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Richard Helppie
Hello, welcome to The Common Bridge. I'm your host, Richard Helppie. Today we've got the president and CEO of the Small Business Association of Michigan (SBAM), Mr. Brian Kelly. Brian, welcome to The Common Bridge.
Brian Calley
Thanks for inviting me, a pleasure to be with you today.
Richard Helppie
We're happy you're here. A lot of people know about your success in the private sector, your extensive public service work as the lieutenant governor for the state of Michigan, two terms in the Michigan House of Representatives, two terms as Ionia County commissioner, and prior to that over ten years with the community banking industry and you still serve on the board of a bank as well as Oakland University, among many other charitable endeavors. But today we want to talk about workforce. The work world is changing, factories are being automated, there's remote work (or is there?), artificial intelligence; so much of our tax base is wrapped around employment. Brian Calley is a true policy expert about these things and we're also going to talk about one of his achievements while lieutenant governor; that is the Gordie Howe International Bridge spanning the Detroit River. But Brian, welcome to the show and just to introduce yourself to our listeners, our readers and our viewers, where were your early days and your education and maybe a little bit about your career arc, if I've missed anything.
Brian Calley
I appreciate the invitation and very flattered to get an invite like this. I want to tell you a little bit about SBAM, what we're doing right now, but just looking back, briefly; born and raised in Michigan, when I was really little in the Detroit area and then my family - after my dad got out of the army - was settled in the center part of the state where I still reside today, in Ionia County. I was in the banking industry straight away, was not really expecting to go into politics. I was always interested in politics, a volunteer involved knocking on doors for other candidates, that sort of thing. But it was really getting involved at the local level, the Ionia County Board of Commissioners that kind of gave me the bug and I thought about maybe doing it on a more full time basis. I ran for state representative and served during some of Michigan's most trying times: 2007, 08, 09 and 10. I was in the House of Representatives and those were really, really difficult times, the financial crisis around the globe hit Michigan especially hard, essentially in a recession or near recession for the whole decade, the first decade of the century. Then I met a person named Rick Snyder - I'd never heard of him before - when he decided to run for governor. We really hit it off and that really did culminate in me joining the ticket with him in 2010. And what exciting times, there were huge changes Michigan had to make, you hear about these days, they talk about the state budget being like 80 billion. But after that great financial crisis how low Michigan had sunk. When Rick and I first took office, Michigan only had about 46 billion back in 2011 to balance its budget. So it was a very, very different time, but a time when we had to rebuild and make big changes and those big changes turned from population losses into population growth, that turned economic and job losses into economic growth and very robust job growth to go along with that. So very exciting time. Then when my time in public office as lieutenant governor ended, I joined as leader here at the Small Business Association of Michigan, not to be confused with the Small Business Administration of the United States federal government. So the US SBA that does loans and guarantees is a different organization. We're a trade association just for small businesses; 31,000 members in every industry you can think of spread across literally every county, all 83 counties, in Michigan. And it's an unusually large association in terms of membership, the largest of its kind in America by a lot. It's really a testament to how big small business is in Michigan. We think about corporate giants being headquartered in Michigan, and we're lucky to have them but even those companies started as small companies; think about Dow and Stryker or Gerber, Kellogg, these are multinational corporate names to the rest of the world, but here in Michigan those are family names and in some cases, family is still around that started those companies. That small business ecosystem is in our DNA here and so it's just been an honor to work on behalf and alongside small businesses and to see what's happening today, which really, especially since the pandemic, we've seen record new small business starts and the five year survival rates starting to trend upward, which is a really, really powerful combination.
Richard Helppie
Topics very close to my heart, having been a startup entrepreneur multiple times. It's an all in, and it's a rare business that goes the five years or 15 years or multi-generational like the Gerbers or the Kelloggs and the other great institutions of the state of Michigan. I know there's a lot on the mind of the small business community today and chief among them is getting a good workforce. So what is the labor situation today and what's the mission? What are the some of the objectives and is Michigan different than other places? You hear Florida is booming. What are we finding out about the workforce in Michigan today? And how does it relate to the rest of the country?
