, that’s what the House Committee on Small Business Subcommittee on Underserved, Agricultural, and Rural Business Development explored this week. On February 15, lawmakers and stakeholders met to discuss the impact of the Investing in Infrastructure and Jobs Act on small businesses across the U.S. The hearing focused specifically on the needs of rural businesses, from internet service providers (ISPs) to construction firms.

Witnesses were (click on their name to read their prepared testimony):

Mr. Ed Mortimer, Vice President, Transportation Infrastructure, U.S. Chamber of Commerce
Mr. Mark Ouellette, President and Chief Executive Officer, Axiom Technologies, LLC, Machias, Maine
Mr. Jason J. Shedlock, Regional Organizer, Laborers’ International Union, New England Region Organizing Fund, President Maine State Building & Construction Trades Council
Mr. Terrance Lee Baker, Owner, Operator, and Independent Contractor, T.L. Baker Pilot Car Escort Services

(To quote one representative, “Maine is certainly represented well, Mr. Chairman.”)

Subcommittee Chairman Rep. Jared Golden (D-ME) opened the hearing by reminding attendees of the IIJA passed last November. Golden noted that it represents possibly the most significant investment in infrastructure since the original Interstate highway law of 1956. He made sure to mention that his home state of Maine will get roughly $1.3 billion alone for roads, $390 million for lead pipe removal, and more than $100 million for affordable broadband expansion. Golden strongly emphasized the importance of rural broadband access, which 83,000 people in his home district (the largest east of the Mississippi River) lack.

Ranking Member Roger Williams (R-TX) took a different tact than his chairman. Explaining that infrastructure was once a “common ground” between Republicans and Democrats, he decried the Democratic Party’s pursuit of policies similar to the “radical” Green New Deal. He continued, lamenting that the infrastructure deal – where only a “fraction of spending will go towards “traditional” infrastructure – will add hundreds of billions of dollars in new debt, which in turn will only lead to higher taxes, inflation, and a reduction in U.S. competitiveness. Williams went on to say that 76 percent of small business owners reported that inflation negatively impacted their businesses.

Not So Small Business

All panelists emphasized the importance of small businesses to the health of the U.S. economy. Ed Mortimer (U.S. Chamber of Commerce) highlighted the fact that 96 percent of his members have fewer than 100 employees. Additionally, Mortimer stressed that small business owners are “starving” for modern infrastructure that he assured the subcommittee the private sector is ready to deliver (with government partnerships).

Mark Ouelette (Axiom) supported Mortimer’s claim that small businesses are struggling thanks to the COVID-19 pandemic as well as their particular geographic and economic situations. Ouelette’s company, Axiom, provides broadband internet service to some of the “most difficult, out-of-reach homes” in the largest Congressional district east of the Mississippi River. At least 10 percent of Maine’s population has no broadband whatsoever, with Ouelette claiming that the real number could be closer to 15 percent. Ouelette stated that his home of Washington County and Maine in general are struggling with poor internet connections, but that the IIJA will provide a number of opportunities for connections and growth.

Representing labor, Jason Shedlock (Laborers’ International Union) was excited for the IIJA because of its potential impact on underserved communities. Thanks to the IIJA, training and apprenticeship programs will have a greater chance of reaching underserved communities so that workforces reflect the places where people live, work, and play. Shedlock went on to illustrate that the job crunch is hurting small and medium sized businesses, such as the construction firms that are working throughout Maine.

Finally, Terrance Baker (T.L Baker Pilot Car Escort Services) described the current state of being a pilot driver in an economy dealing with inflation and new regulations. Baker lamented the high cost of diesel fuel that prevents him from operating outside of the state. Additionally, the implementation of “California air standards” forced him to upgrade his vehicle at no small cost to himself. Although Baker applied for a loan from the Small Business Administration in 2020, it its approval took over a year. Baker iterated that the cost basis for many companies, especially smaller ones, is energy, and that the IIJA has not addressed it as of yet.

