Dashboard: Solving Monopolies, Immigration, Tipped Wages, and the Debt Ceiling

[Music] welcome to another 21 hats dashboard brought to you by our sponsor the great game of business I'm Lauren Feldman and I'm here with John arensmeyer who is founder and CEO of small business majority in advocacy group for businesses and entrepreneurs welcome back John thanks for having me Lauren always a pleasure John we continue to enjoy the Good Fortune of living in interesting times both on the economic front and on the policy front I'd love to know what you and uh the small business majority have been focused on lately what have you been paying attention to well a really interesting issue that's come up in the last year or two is the issue of competition corporate competition U concentration uh and competition and uh basically this is really a bipartisan issue which is really interesting which is a rare thing in our in our current political environment essentially uh there's a really move of foot to make sure that we have true competition in our economy and we've seen the rise of very powerful corporations particularly in the tech sector and we're becoming more aware of practices um between um companies and uh between suppliers and and and purchasers that are um really anti-competitive let me give you a couple of examples of this one is um the area of non-compete agreements uh it's it's really funny because you're talking about competition and W in in the term non non-compete agreements well I guess that means it's not really promoting competition uh there are only three states in the in the country uh one of which is where I ran my business California that do not allow um uh non-compete agreements and uh basically it impedes the ability for uh people to leave companies and start businesses it impedes the ability for businesses to hire people um I ran my business in a state that didn't allow it there was no shortage of of uh competitive entrepreneurship Dynamic entrepreneurship in California and um it really does enable people to stifle competition and to promote um concentration another example is franchise agreements these tend to be in varying degrees very one-sided in favor of the franchise or um and really limits the ability of franchisees to maneuver uh in a in a truly free and competitive way and just another example is and this is more on the tech platforms that are you know the self- preferencing where they'll they'll promote products uh that they make themselves um that compete against the people small businesses that are selling on their platform these are just three uh examples of a problem across uh uh across the entire economy and it is something that both the executive branch through the Federal Trade Commission and the justice department and the legislative branch through legislation on capital heral is really trying to deal with it as I said they're trying to deal with it in a bipartisan fashion tell me more about the franchise agreement one I think that's gotten less attention than than the others and I'm not as familiar with it what what would change there and how would that work well there are um there are laws California passed one and uh there's uh other laws pending that basically um do not allow certain types of of of sort of one-sided contracts by um by franchise ORS uh hidden Clauses in franchise contracts that allow the franchise or to come in and shut down uh a franchise and automatically just take the franchise away because of some of some supposed violation it also puts pressure on franchisees to um to not necessarily do the right thing there's a there's as people know there's a law that passed in California setting up sectoral bargaining in the fast food industry and um one of the issues there is that the interest of the franchisors and are very different from those of the franchisees and a lot of times franchisees and I'm not defending uh poor uh Employment Practices by franchisees but often times there's under tremendous Financial pressure to not be able to pay people as well as they'd like to pay because of their franchise agreements so we see this manifesting itself in a number of ways and uh their you their government can step in and set some rules of the road that allow for more free and Fair competition so the question I mean these topics have come up before you say there's a bit of a movement and it's kind of bipartisan do you are you optimistic that something that might actually happen with these I am because uh this this is happening across the economy it's gotten the attention of both at the state and federal level and it is bipartisan you see some of these bills the self- preferencing bill uh in the Senate is co-sponsored by Democratic senator Amy Kumar and Republican senator Chuck Grassley um people as U you know like Josh Holly are on some of these bills along with um with more more Progressive legislators so I do think uh there will be an opportunity now the counterveiling U side of this is that the the big um corporations particularly big Tech in this case poured millions of dollars into advertising uh to push back against um against this so it's not it's not going to be easy but I think compared to a number of things that we're trying to get accomplished um in our political world right now this is something that I think has legs and it's something I was I spoke at a conference yesterday on competition and all everyone was saying wow if we called