America’s economy and business climate is strong despite trade concerns, workforce challenges and lack of startup funding, according to Thomas Donohue, CEO of the U.S. Chamber of Commerce, who spoke at the State of American Business forum held in Washington, D.C. on Thursday, (Jan. 9).
The Fayetteville and Rogers-Lowell Chambers of Commerce held a webcast watch party in Rogers, which was one of eight simulcast sites for the half-day forum.
Donohue said during his many years in Washington he’s witnessed 15 times the U.S. business sector prepare for a recession by curbing expenditures, building inventory and bracing for slowdowns. Donohue said the economy is as strong as it has been in some time. But he added there are risks to the growing economy which are geopolitical in nature. He said there is plenty of work to be done amid the unfolding impeachment drama.
“Recessions have only shown up 4 times out of the 15. Despite all the rhetoric in 2019 of looming recession fears, again there was a no-show. … I don’t believe we are now or anytime soon looking at a recession,” Donohue said during his address.
He said there are 25 issues his organization is lobbying for and the U.S.-Mexico-Canada (USMCA) trade alliance is of primary importance. He said this is a much-improved agreement and is poised for passage in the Senate in the next few weeks. Donohue said passage of the trilateral trade agreement has also gone a long way in showing China, which is looking at its own economic problems, the U.S. is serious about improving trade positions with other countries.
Donohue said the U.S. is in a good position to help China feed its people given the devastating impact from African Swine Fever that has resulted in massive losses of pork, a major meat component in the Chinese diet.
Talk Business & Politics CEO Roby Brock asked Donohue about the plan of action for the U.S. Chamber of Commerce in advocating against tariffs that impact businesses and consumers and serve as a threat to economic growth. Donohue said his organization is adamant about the negative impact of tariffs. American consumers pay the tariffs when they are levied on U.S. goods or foreign goods. He said tariffs hinder business growth and with the vast majority of economic growth opportunities occurring outside the U.S. in the next decade, the U.S. needs to be a global player or it will be left behind.
Other topics of concern are new regulatory concerns for the gig economy, namely those small businesses and large companies that use independent contractors for certain duties. Donohue said as California has cracked down on the practice, he fears other states will try and follow that “bad” example. He said restrictive laws that prohibit the use of independent contractors will also impact millions of consumers who work side gigs to better support their families. He said squelching the gig economy is a blow to free enterprise which is important to growth economies.
“Many industries utilize independent contractors from delivery services to new publishing and media. This is crucial to their business models and we will fight for them,” he said.
During the forum, Steve Case, former CEO of AOL.com and now an entrepreneur advisor and investor, spoke about challenges in the entrepreneurial sector with a lack of funding across much of the nation. He said venture capital funding is highly concentrated (50%) in California with another 25% split between New York and Massachusetts. He said Texas gets just 2% and Florida 1.3%, which means the other states get less than 1% of the total funding. Case said the funding concentration created a brain drain as college graduates are leaving for the coasts. And, he said women get less than 10% of VC funds and minorities less than 1%.
“It does matter where you live and what you look like. Immigration is complicated, but if we don’t figure it out we will fall behind as 40% of our small businesses are run by immigrants,” Case said.
Case said the biggest advice he can give entrepreneurs is to fight the battles worth fighting and never give up.
“AOL almost went bankrupt three times before we made it,” Case said, “In the early 1990s, most people thought being online was a stupid idea.”
Charlotte Lee, founder and CEO of Kastling Group, who offers expertise in the custom enterprise solution development process, said immigrants have no issues with risk as they come to this country with nothing. Lee is a daughter of immigrants who ran a successful cookware business after immigrating to the U.S. When Lee graduated college, she began her own business.
“The thought of moving from 0 to 1 doesn’t look that daunting. Immigrant-run businesses look to add value in areas that are underserved. We go into depressed areas, work unconventional hours, seek underserved needs from laundry mats to convenience stores,” she said.
Based in Arlington, Va., her software enterprise development business has worked for the U.S. House of Representatives, U.S. Patent and Trademark Office, Department of Defense, Department of the Treasury, Department of Veterans Affairs, and Pension Benefit Guaranty Corporation.
Jacob Hsu, CEO of Catalyte, is using computer algorithms to seek out potential software engineers on demand. He said the idea that talent is scarce, simply is not true.
“It’s abundant if you know where to look,” he said during the forum panel discussion.
American businesses have fallen into the trap of “just-in-time” manufacturing which has led to hiring people for a narrow set of skills. He said this has created a mismatch between needed skills and the available workforce. Hsu’s firm is building technology workforces with nontraditional methods. They use a test through a computer that looks at 500 traits. The algorithm can detect grit and tenacity which are among the two most important hiring traits for software engineers.
“We have hired truck drivers, call center operators and academic PhD’s who have taken our assessment and scored well. We put them through a 20-week training program for computer science and they have been some of the top-performing software engineers we have placed,” Hsu said.