Small Business & Entrepreneurship Archives - Page 5 of 11

Iowa’s App Economy: A Summary

Posted on October 12, 2017 by The Progressive Policy Institute

When it comes to tech jobs, global hubs like Silicon Valley, New York, and Austin get all the attention. But, to an increasing degree, our research shows tech-driven employment growth is not restricted to those high-profile areas.

For example, our widely-cited March 2017 report “How the Startup Economy is Spreading Across the Country—and How It Can Be Accelerated” demonstrated that the startup mentality could be found in many regions. And our new report (“The Next Ten Million Jobs”) finds that tech and tech-related jobs grew by 51% in the “Heartland” states from 2007 to 2016, only slightly slower than the nation as a whole. In Iowa, tech and tech-related jobs grew by 83% over the same period (Figure 1), accounting for almost one-quarter of private-sector nonfarm job growth (Table 1).

Expansion of the Joint Employer Doctrine Fails to Strike the Right Balance

Posted on October 5, 2017September 18, 2024 by The Progressive Policy Institute

Policymakers across the United States are struggling to figure out how to adapt to swift changes in the American workforce. So-called “alternative work arrangements,” for example, are growing: in 2015, 15.8 percent of workers were independent contractors, temporary workers, contracted workers, or “gig” workers—a 50 percent increase in just a decade. Yet some efforts at adaptation—such as expansion of the “joint employer” doctrine—may do more harm than good. PPI is committed to helping find solutions that balance worker protection with business productivity and investment and the expansion of the joint employer doctrine fails to strike that balance. We must figure out a better way forward that boosts economic dynamism without sacrificing worker interests.

At the end of July, the Save Local Business Act was introduced into the House of Representatives. The bill, with three Democratic cosponsors among over three dozen Republicans, aims to narrow the expanded definition of “joint employer” promulgated by the National Labor Relations Board (NLRB) in 2015. This elicited immediate praise from business groups—particularly those associated with franchises—and opposition from unions and other groups advocating for worker rights.

The joint employer doctrine is used by the NLRB and courts in determining legal responsibility for issues such as overtime pay when more than one employer is involved. If a bank, for example, contracts with a company to provide janitors to clean the bank facilities, the janitors are employees of the contract firm, not the bank. Yet, if the bank has some level of control over of the janitors’ wages and hours, it could be deemed a “joint employer” and would be responsible for appropriate legal compliance.

Not incidentally, the joint employer doctrine is central in shaping the ability of employees to engage in collective bargaining. Contract workers, temporary workers, and franchise employees—all of whom are affected by the joint employer doctrine—are difficult to unionize. Employees of franchise locations—fast-food restaurants, for example—are technically employees of the franchisee (the local operator), not the franchisor (the national brand). The entire purpose of the franchising model is to allow the franchisor to focus on brand and system, and leave the franchisee to focus on operations and local context, including employment.

Under the expanded joint employer doctrine of the NLRB, however, it is possible that both the franchisee and the franchisor could be considered employers of the workers at each individual franchise location. This “could fundamentally change business in the United States by destroying the franchise model.”

Until the 1980s, the NLRB threshold for a joint employer finding was “direct or indirect control” over working conditions. This was a fairly broad doctrine and, in certain circumstances, could be used to find that employees were subject to “control” by more than one employer. Nonetheless, the NLRB joint employer standard remained more modest than definitions used in Title VII of the Civil Rights Act and the Fair Labor Standards Act (FLSA).

Beginning in the 1980s, the NLRB gradually narrowed the definition to “direct and immediate” control over employment issues. The change from “indirect” to “immediate” had large implications in where the joint-employer line was drawn. If the bank “shares or codetermines” the conditions of employment of the contracted janitors, and “meaningfully affects” their hiring, firing, supervision, etc., the company could be a joint employer. Now, the NLRB says, no longer is “direct and immediate control” required—even the possession of authority to direct third-party employees is sufficient, regardless of whether the authority is exercised.

These subtleties in language and reliance on factual findings are classic examples of legalese, but cases involving worker rights and business interests frequently turn on choice of words and how those words are put into practice.

Business groups do not welcome a broader definition. Especially as it pertains to franchise arrangements, the more expansive standard could open up franchisors to greater liability and more attempts at collective bargaining. Already, we have seen arguments to apply the extended joint employer doctrine to other areas, such as student athletes. A challenge to the NLRB’s expansive interpretation is currently pending in front of the D.C. Circuit, and it is expected that the NLRB under President Trump will work to narrow the standard. In the Republican-controlled Congress, the Save Local Business Act could find easy passage and, at the state level, legislatures are being lobbied to pass laws saying that franchisors cannot be considered joint employers.