The Broad(band) Strokes of Infrastructure

A significant portion of the hearing was dedicated to broadband (broadband defined as 100 megabytes per second of both upload and download) internet expansion. Mortimer pointed out that the U.S. economy has shifted from brick and mortar to e-commerce, and a functional broadband network is essential for small businesses trying to participate in a modern economy. Mortimer was particularly excited for the $65 billion for broadband infrastructure that will help local businesses decide where to locate, how they will succeed, where they will find their customers, and where they will hire their employees.

Ouelette was also excited about broadband provisions in the IIJA. As a small ISP in rural Maine, his company is one of the few options for Mainers to receive broadband internet. The investments from the IIJA will not only help elderly Mainers access telemedicine services, children attend online school, and isolated workers operate remotely, but also help Axiom provide healthcare benefits for its seven workers for the first time. Ouelette also happily highlighted a provision of the IIJA that will automatically reduce the internet bills of qualifying families by $30.

Paving The Way With The IIJA

Each panelist illustrated how the IIJA will help small businesses in their field. Mortimer applauded the scale and timeline of the IIJA, claiming that it will help the country plan for the next 50 to 75 years. Although Williams stated that the IIJA will only add to inflation, Mortimer responded by claiming the law will actually be deflationary because of its long-term nature.

When asked by Rep. Troy Carter (D-LA) about how the Chamber of Commerce will reach out to disadvantaged communities, Mortimer responded that the Chamber of Commerce plans on publishing on its website all new government projects funded by the IIJA. Mortimer also stated the need for the Chamber to visit these communities themselves through their “Equality of Opportunity Initiative.”

Shedlock also claimed that the IIJA will help labor due to its supported projects as well as training programs. In addition to the recent executive order from the Biden Administration that requires all federally funded projects of $35 million or more be performed under the “gold standard” of a project labor agreement, training programs in the IIJA will create a sustaining training module for trades workers. Shedlock was also grateful for projects located in Maine, as local work will reduce the number of long nights, overnight vehicle stays, and increase the amount of time workers can stay in their communities.

When asked by Golden whether a young drivers pilot (Formally known as the DRIVE Safe Act, now passed as a part of the IIJA) would help the interstate trucking industry, Baker responded that it would, but the biggest point of concern is still the cost of fuel. Baker pointed out that he has seen an 80 percent increase in the price of diesel fuel, which forces him to raise his per-mile rate – to the point where he is losing customers. Baker laid the blame on both supply chain issues and workforce shortages on “California” air regulations that truckers cannot afford to follow.

On The Road Ahead

Each panelist outlined what they hope to see from the federal government in the near future regarding the IIJA. In order for communities to make the most of the IIJA, he suggested that they put together concrete priorities that have community consensus. Baker also made sure to make his opposition to the Biden Administration’s stalled “Build Back Better” plan because of its “short-term” spending outlook. Mortimer also opposed any initiatives for a gas tax “holiday,” as recently floated by a number of legislators. “Now is not the time to reduce funding for infrastructure,” Mortimer said, claiming that investments need to be paid for.

Ouelette reiterated his enthusiasm for expanded broadband funding. Giving famlies the digital tools so that they can work at home and keep their loved ones safe is important and critical, and for those reasons alone broadband is a game changer. He also stated that there is no reason why the U.S. should be lagging behind its peer countries like South Korea, as public investments only help businesses grow. Ouelette also implored lawmakers visit communities where funds will be the most effective, because he claimed it will help promote helpful programs in the IIJA.

Shedlock reiterated the IIJA’s local benefits, claiming that it will let workers spend more time working in or near their communities and creating healthier, more connected personal networks. Registered apprentice programs, helped by the IIJA, will also let individuals and small businesses set pathways to the middle class while also equipping individuals to pivot to new trade jobs.

Baker insisted that the best way to tackle current fuel prices would be through oil pipeline construction. He indicated support for restarting the Keystone Pipeline and granting federal support for the Dakota Access pipeline.

Finally, Mortimer pleaded that lawmakers pass a FY 2022 appropriations bill by the March 11 deadline. He also asked that Subcommittee assert itself during the implementation of the IIJA to ensure that its “congressional intent” is being followed. However, Mortimer also made sure to highlight that the federal visions of Presidents Dwight D. Eisenhower and Theodore Roosevelt are needed to help modernize America’s integral infrastructure.

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