John Hickenlooper: Leveling the Playing Field for Small Businesses
Governor Hickenlooper’s Plan to Level the Playing Field for Entrepreneurs
As an entrepreneur and a small business owner, John Hickenlooper will come to the presidency with an appreciation of the importance of small business in America. Hickenlooper will unveil his full economic agenda in New Hampshire next week, but ahead of an appearance at San Francisco’s Commonwealth Club on Friday, Hickenlooper is releasing a plan to strengthen national anti-trust policies to ensure space for small business growth.
Background: The Impact of Monopolies on Small Business Growth
Small business is one of the great engines of the American economy. According to the Small Business Administration, small businesses (which SBA defines under 500 employees) account for 65.9% of net new jobs created from 2000–2017, and comprise 41.1% percent of private sector payroll.
Yet America’s start-up economy is slowing down. Fewer people are deciding to become entrepreneurs. According to the Census Bureau, 414,000 startup firms created 2.5 million new jobs in 2015, below the average in the 2002–2006 period of 524,000 startup firms and 3.3 million new jobs per year.
The peak was in 2006, when 558,000 startup firms created 3.4 million jobs. Simply returning to those 2006 levels of American innovation would result in 150,000 new startups and 900,000 additional jobs compared to our current track. Hickenlooper believes that, with the right policies and leadership, it is possible to spur multiples of that kind of expansion of entrepreneurship and start-ups.
The decline in start-ups in recent years is partly due to the rise of competition-strangling mega-firms in many sectors after decades of erosion in anti-trust enforcement. America’s two largest hardware stores now control 80% of market share. Currently, four companies control 98% percent of the cell phone service provider market share. Fully 56% of all e-commerce is controlled by Amazon and eBay. Even America’s beer industry is 75% controlled by just three companies.
Such market domination creates opportunities for sector giants to undercut competition from small business in numerous ways, from locking them out of supply chains, to outright buy-outs of potential new entrants in the sector. Monopolistic companies also use tactics such as non-compete agreements to prevent employees in their sectors from starting their own firms. Nearly one in five American workers are subject to noncompete clauses, and research shows that states with enforceable noncompete agreements have lower rates of within-industry entrepreneurship. One study finds that enforceable non-compete agreements may lead to an 18% reduction in new firms in knowledge-intense fields.
Addressing the Rise of Monopolies: Changing the Focus on Anti-Trust Laws
In the late 1970s, the so-called “Chicago School” began to undermine the role of antitrust laws in protecting upstart businesses from unfair competition. This school of thought posited that antitrust intervention was more likely to harm consumers — to take actions that were “false positives” in their words — than to protect consumers by enabling competition. In a range of areas, including the rules of predatory pricing and what constitutes monopoly conduct, the Chicago School approach gutted the effectiveness of antitrust law. By picking antitrust enforcers who espoused this approach, and by picking judges who championed it, our antitrust laws are no longer working effectively on behalf of consumers and entrepreneurs.
The results of the Chicago School agenda are in and they are a more concentrated economy, a harder environment for entrepreneurs to build businesses, and a more difficult environment for consumers and workers. As President, Hickenlooper would push for a “post-Chicago School” approach to antitrust, appointing enforces who appreciate the need to encourage competition, nominating judges who are committed to the original aims of the antitrust laws, and supporting legislation and administrative actions that encourage competition. To support these goals, he would support legislation to restore the Clayton Anti-Trust Act to its original purpose of encouraging competition instead of solely focusing on general public welfare.
Addressing the Rise of Monopolies: Codifying a Right to Repair
Big corporations have been intentionally making their products more difficult to repair by adding software that prohibit nonauthorized repairmen from doing the work. These practices prevent owners of products and small businesses from doing the work and increase the costs for consumers because of the lack of competition. As President, Hickenlooper would encourage Congress to pass legislation that prohibits companies from preventing others from repairing their high-value products by outlawing diagnostic authorization and requiring companies to release repair-related manuals. This proposal would be directed towards large purchase like automobiles and agricultural equipment. This will allow individuals to easily repair things they own without needing to pay corporate-affiliated repairmen. This change would also lead to more market competition amongst repairmen because smaller shops could fix a greater variety of products.
Addressing the Rise of Monopolies: Limiting Non-Compete Agreements and Prohibiting Non-Poach Agreements in Franchises
Too many American workers have lost the ability to break out on their own because of noncompete and non-poach agreements. Companies should not be able to tell their employees they can’t look for better opportunities elsewhere. These agreements stifle innovation, suppress wage growth, and prevent workers from taking the skills they have learned to new adventures. States that do not enforce these agreements see more innovation, more startups, and higher wages for employees.
As President, Hickenlooper would urge Congress to pass limits on noncompete agreements in hiring contracts to short durations, prohibit them for non-exempt employees, and force companies to prove genuine harm before legally enforcing the agreements. He would also enforce our antitrust laws appropriately to prevent franchises from using “no poach” laws to prevent workers from benefitting from competition.
Addressing the Rise of Monopolies: Federal Data Collection and Publishing
The federal government’s commitment to addressing and understanding industry consolidation needs to be redoubled. In 1981, the Federal Trade Commission stopped publishing and collecting industry concentration data. As President, Hickenlooper would bring back the required 1981 Federal Trade Commission reporting on industry concentration. Moreover, he would also commission more studies and analyses, including retrospective evaluations of consummated mergers, providing guidance for future work and even investigating whether completed mergers should be undone.
John Hickenlooper: Rooted in Entrepreneurship; Focused on Small Business.
This set of policies flows from John Hickenlooper’s life experiences. John Hickenlooper moved to Colorado in 1981 to pursue a career in geology. In 1986, due to a downturn and changing economy, John and thousands of other geologists to lost not only their jobs, but their profession. John was out of work for two years. In 1987, he and some friends decided to start their own business. Using a library book on how to write a business plan, and cobbling together loans from the local government and family and friends, they opened a brewpub in an abandoned warehouse district.
Rent was cheap in this forgotten corner of Denver, costing only one dollar per square foot per year. John worked with other small businesses to create a dynamic, new neighborhood that became a national model for urban revitalization — now known as LoDo. John ultimately opened 15 brewpubs and restaurants, almost all in historic buildings, mostly across the Midwest. As he did in Denver, he worked closely with other businesses, nonprofits and local governments to help revitalize the downtowns around each of his brewpubs.
Hickenlooper saw how small businesses can transform a community, and he is committed to their strong growth as president.
 https://www.progressivepolicy.org/wp-content/uploads/2019/02/PPI_Escaping-the-Startup-Trap_Feb-2019.pdf and “Frequently Asked Questions,” U.S. Small Business Administration Office of Advocacy, August 2018; https://www.progressivepolicy.org/wp-content/uploads/2019/02/PPI_Escaping-the-Startup-Trap_Feb-2019.pdf and “Frequently Asked Questions,” U.S. Small Business Administration Office of Advocacy, August 2017
 https://files.taxfoundation.org/20190403131203/Tax-Policy-and-Entrepreneurship-A-Framework-for-Analysis1.pdf new and https://www.kauffman.org/what-we-do/research/business-dynamics-statistics/business-dynamics-statistics-briefing-jobs-created-from-business-startups-in-the-united-states