One problem is the likely response from franchisors to the expanded NLRB standard—in particular, we may see reduced business dynamism. Franchising is an engine of entrepreneurship in the United States, with independent operators who, despite the assistance of national brands, assume plenty of financial risk themselves. At the same time, we have seen the rise of large franchising operations that own hundreds of franchises across the country. Not surprisingly, large franchising operations are better able to comply with employment laws than small, single-operator franchisees. Faced with the new incentive structure of the expanded joint employer doctrine, franchisors will have a clear preference against smaller franchisees in favor of the larger organizations. This will make it much harder for new entrepreneurs to enter business through franchising, further raising barriers of entry for business creation.

The NLRB and other public agencies have the unenviable task of modifying law and policy to keep up with shifting employment arrangements, in an environment of stagnant wages for many workers, geographic concentration of economic rewards, and concerns about entire occupational categories being lost to automation. As mentioned, “alternative work” is growing. The Government Accountability Office (GAO) estimates that the “contingent workforce,” depending on the definitions used, could be anywhere from five to 40 percent of the total labor force. More people are receiving income from multiple sources, which includes new online and on-demand platforms. These changes have prompted calls for new legal classifications, such as the “independent worker” category proposed by the Hamilton Project two years ago.

Confronted with these challenges, expanding the joint employer doctrine is perhaps an understandable attempt to try to help workers cope. The fastest-growing type of alternative work arrangements is “workers provided by contract firms,” precisely those at the core of the joint employer doctrine. Yet we also need to help policymakers and businesses think creatively about other ways to manage and adapt to these challenges, as they will only increase in significance. In the face of a “fissured workplace,” how can policymakers help workers and businesses adapt and succeed together?

In managing these changes, we must ensure adequate worker protection and representation while also supporting (or at least not hindering) businesses to pursue innovation and productivity. Policymaking should be guided by certain principles, among which might be the following.

Clarity and certainty. Any standard leaves room for interpretation (and litigation), but workers and firms need to have clear ideas about where they stand regarding rights and responsibilities.
Get the incentives right. Policies should minimize the amount of “gaming” that might go on by firms in trying to avoid legal compliance. This doesn’t mean the presumption should be that all firms will act badly—policymakers need to pay attention to the incentives they establish.
New ways for workers to organize and improve. Despite the NLRB’s presumption, traditional unions may not be the best adaptive form of organizing in the modern workplace, and new Internet platforms have arisen to help fill the gap. Policy should facilitate these, but also focus on how new organizing tools can support learning and skill upgrading among workers, not just collective bargaining.
Informational equity and transparency. As the Roosevelt Institute has coherently outlined, employees in more sectors are subject to “opaque algorithms” that determine wages, scheduling, evaluation, and so on. Giving workers more transparency and control over this information will reduce asymmetry and empower workers to better manage their careers.

Most of the American labor force is still characterized by traditional employment, but new forms of work are growing rapidly, especially in sectors where low-wage and high-turnover work predominates. Addressing this challenge is a major priority, and we need to find ways that policy can jointly advance the interests of workers and firms.

Fulfillment Centers: The Nodes of a Packet-Switched Physical Distribution Network?

Posted on August 27, 2017September 18, 2024 by The Progressive Policy Institute

Warning! Wonky post ahead.

At PPI, we are focused on understanding where the new jobs of the future are coming from, and how policymakers can help foster their growth. That sometimes requires identifying underlying trends that may not be obvious.

The growth of multiple networks of ecommerce fulfillment centers–built by retailers such as Amazon, Walmart, Nordstrom and many others–is effectively a transition from “circuit-switched” physical distribution networks to “packet-switched” physical distribution networks. Analogous to the shift from circuit-switched telephone networks to the packet-switched networks that make up the Internet, the new ecommerce distribution networks are capable of much greater flexibility and lower costs than the dumb warehouses which preceded them.

And just like the Internet helped create a wave of new industries in tech hubs, this new “Internet of Goods” is going to enable a new wave of business and job creation in domestic manufacturing and food production. With the right policy, this growth in domestic manufacturing and food production jobs will benefit states across the country.

Background

The old telephone networks were “circuit-switched”–that means the telephone company would set up a separate circuit for each call, and the callers would “own” the circuit until the call was over. The connections were solid, but they were not flexible, and they wasted network resources (since so much of a voice conversation is dead air). By contrast, the multiple networks that make up the Internet break down data (including voice) into packets, which are then routed to their destinations and reassembled. Packet switching requires a lot more intelligence in the system, but it’s much more flexible and lower cost than circuit switching.