Brian Calley
We are in a predicament here in Michigan, we have a perfect storm of issues working against us right now when it comes to workforce. We have a low labor force participation rate, about 60 percent of those in the labor force according to economic standards. So it'd be over age 16 and still alive, that's the denominator of the fraction, and then available and looking or in the workforce being the numerator of that fraction, so it's 60 percent. Leading states are more like 65, 66, 67 percent so it's a pretty big difference. Michigan's labor force participation, if you were to go all the way back to the year 2000, 23 years ago, it was 68 percent. That's over 700,000 fewer people in our workforce today as compared to the year 2000. What's happening there, we do see prime working age labor force participation actually is about 4 percent less than it was 20 years ago. That hurts us in the worst way. I mean, that's the girth; that 25 to 54 is what economists call prime working age. So that's fallen back some, there are some reasons that we've identified for it that we can get into later that, I think, deserve some policy responses. But we also have an older than average state. Our birth rate does not keep up with the people that are exiting the workforce and the number of people that die each year. That puts us in a position where our population outside of immigration or migration of people is locked in for the next 20 years at least; it's going to go down and so that is really quite a predicament. Labor force participation rate is low, our birth rate is not what it used to be because our average age is higher and more people are exiting the workforce than entering it in Michigan; kind of a perfect storm. So as hard as it is to find people today, it will get harder in the next decade.
Richard Helppie
Does that older population, older workforce mean there's more opportunity for an ambitious young person to come to Michigan and build a business and build a career?
Brian Calley
I really think that that's a great insight. When you consider there's a lot of places that are exciting to go to, and you brought up Florida, when you look at net outbound migration since the pandemic, new census numbers have come out recently that show the three biggest gainers of Michigan outbound migration are Florida, Texas and North Carolina, the Sunbelt is really gaining a lot of people. Now we do have some net inbound migration from two places, places that used to take our young people, places like Illinois and Chicago we have net inbound migration; now from New York we have net inbound migration, but overall, across the whole country, we are down. So where are people going? Sunbelt is definitely one of those places with a lot of energy, a lot of growth, a lot of excitement, a lot of building and so I think there does deserve investigation as to what makes those places so special or such an attraction. There is a ton of demand and opportunity here in Michigan, a lower cost of living in some of those other places too, so that does create opportunities. You have an older than average population, it means that more slots in senior level positions and in high up areas, and also in entrepreneurship and gaps in the marketplace there will be lots of opportunity here in Michigan. But I think it's important to acknowledge that it's not just...people don't necessarily follow jobs, in fact, these days, jobs follow people quite a bit. I think one good example would be for all the talk of Michigan luring in say, Ford Motor Company to build a battery plant in Michigan, those are production level jobs. But when it came to a new engineering center, it went to Atlanta, Georgia. And so when you think of that young, new upstart talent and where are they going and looking for it? While production jobs are kind of nice to have, I understand why our state has kind of targeted those in their incentives but really having the high value add; early stage, that design and engineering and those types of...I think we have to be really careful not to lose those parts of that production process. And that's where you see a ton of engagement with smaller firms that are part of that ecosystem for larger supply chains. That's what I love about what we do here in Michigan, we've got stand alone small businesses and then we've got small businesses that are part of huge supply chain operations. And while at the end of the day, there's a product that's sold by a big company, like an automotive company, for example, or medical appliance manufacturer or chemical manufacturing and furniture manufacturing, that all throughout that supply chain there are tons of smaller companies that really are nimble and creative and innovative and are feeding into the supply chain. The way I look at it, a small business has a piece of the success at every level of business and that's where we have an opportunity here in Michigan; those big company supply chains do create opportunity for smaller companies. But it's not just that, I think that we have to take a page for just the energy...and I'm going to use the word place-making because I can't think of a better term or there's not been a better term invented yet that I know of. Because place-making, some people are like, make sure you have nice curbs and flowerpots on Main Street, that's not what I'm talking about. What I'm talking about is vibrancy and energy, high quality of life, just the types of amenities that draw in the next generation that aren't just following where the job is. But instead, you've got to have the job and the opportunity for a career outside of just a job, but also the place that they can see themselves making a life and spending their free time and building a family.
Richard Helppie
Well, we certainly have got enough of those in the state of Michigan, the fun things, the festivals, literally 12 months a year, and plenty of outdoor recreation, plenty of cultural development. Of course, I'm very excited about what's happening in the city of Detroit. I mean, we have just a resolute focus on the future, and I think Detroit's on the upswing and not likely to go backward. When you talk about place, I've heard you speak before about the linkage among housing, employment, education and training and thriving businesses, all of these are necessary in order to create demand for a workforce; what's going on in your organization to try to make sure that housing education and opportunity are there?
