There is nothing small about infrastructure reform. The national need for repairs and new construction is staggering, and President Trump’s new proposal is huge — designed to stimulate $1.5 trillion in infrastructure investment, including $200 billion in direct federal funding.
But even the biggest American projects must include a small component: small business. To leave America’s entrepreneurs out of this massive undertaking would be a sizeable mistake; it is Congress’ responsibility to include small firms in infrastructure legislation.
{mosads}We’ve seen the small-business community nearly left behind in other recent, large undertakings. Tax reform was originally drafted without adequate consideration for pass-through entities. Some might argue that, even by the end of the legislative process, small firms took a distant second place to the big corporate wins of tax reform.
For example, tax cuts for small businesses will expire; meanwhile, for publicly held companies, the new, lower rates are permanent.
Federal health-care reform, historically, has left small business out in the cold. Health-care battles in Washington, D.C. are fought among the bigs: big insurance, big pharmaceuticals, big employers and big government.
No matter what the shape of legislation has been, the individual and small-group market is left with the same result, time after time: higher premiums and fewer choices.
The risk for small business to be left out of infrastructure reform is especially high because it is not immediately obvious what small business has to do with huge projects like building roads or airports.
But the small-business interest is actually powerful, and twofold:
First, repairing our nation’s infrastructure is essential for the health of every business. Large and small companies have equal need for a highly functioning system through which to move goods, people, energy and information.
When that system is broken and slow, every size of business slows down, too. Since small firms create two-thirds of our net new jobs, we can’t afford to have them riding the brakes.
Second, the federal, state and local contracting dollars of infrastructure reform will be a very, very large pie. Small business, which makes up fully half of the American economy, should get at least a healthy slice.
While a business with fewer than 10 employees won’t be applying for a contract to build a bridge, there ought to be a guarantee that a certain percentage of the subcontracts on a bridge project (for example) will go to small firms.
Unless Congress mandates that large, “prime” contractors meet certain subcontracting goals or requirements, there is a risk that small firms will not have a fair chance to contribute to this massive national undertaking.
Requirements should be put on prime contractors in the name of fairness, but also in the interests of innovation, efficiency and job creation. With all due respect to our nation’s big businesses, no one brings perspective and creativity to a project like an entrepreneur.
A small business is also more likely than a large business to grow and hire more people when it is part of a federal contract. Seeding federal projects with companies that are owned and run by individuals (not shareholders, boards of directors and CEOs) is good business and good economics.
If Congress can come to an agreement on how to move the president’s initiative forward, the task of building and repairing our nation’s infrastructure will be one of the largest construction projects in American history.
For members of Congress, who routinely pay lip service to the value of small businesses, this will also be a big chance to prove that they really understand there is nothing small about the sector’s economic and cultural contributions.
The small-business community will be watching infrastructure proposals closely, and they will register their approval — or otherwise — at the ballot box in November.
Hector Barreto is chairman of The Latino Coalition, an organization aiming to develop initiatives and partnerships that foster economic equivalency and enhance overall business, economic and social development of Latinos. Barreto was the 21st administrator of the U.S. Small Business Administration.