As we’ve seen over the past two decades, the widespread introduction of packet switching in telecom opens up all sorts of possibility for entrepreneurs and existing companies to create new digital products and services. The Internet revolution transformed digital industries, creating millions of jobs in the process. In particular, since December 2007, the tech-ecommerce sector has generated 1.7 million jobs. That’s around half of private sector job growth, outside of health and education.

The old warehouse-retail distribution system was analogous to circuit switching. Big trucks would bring boxes of identical goods from manufacturers or importers. The warehouses would break down the incoming goods into predictable patterns. All the boxes of identical lamps, for example, would be stored together for easy retrieval when it was time to put together the shipments to individual retail stores. The shipments were regular and straightforward, and didn’t require much “intelligence” in the networks.

Ecommerce fulfillment centers are much more like the “routing nodes” of the Internet. They take in goods from a wide variety of sources, at irregular interviews, including returns from consumers. They store the goods according to their own internal schema. For example, Amazon uses a “random stow” method that distributes incoming products across the fulfillment center in a way that maximizes the odds of products in the same order being close together. Since most consumers don’t order multiples of the same item, the Amazon random stow method might distribute the most popular items across the whole fulfillment center, rather than clumping them all together. Then the ecommerce fulfillment center puts together consumer orders and ships them out.

The Internet of Goods

In effect, these multiple networks of fulfillment centers are creating a new packet-switched “Internet of Goods.” The first economic consequence, as we have described, is the creation of hundreds of thousands of jobs in electronic shopping companies and fulfillment centers. This is analogous to the first wave of Internet growth in the 1990s.

The next step, we believe, will be the creation of new businesses in domestic manufacturing and food production that make use of the flexibility and low cost of the Internet of Goods. For example, we can visualize custom manufacturing operations that are located near fulfillment centers. They take production orders from customers, and then ship out the product on the same day via the fulfillment center. The cost of distribution would go way down compared to today’s situation, giving domestic custom manufacturers a sustainable competitive advantage against foreign rivals.

To get an idea of magnitudes, consider that as of 2015, 57% of the retail price of furniture was the cost of distribution (transportation, wholesale, and retail). For women’s clothing, 59% of the retail price was the cost of distribution, and for food, 40% of the retail price was the cost of distribution. Reducing the cost of local distribution while shortening the distribution time could open up new sustainable business models for domestic manufacturers and food producers.

Flashback Friday: PPI in Hindsight

Posted on March 31, 2017September 18, 2024 by The Progressive Policy Institute

Just over a year ago, PPI unveiled a big ideas blueprint with a prescient subtitle: Unleashing Innovation and Growth: A Progressive Alternative to Populism. We knew that progressives in the United States and Europe needed better answers to the economic and cultural grievances that have fueled the rise of a retrograde populism and nationalism around the world. We did not foresee that Democrats would fail to offer a forward-looking plan for jobs and shared growth, opening the door to Donald Trump’s improbable victory.

Which makes the themes and ideas in PPI’s sweeping policy blueprint more important than ever. Populism today thrives in the political vacuum left by center-left parties that offer no clear vision for reviving economic dynamism and hope. “Winning the economic argument will be essential to victory in the 2016 elections and it starts by getting the diagnosis right,” the blueprint noted. Instead, Democrats ran a campaign that leaned heavily on identity politics, wealth redistribution and centralized, small-bore solutions.

Unleashing argued that America (and Europe) are stuck in a slow-growth trap that holds down wages and living standards. And it offered bold prescriptions for building on America’s competitive advantage in technology and entrepreneurship to spread innovation – now concentrated in a vibrant digital sector — to the nation’s physical economy, which continues to suffer from low productivity. In addition, the document proposed creative ways to modernize the nation’s economic infrastructure, improve the regulatory environment for innovation, build middle class wealth and empower poor Americans to work, save and chart their own course to social mobility and inclusion.

Crucially, the blueprint also urged progressives to reject anger and victimhood and offer voters a confident account for how America can build a new, inclusive prosperity:

What America needs is a forward-looking plan to unleash innovation, stimulate productive investment, groom the world’s most talented workers, and put our economy back on a high-growth path, It’s time to banish fear and pessimism and trust instead in the liberal and individualist values and enterprising culture that have always made America great.

That was the road not taken in 2016. Now it’s the road to political relevance and success for progressives here and elsewhere.