Brian Calley
We take a real broad view on what it takes to be successful to create an environment of success around small businesses. It comes from the knowledge that a small business is located in an area - most of the time that small business can't just pick up and go someplace else. It's not like where in the world do we want to be because that small business owner has made a life and likely in the community where they're operating. And it's the talent pool they draw from, their connections, their credibility, their resources, just their whole life built around a community. When you take that now, it's like the community that they're in is the region that they're really tied to, then to recognize that places need business, business needs people and people want place. All of those we think of like a triangle, these things are connected, and if any one of them are not working optimally, none of them will work optimally. So that does give us a pretty broad view on what is a business issue. We spend a lot of time on people and place issues because it's required for workforce, which is our biggest challenge in the future. There is a shortage of housing in Michigan, it started during the great recession when we had a big outbound migration of people in the first decade of the century. We lost a lot of trades people and new build permits plummeted. So now we find ourselves with a housing stock that has an average age of about 50 years old and we're short almost 200,000 housing units. Even when new units are being built, a lot of times it won't match up with the market of people that need housing and in the housing that's available; they just miss. So we know that we've got a big housing issue and challenge and we need supply side solutions to deal with it. The other area that we've really gotten involved in is childcare, where we have people that left the workforce temporarily, or in some cases long term, but really intend to get back in throughout the uncertainty of the pandemic. The shortage in childcare is so acute that...remember that prime working age and I talked about the number of people that have fallen out in prime working age, childcare is a piece of that answer. So we've really focused on childcare, on both supply and affordability of options for younger families with children. And then beyond that, another area in that lower prime working age labor force participation, we believe that about half of the 4 percent drops - remember there's a 4 percent drop in 25 to 54 year olds in the last 20 years in their labor force participation - about half of that 4 percent drop we believe is directly tied to opioid addiction. And that is really kind of staggering when you think about the impact.
Richard Helppie
Is that a demographic change, fewer people because they've aged into another bracket? So it's not looking at the same population, it would be looking at the population as it existed at a point in time, and then the population as it exists today.
Brian Calley
Yes, that's true but it's important to understand that we're talking about proportion of the total. So not only did the pie shrink, but the percentage of people in that shrunken pie has gone down 4 percent.
Richard Helppie
One of the things I read about in preparing to talk today, you've got a real focus on employing everyone; a disability, what have you. Over the weekend I was at a coffee shop in Livonia and there was a little placard on the counter that said, our team member is deaf so here's a plastic menu, circle what you want. And I thought hallelujah, here's somebody that's got a job with a minor modification and now one more person is in the workforce. So you're expanding that workforce among the other populations that you're getting to work based on their age, based on whether they need childcare, based on can we accommodate their disability. Is there a way to help people come back from opioid addiction and re-join the workforce?
Brian Calley
There is and it requires us to look at addiction as a healthcare issue rather than a criminal justice issue. So people that are dealing drugs, yeah, that's a criminal justice issue, but being addicted...and then there's a whole bunch of things when a person goes into drug seeking mode, their brain is literally not working right because of that addiction. The idea of a treatment based approach, based on evidence-based practices, including medically assisted treatment, is really changing those trends; it's more possible for people to recover from addiction than before so employing that and fusing into the criminal justice system. That's why you see SBAM so involved in criminal justice reform, childcare issues, disability employment, our K-12 issue, benefit cliff issues on social services; all of that work goes right back down to this perfect storm of demographic challenges that we face and saying, for at least the next 20 years, we know that except for inbound migration, the demographics of our population are such that we are going to shrink. Since that's the case, we have to have a higher level of success in getting people into the workforce among that pie that we have. So who's out of the workforce, we look at it and say okay, people that have been through the criminal justice system, what can we do in the areas to divert people from jail or if they're already there to give them a new pathway, things like vocational village in prison teaching skilled trades so people have a high degree of employ-ability as they leave. That's been a wildly successful effort in reducing recidivism and independence after leaving incarceration. These are things that are solvable. While our system tends to want to see...we've got this labor force challenge and it's locked in for the next 20 years, what can we do? It defies some big sweeping across the board answer, rather it's looking at literally dozens of different populations, understanding what are the barriers to them getting into the workforce, and then having consistently applied successful program answers, barrier removal for each of those populations to make a little bit of incremental progress. So when we look at childcare, there's a subset of the population that fixing or aiding in the childcare process or conundrum for many families will help. It's just a subset. If we do everything right there, it will make our labor force participation rate a little bit higher. If we're more successful in getting people with disabilities, you talked about that. The question in disability is oftentimes...one of the things that scares employers away is this word "reasonable accommodation" from the Americans with Disabilities Act. It sounds scary, like, wow, that sounds like it could be expensive. But the really cool thing that more and more employers are finding is not only do you get more loyalty and longevity out of employees with disabilities when you figure out what is the accommodation you need to make for that employee, but it tends to be an accommodation that simplifies the process, makes it more accurate, increases customer service, and helps every other employee involved. So in your example, with circling the menu, I'll bet you that that employee who is hard of hearing is more accurate with filling orders than people that are listening to an order and writing it down. It's taken an opportunity for mistake out of it; it's probably a good process for every employee to use, not just those that are hard of hearing.