one of these conferences 10 years ago we'd have a third and number of people in the room so it is something that has really you know struck a cord and I think will be some progress on a number of fronts interesting all right there a couple of other things I want to hit with you one of which is just kind of taking me by surprise I'm almost like asking what century are we in but there seems to be a movement to bring back child labor um the the governor of Iowa um as at the time we're recording this is planning to sign a bill that would remove some restrictions on child labor allow children as young as 14 to work in Roofing construction and demolition um I'm I don't even where is this coming from I have no idea well I do know where it's coming from but the as you say it feels like we've gone back a century or more um look we have a Workforce issue in this country and uh one of the things we can do immediately to solve that is is get our immigration um system straightened out get comprehensive immigration reform we hear from businesses everywhere the hospitality industry the construction industry um who um are desperate for for workers desperate for labor and they used to rely on on on on on immigration on immigrants to perform a a lot a lot of this work and it's just not happening now so basically if if you're a company that feels you have to hire children to and in many cases these are you know undocumented immigrant children to do work a you have a business plan you need to change and B you're operating in a situation where and I'm not in any way justifying what they're doing but where uh you don't have enough people uh available to do the work that's needed we need a a revamped um uh Workforce system here we need people trained for for for modern jobs and we need to absolutely uh expand our our legal immigration uh and we need to uh set a path toward um uh toward citizenship and documentation for those who are in this country are undocumented I'm afraid to ask but do you have any optimism at all that there is a possibility of real immigration reform anytime soon well this has become such a political flash point it's it's really um uh very very unfortunate and because of that uh I think that you know they going to be challenges however it is the business Community large and small who is suffering from not having a comprehensive immigration uh position and let's hope that you we certainly are advocating on behalf of small businesses let's hope that the combined efforts of large businesses small businesses um who tend to be in alignment on this issue uh can put some pressure to get some change uh it is unfortunately a a real political flasho now and um I I am optimistic but I I I am you know concerned all right next topic that issue of tipping especially in restaurants has been around for quite some time I don't think anybody really loves the system but it's very hard to change an entrench system like that there have been numerous efforts um but a different approach has been tried recently there are some jurisdictions that are trying are basically passing laws that Outlaw uh tipped wage systems and one of those jurisdictions is Washington DC where you live and I'm just curious I gathered the just went into effect in March and I think it's being phased in so I don't know how much of an impact it's made yet um but it's it was called initiative 82 and I'm wondering if you're seeing it make a difference I I gather it's it's addressing issues that are important to labor but it's also creating more bureaucracy for business owners um do you have any idea how this is playing out so far well it is being it is being faced in and business owners I know I live in DC restaurants particular are dealing with it in different ways putting SE charges on um you know automatic service charges in some cases um look we we should not have a system where uh the labor force is dependent upon the the kindness of of of strangers for their uh for their uh livelihood uh businesses all businesses should pay a living wage which we have a minimum wage um in DC and elsewhere and if if tipping is something that is happens on top of that great I certainly know that in particularly in higher-end restaurants uh servers can make a lot of money uh and that's great um but it shouldn't be at the expense of people working across the restaurant system who um literally are barely making ends meet they need a guarantee that they're going to have a certain level of income and yeah we need I I'm I'm not for crazy bureaucracy we need a basic system where you're paying uh a fair wage and if if people tip on top of for that that's fine if that's the tradition in your industry that's fine but we shouldn't uh have people have to rely on that we shouldn't have business plans for restaurants uh assume that well this is all going to work out because my labor costs are low and if customers want to tip great uh that's just not a very healthy economic system moving forward I think there there is legitimate fear among business owners that you know if if you give them a more rational business model which is what you're suggesting that inevitably means higher prices and it's reasonable for someone to wonder how much more will people pay um have you is that issue starting to rise in DC or are we not far enough into this look as I said some some businesses are adding SE charges I'm personally fine with that I mean businesses should charge what they