How the Startup Economy is Spreading Across the Country – and How It Can Be Accelerated

Posted on March 30, 2017September 18, 2024 by The Progressive Policy Institute

More than that, the startup culture of entrepreneurship, fueled by scalable technology, is spreading as well. Around the country, an increasing number of companies are describing themselves as “startups” when they advertise for workers.

In new research, the Progressive Policy Institute (PPI) and TechNet explore the importance of the startup economy to job growth, not just in traditional technology hubs, but also in metro areas around the nation. Read the paper here.

USA TODAY: Emerging Tech Hubs Are Far From Coasts

Posted on March 30, 2017 by The Progressive Policy Institute

PPI Chief Economic Strategist Michael Mandel was quoted in USA TODAY regarding his recent report, “How the Startup Economy is Spreading Across the Country” on start-ups and entrepreneurial growth across the country:

“I was surprised by cities in the Midwest that made the list,” says Michael Mandel of PPI, who conducted the study. E-commerce contributed to job creation in Ohio, Tennessee, and Kentucky among companies large and small, he said.

Read the piece in its entirety at USA TODAY.

How the Startup Economy is Spreading Across the Country- And How It Can Be Accelerated

Posted on March 29, 2017 by The Progressive Policy Institute

It is March 2017. Square, the small business payments startup founded in 2009, is hiring for its customer support operation in St. Louis. Fintech startup Greensky, founded in 2006, is expanding in Atlanta. Seattle-based Zulily, the ecommerce startup founded in 2009 and bought by QVC in 2015, is hiring for its fulfillment center in Bethlehem, Pennsylvania, on the site of Bethlehem Steel’s former main plant. Venture-funded Thread International, based in Pittsburgh, is staffing up its
headquarters to help turn recycled plastics into fiber and yarn. Total Quality Logistics, a freight brokerage founded in Cincinnati in 1997, has 26 positions open in Ohio, 11 in Florida, and more elsewhere.

All across the country, entrepreneurs are founding and building new companies that use technology in innovative ways. The American startup ecosystem — the envy of the world — has spread outside of the coasts and high-profile tech hubs, such as San Francisco, Boston, and New York City, to other parts of the country. Startup activity is happening everywhere in cities and towns across America.
More than that, the startup culture of entrepreneurship, fueled by scalable technology, is spreading as well. Around the country, an increasing number of companies are describing themselves as “startups” when they advertise for workers.

In this paper, the Progressive Policy Institute (PPI) and TechNet explore the importance of the startup economy to job growth, not just in traditional technology hubs, but also in metro areas around the nation.

Legal Newsline: Justice Reform Groups Continue Push for Venue, Jurisdiction Bills in Missouri Legislature

Posted on March 22, 2017 by The Progressive Policy Institute

Phil Goldberg, director of the Progressive Policy Institute’s Center for Civil Justice and Don Gifford, a member of PPI’s Center for Civil Justice Advisory Board, were quoted in the Legal NewsLine about a recent Missouri Supreme Court ruling:

“The ruling offers some clarity on jurisdiction rules in Missouri—as in, courts don’t have jurisdiction over out-of-state claims—but it doesn’t completely settle the issue that’s been so controversial in the state, Phil Goldberg, director of the Progressive Policy Institute’s Center for Civil Justice, told the St. Louis Record.

If someone has been wrongfully injured and they want to bring a lawsuit, they should be able to do so—but only in the place that makes sense for that lawsuit,” Goldberg said.

Part of the problem is fraudulent joinders. Joinder refers to the occasion when multiple parties join a lawsuit as co-plaintiffs or co-defendants. In Missouri, frustrations arise when parties are allowed to join a case without meeting jurisdiction requirements. A lawsuit may originate with a plaintiff who meets proper jurisdiction requirements, but then out-of-state plaintiffs attach their claims in a joinder. Proposed rule changes address that issue.

“We think joinder was never meant to get around venue and jurisdiction laws,” Goldberg said. “Venue laws and jurisdiction laws should be clear that if you’re not from Missouri and you don’t have venue or jurisdiction in Missouri, you don’t get to bring your lawsuit in Missouri.”

Read the rest of the article at the Legal NewsLine.

Trump’s EPA Cuts: An Invitation to Litigation

Posted on March 20, 2017 by The Progressive Policy Institute

The bullseye of President Trump’s budget cuts is now clear. Unless Congress asserts itself, the budget of the EPA will be slashed thirty-one percent, more than any other agency. The budgets of the National Oceanographic and Atmospheric Administration and climate change programs within NASA will be similarly decimated.