Richard Helppie
What I really like about what you're talking about is that you're looking at the problem, breaking it down, applying solutions as we go, good government, kindness - I've always said this country is filled with compassionate and generous people - people in government, people that are in the private sector; it's very encouraging. But you've got some headwinds from a policy perspective, things like independent contractor requirements, temporary employment agencies - and the one that I worked in, retail and restaurant hospitality - predictive scheduling, it's really difficult to legislate something like that, and wage disclosure and job maintenance requests. What are some of the headwinds you're seeing on the policy front?
Brian Calley
There are a barrage of proposals coming through the political process right now at the state level, and then some through regulatory means at the federal level, that would really dampen all of this energy that we see happening in entrepreneurship in the last few years. So if you were to look back, starting halfway through 2020 and continuing to 2021 and 2022, we saw people really turn to entrepreneurship and a very common way that people do that is by becoming an independent contractor. So a very common way that people start a new business, they might have a professional career and they've got some sort of a trade or professional service that they do for one company as an employee. And they decide to leave that employment and their former employer is their first customer. Then they hang a shingle and they're doing it for other people, but they're working as an independent contractor before they're ready to grow and take on employees. There is a proposal that is like a fight between big companies and big labor. These proposals are really...the collateral damage would be small businesses that are getting formed. By saying basically, that a company cannot outsource anything to a smaller company or an independent contractor operating as an independent contractor, if it's in the usual course of their business. So I could fix the window here using an independent contractor but I couldn't use somebody to do web design because that's in the usual course of my business to offer a website. That sort of thing could really throw a wet blanket on all of this exciting activity. And so we're in education phase trying to help these new legislators and the people that are making the federal rules understand the impact that these proposals would have. You brought up predictive scheduling - the idea of guaranteeing two weeks out exactly what a schedule in retail or restaurant or hospitality is going to be - if you don't, if you deviate from that schedule, having to pay overtime. Well, the way that the workforce works today and the unreliability, you can't guarantee what a scheduled is going to be two weeks in advance. I have a professional position, I cannot tell you exactly what my schedule is going to be two weeks in advance, there are so many things. Imagine if you're running a golf course and it rains, you just don't need as many people on those days when fewer people are out on the course, these sorts of things. We have to make sure that we don't create a climate...like we can do everything great with workforce, we can do everything great with our housing and infrastructure and communities but if we create a regulatory burden that is so onerous for small business, they can't survive, they can't make it to maturity those small businesses making it past the first five years, then all the rest of that work will have been for nothing. Because remember, the three legs of the stool, places need business. So we have to make sure that this place is as competitive and predictable and reasonable for entrepreneurs that are putting their whole life, their reputation, their time, their energy, their capital, into this enterprise. Most of us have investments and they're spread and diversified, for entrepreneurs, oftentimes their entire financial livelihood is wrapped up in one singular enterprise and when you put it in that context, you realize how important it is to make sure that they have the environment that they succeed or fail based on the strength of their idea and the purpose for the business and the work ethic they put into it. They shouldn't succeed or fail based on external forces like regulations that are so onerous they can't survive.
Richard Helppie
It's a policy very close to my heart as a entrepreneur, the bet is net worth three times, and understand the exhilaration and the absolute terror of trying to get that next payroll out and that type of thing. And in that role, you're always looking for good people, you're looking for ways that you can support them so that they can be most productive. But also, it's an expense, like, oh, do I really need somebody to do that thing now, because I've got such limited resources as a young company. And I shudder to think if the state of Michigan or the federal government would have come in and said you could only hire people on 40 hour a week basis and not bring on stringers, never would have got off the ground, and enterprises that have turned out to be very, very successful, just wouldn't have happened. So in your work with the Small Business Association, what type of ideal policies are you promoting? I understand the defensive part of "let's not do that" from perhaps folks that haven't actually run a business before but are there policies that you're promoting as ideal places to work?