need to charge in order to cover their costs pay their employees uh a proper wage make a profit and you know the how that money comes in you know it comes in in different ways but it shouldn't part of that business model should not be that that your workers particularly at restaurants and you know that are that have lower margins that U maybe not in in such fancy areas um we shouldn't um it shouldn't depend on on the kind as I said the kindness of strangers to pay a part of that you should be you should have a set of costs and you should charge your uh price your product accordingly all right one more topic um on our list of unsolvable problems um starting with uh figuring out how to get sellers to be able to compete fairly on Amazon uh with Amazon to um solving the immigration uh issue to tipping perhaps the most impossible of all is the debt sealing issue that is looming before us I'm no expert I have no idea where this is going I'm not sure you do but I'm curious do you have any advice for business owners who are wondering if you know this whole thing is going to blow up in a month um or have you heard anything from the business owners uh that participate in your organization uh about what they're planning to do or is everybody just holding their breath well it is remarkably unbelievable that we'd have a government that doesn't pay its bills it doesn't pay for um for expenditures uh that have already been uh voted on by Congress it is it is remarkable uh yes we have herur and businesses they are concerned um I think the the disaster that would be fall the economy is so great it's kind of hard to get your arms around it um you know our only advice to to business owners is um no we we don't know for sure what's going to happen and I suppose you should be careful uh don't assume you're going to have a credit available um if this happens if you're a government contractor don't assume you're going to have any contracts um for for a while I mean I hate I hate to have you know we actually are pulling out of the pandemic our polling is finding that businesses are actually fairly optimistic about the future despite uh inflation despite some of the other um um problems that we're facing but um uh yeah I mean if you you know at this point given the sort of um nutty nature of of of of Congress uh I you know it's hard to say that this is going to get resolved even though it's been resolved in the past and I guess business owners like all of us should be um concerned and and maybe being a little cautious that caution can by itself do damage to the economy if everybody pulls back and you know doesn't expand um or even Cuts back on employees even if the situ is solved you could have the economy uh slowing at a what is a difficult time even without that you're absolutely right I mean everything I just said about you know advice to business owners and trying to be you trying to be realistic here is not healthy as I said we're we're actually seeing uh lot of evidence that there's optimism in the small business sector and that people are are are moving on so you're absolutely right I mean the only I don't I wouldn't call it good news but the the only issue is that it sounds as if this is going to have to get resolved from way or the other in the next month I believe treasury secretary Yen has said that June 1st is kind of the witching hour so uh it's not as if businesses will have to spend the next six months necessarily worried um and they're probably limited as to what they can do in the next month so uh I think we're going to we're going to see this it it is still incredible to me that this might happen but um you know I anything's possible in this political environment and uh certainly for the next month or so I think businesses should be a little cautious it's kind of amazing to me I think we've been talking about the possibility of a looming recession for close to a year now and it not only hasn't it come I mean we just got a jobs report that showed you know very robust growth um it's almost like if we if we can't get this recession we're going to create one ourselves that is a fear and I um I'm not an economist but um small businesses certainly have concerns that the interest rates keep keep Rising uh obviously that has choked off some credit um and you know at the same time businesses have been struggling with inflation also so if in fact this does um end up reducing inflation and we have seen some signs that inflation is easing then then that'll offset uh some of the some of the credit concerns so um you know who who knows I if they if they don't solve the debt sealing problem they that would certainly solve the inflation problem I suspect uh that is an unfortunate way to solve it but uh you're probably right all right well I like your optimism on uh on the competition front I think there are a lot of really important issues there and that's what I'm going to take away from this conversation we'll see what happens with everybody else John ainm is founder and CEO of small business majority uh John I really appreciate your taking the time well you run a small business you got to be an optimist so I'm an optimist and uh thank you for having me Lauren of course this episode was brought to you by the great game of business which helps businesses use an open book management system to help build healthier companies you can learn more at Great game.com thanks John have a great week everyone [Music]