These cuts should not come as a shock. During the campaign, President Trump reportedly said he’s like to abolish the EPA or “leave a little bit.” And he has famously asserted that “the concept of global warming was created by and for the Chinese in order to make U.S. manufacturing noncompetitive.”

Brazil’s App Economy

Posted on February 22, 2017 by The Progressive Policy Institute

Apple’s introduction of the iPhone in 2007 initiated a profound and transformative new economic innovation.

While central bankers and national leaders struggled with a deep financial crisis and stagnation, the fervent demand for iPhones, and the wave of smartphones that followed, was a rare force for growth. Today, use of mobile data is rising at 50% per year globally, a stunning number that shows the revolutionary impact of the smartphone.1

More than just hardware, the smartphone also inaugurated a new era for software developers around the world. Apple’s opening up of the App Store in 2008, followed by Android Market (now Google Play) and other app stores, created a way for iOS and Android developers to write mobile applications that could run on smartphones anywhere.

em português: PPI_BrazilAppEconomy_PT

A Big Deal for Small Business: Seven Stories of How the Trans-Pacific Partnership Would Boost America’s Small Exporters

Posted on September 26, 2016 by The Progressive Policy Institute

When Americans think of trade, we tend to focus on large, world-leading multinationals. We usually don’t think of a small food exporter like Pacific Valley Foods, which started in a couple’s home office, or of The Pro’s Closet, an online global reseller of used biking gear founded by a pro cyclist. But, like these businesses, 98 percent of U.S. exporters are actually small and medium-sized enterprises (SMEs), and these smaller traders account for over one-third of U.S. exports.

SMEs that export are also economic powerhouses—they hire more employees, pay higher wages, and are more resilient and productive than their non-exporting counterparts. And, since only about five percent of American SMEs currently export, the United States has significant untapped potential to drive growth and support good jobs by increasing small business trade.

In a previous issue brief, we explained how the Trans-Pacific Partnership agreement (TPP) would boost U.S. small business exports by clearing away significant foreign trade barriers and by mandating reforms that would make exporting fairer, faster, cheaper, and more certain for America’s smaller firms.

Marshall & Tucker for The Hill: Congress should get to work on overtime

Posted on September 20, 2016 by The Progressive Policy Institute

After a long stretch of economic stagnation, the stars may be aligning at last for America’s hard-pressed middle class. The U.S. economy’s growing strength, plus a push in Washington to update overtime rules, could combine to boost incomes and give working families a long overdue raise.

New government figures show that the Obama recovery is finally reaching average Americans. Median household income rose by five percent in 2015, the biggest single-year spike since 1967. Families at all income levels made progress, with the bottom 10 percent reaping the largest gains. Rising incomes lifted 3.5 million people, including one million children, out of poverty and modestly reduced inequality.

Reinforcing the good economic news is a move in Washington to ensure that millions of low-paid white-collar workers can once again qualify for overtime pay. The question is whether it will fall victim to partisan deadlock.

Continue reading at The Hill.

MIT Technology Review: Dear Silicon Valley: Forget Flying Cars, Give Us Economic Growth

Posted on June 21, 2016 by The Progressive Policy Institute

Dr. Michael Mandel, PPI’s chief economic strategist, is quoted in David Rotman’s piece about the advances in technology and economic slowdown.

Michael Mandel, an economist at the Progressive Policy Institute in Washington, D.C., says the productivity slowdown is occurring in what he calls the physical industries, including manufacturing and health care. Such industries, which he estimates make up 80 percent of the national economy, account for only 35 percent of investments in information technology and their productivity reflects that, growing at only 0.9 percent annually. Meanwhile, productivity is growing by 2.8 percent a year in what Mandel calls digital industries, which include finance and business services.

If that is what is going on, it leaves plenty of room for optimism. “As we learn to apply the new technologies,” says Mandel, “we could see growth in productivity speed up again.”

Read the rest of the article at the MIT Technology Review.

Recode: Google wants to prove its app business is just as good as Apple’s

Posted on May 19, 2016 by The Progressive Policy Institute

A PPI report on App Economy jobs is cited in this article from Recode.

Beyond flaunting the growth of Play, Google has another motive in highlighting the success of apps like Prune. It needs to convince regulators in Europe, who have opened an antitrust case against Android, that the operating system boosts other companies instead of thwarting them.

In its argument to regulators, Google is likely to point here, to a recent report from the Progressive Policy Institute. It claims that some 1.66 million app jobs emerged in the U.S. from the “app economy,” more than double the number from three years ago.”

Read the full article at Recode.

The Next Ten Million Jobs: Energizing the Physical Industries in the Heartland States

issue: Small Business & Entrepreneurship