Brian Calley
First of all, we can talk about government policies, but then there's also best practices and how can small businesses make sure that they're in the best position to compete and win out there in a very, very competitive job market. On the government side, education is so key. So having education, workforce development and lifelong learning opportunities for people that are well aligned with what the world demands, that's just a key ingredient, and also that we're not creating more hardship than help with things like our criminal justice system. There's kind of the old, 1980s way of lock everybody up; it has given way to this idea of how do we understand what's the root cause of the problem, fix that problem, so we can reduce recidivism and improve this safety in our communities and get people back on their feet and employed. So those types of policies that are really pushing past the old way of thinking and embracing the idea that people can get back into productive society and that's a benefit to all of us when they do and the best practices from this. It's been really fascinating to watch how businesses of all sizes, but I'll say especially small businesses, have leaned into some competitive advantages. What they have first is flexibility. Now flexibility is not...don't read that as being just remote. Remote work is one form of flexibility. But there are lots of ways that flexibility can come into being. I see employers that are trying to be as flexible as possible, are giving a new generation of employees that want to fit work into their life, instead of fitting their life into their work. I mean, I did growing up in the 1980s, born in the 1970s. To me, I fit my life into my work, it's just my mindset, my work is like my identity. But I think the faster that those of us who are on the second half of our careers can understand and embrace or just accept that generations coming up after us - Millennials and Gen Z - they look at it very, very different. So flexibility is very, very important for companies to grow. But what I also see happening is embracing automation and artificial intelligence, technology in general, doing things differently as a response to the lack of finding workforce. So I think under the surface right now...it's funny when you have as many members as [we do] we see anecdotes pile up and can see and read the story sometimes before the economic statistics show it, and what I think is happening under the surface right now is a productivity revolution. And that productivity revolution is people finding and deploying different processes, systems and technologies at a smaller scale than ever. It used to be automation was like when you are making this many widgets you invest in automation, that it's worth it to make the investment. But when you can't find people it changes that calculus, like now, if you look at it and say, it's going to get harder in the next ten years to find people, then more and more entrepreneurs are looking at available technologies to operate more efficiently; how can I still grow without having to hire as many people - it's a different mindset. It used to be that we thought of economic success as how many people that you employ, but as you know, being a person who's signed the front side of paychecks, that you don't start a business because you aspire to employ more people, that's a byproduct of the purpose and the mission of the business; you need people to grow. In the absence of people, technology has a bigger and bigger role to play in the future so I see that deployment of technology. But I also see employers that are willing to do more things to get more involved in problem solving with their workforce, to help them get past whatever obstacles or barriers that they have. It's interesting watching it too, those who get over it quicker...this idea of like, I never used to have to get involved and make sure that my employees have stuff figured out in their lives and that they've got whatever they need to show up for work. But there are people living on the edge that to you or me, our car breaking down, it's just an inconvenience. There are other people where it literally means they lose their job, because they just can't figure it out. But those employers that are figuring that out, are planning on and embracing the idea of helping their employees figure things out, being flexible, helping them to figure out these challenges, are having more success in retaining people, finding people. Just a new world, it's different than it ever used to be.
Richard Helppie
Absolutely. Great corporate culture is I want you to be great at your job, what do we need to do to help you be great at your job. I know as an employer, I discovered all kinds of different things. With labor markets, labor markets will always come into balance, there's going to be a hot skill, there's going to be a deficit of those skills and then either technology will eliminate that demand or help people become more productive and fill in there. What I've always been fascinated with is those people that are trying to create yesterday's labor environment versus the future. A couple of examples here. The union for the writers in California - predominately California, the Hollywood screenwriters - they were aiming at the future; I thought that was a great target. They were saying, look, writing 22 episodes for a network broadcast over a season, that world's gone. It's about streaming now, but we can't get paid right for streaming with the current contract. Yet we've seen in our own town, I think it's going away, where some of the bigger unions who helped us build a great middle class and got people's ability to participate to the maximum in the workforce, did a lot of good things, wanted to try to recreate 1960 again, with the number of labor hours that went into building a car without the inefficiencies. So unions are a good force when they're joining to build great enterprises. But we've had changes in the state of Michigan, the cradle of organized labor, and we've eliminated the right to work laws, and now that perhaps is at risk, what's going on? How are the right to work laws designed to work? What are some of the pros and cons? What are some of the risks to that right to work legislation that we have today?
