House Small Business Subcommittee Testimony of:

Jim Blann
Senior Vice President
American Express Small Business Services

September 28, 2000

"My name is Jim Blann. I am the Senior Vice President of American Express Small Business Services. The testimony I am about to provide represents the voices of tens of thousands of small business owners who have played a part in a program we have conducted this year called 'Voices from Main Street'.

My testimony will focus on the workforce needs of small business owners, because it was this issue that was identified as their number one priority. Most specifically, I will focus on the fact that small firms say that today's labor force suffers from a severe skills gap that inhibits their growth and profitability.

Voices from Main Street was designed to help small business owners interact on a national level and discuss the issues most important to them. Small business owners have responded in a powerful way through a variety of channels we provided, including:

• two national surveys,
• a Web site,
• national Web chats,
• a nationally televised one-hour program produced by CNN,
• and Web cast town halls

American Express launched this program because, despite the remarkable work of the organizations sitting here today, too often the concerns and needs of the Main Street entrepreneur are drowned out by the voices of other constituencies. Small businesses are the backbone of the American economy. Given the contributions they make to this country, the situation we are dealing with is perilous.

You no doubt are aware of how small businesses employ half of the country's private workforce and account for half of the country's private sector output. Additionally, I want to point out that many large companies are affected tremendously by the rise and fall of small firms. My group alone at American Express serves more than 2 million small businesses. Very frankly, the survival and growth of small business is extremely important to big businesses.

Now, let me tell you what small firms told us about the current labor shortage and how it is especially troublesome for them.

Small businesses often don't have the resources to recruit, compensate, and train a qualified workforce—resources often available to larger companies. When you compound this disadvantage with a gap in the skills needed by the small business community, it is fair to say that the situation is reaching crisis proportions. Two of the most significant findings from this program include:

• Most small businesses are dissatisfied with this country's workforce skills. Only 1/3rd of small business owners say they are very or extremely satisfied with the skills of their employees and potential employees, according to one of our Voices surveys
  
  
• Small business owners say that despite the emergence of the Internet economy, it is not computer or science proficiency their employees need, but the basic soft skills, like verbal and written communications and interpersonal skills.

Mr. Chairman, ladies and gentlemen, this situation has truly reached a crisis level for small business owners across the country. The small business community is telling us that they need a better equipped workforce, or the entrepreneurial renaissance that has driven so much of this country's record economic expansion will wither.

What are some potential solutions? Small businesses narrowed their short-term priorities to two ideas that I would like to open for discussion this morning.

The first idea is more internships for teenagers. The majority of employees in the small business workforce have only a high school education, so that means we need to aggressively pursue connecting more secondary and vocational schools to the small business community.

The second potential initiative is creating more readily accessible information on those existing training programs that work well. When we asked entrepreneurs if they were aware of local programs designed to improve workforce skills, only 40 percent said they knew of a program in their community.

The sad thing is that many good programs exist that could help small business owners today. Created at the state, county, and local levels through a combination of school administrators and business groups, many of these programs unfortunately just aren't widely promoted.

One immediate action could be providing small business owners with a single convenient place for them to find out about existing local programs. For example, the SBA could perhaps add to its Web site a place where educational institutions and small business owners could come together to promote their programs, share experiences and expand best practices. American Express is prepared to assist in the creation of such a site or to perhaps utilize the Voices from Main Street Web site.

We also would welcome the opportunity to work with the committee to hold Internet-based committee hearings on this issue to allow the American small business community to provide more direct input.

Small business owners know they have a responsibility to get involved. They are looking for opportunities to assist local schools and other institutions in preparing the next generation for the working world, and a broader discussion with other members of Congress involved might be a next step.

Solutions will not be easy. Most small firms need help right now. But small business owners are cognizant of the fact that the problem requires both short-term solutions and long-term planning.

Small business owners also tell us that the solutions do not necessarily require legislation or the creation of new federal programs. In fact, solutions that require more paperwork or are inconvenient to access and manage will not be widely used and will not improve the situation for most small firms.

I thank you for providing American Express the opportunity to share with you what small business owners have told us. I am happy to explain more about the research we have conducted. And I look forward to helping you help small businesses overcome this critical dilemma."


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