Brian Calley
Right to work is real simple to understand. It just means that the employee is in the driver's seat. They choose to join or pay agency fees to a union or not; each individual employee decides that for themselves. Are you on the side of business or on the side of labor; right to work is just on the side of the employee, the employee decides. The employee is the boss. It's just like any other association, they're the ones who decide whether or not they join, is the service worth the cost of joining. In a nutshell, that's all right to work is but it sends a signal out there, to the rest of the world, that there's just...the states that have right to work laws, have, on balance, done better in the last, especially, in the last two decades. So when you look at where any individual state was before and where they're at now, you see that between population growth and income growth...here in Michigan, I think, is a great example, that over just a period of about ten years the amount of income growth and job growth, the population growth that started coming back, there was net inbound migration to right to work states, net outbound migration for those who are not right to work. So there's lots of good supportive economic data to support that policy. By repealing it, what happens is Michigan just gets crossed off the list of places where companies make major investments that aren't already dealing with the labor environment here. What it says is that - it's kind of like the old days - labor unions are back in charge in Michigan. For a lot of companies, they look at it and say, you know what, I've got a lot of places in the world I could be, let's just cross Michigan off the list. The sad thing is that we don't even really know how much we lose, because we were never even in the ballgame in the first place. When you look at what had happened before, we knew when we were in the game and on the hunt and trying to land some deal. You know you either want it or you didn't want it. The big risks that we faced with right to work is how many companies crossed us off the list and we would never have been in the game in the first place, never even know how much you lose. So I think this will make some difference. It's hard to you know, there's a lot of factors that go into play. I don't want to oversell it, like this is the one thing. When Michigan went from a shrinking state to a growing state [for] unemployment and population and income, it was a whole bunch of things that changed. Becoming right to work was one important facet of that.
Richard Helppie
I know that there are critics that will say, well right to work for less, but also I've heard from a lot of my friends that are UAW, Teamsters, a couple AFL-CIOs, and they felt that there was a disconnect between union leadership and then the rank and file. And to your earlier point, they didn't want to pay the union dues or join the union, because they didn't feel that it was going to serve them. Again, it's an aspect of the labor market. I also liked a lot of what you said about the recovery from people from addiction or bringing people that have been incarcerated back into the workforce. This is all fitting in with a lot of things we've talked with Judge Milton Mack and other of our guests. You want to treat mental health, which addiction is part of, in the community versus they're going to be put in an inpatient facility someplace so they can work through their addiction issues, get healthy and start building a life at the same time. I think that's just a good society, a compassionate society and good government. I think most people don't know about this story, about the trade and that you were very instrumental in setting up the Gordie Howe International Bridge, so take our listeners, readers and viewers through this from A to Z, if you would. How big is the trade with Canada? Where does it go through? And what were some of the issues and how is this bridge project resolving those?
Brian Calley
Our trade with Canada is a lot bigger than what people realize. In Michigan in particular, the integrated manufacturing supply chain that goes from...really it goes across the whole continent, but especially on either side of the Detroit River, it is huge. Much of that trade, especially the automotive part, goes over one bridge. So there's a tunnel in Detroit, but trucks can't go through the tunnel, it's not tall enough or big enough. All of the trucks, all the commercial trade goes...you can go up to Sarnia but that's way out of your way for where the manufacturing base really is. So over 99 percent of the commercial trade between Michigan and Canada goes over that one bridge in Detroit and that's a huge, huge risk to have in one 90 year old bridge. It's not like...we think about it in terms of terrorism, if you really wanted the 9/11 terrorists wanted to really take down the Michigan economy, the Ambassador Bridge probably would have been a target for them as opposed to a building or buildings in New York, because it would have absolutely crippled the automotive industry in North America, and especially in America. So this idea of having some redundancy of that infrastructure is important but also it's a constrictor, there's only so much growth that can happen. Most businesses that trade across the Canadian border are actually small businesses. The volume of trade and dollars are bigger with the big companies because of the automotive industry, but in sheer numbers of those who trade, most are small businesses. Everybody is in on this. We also have a huge reliance on Canadian nurses in our health care system; we would be way short of nurses in Detroit if it wasn't for the ability to go back and forth efficiently across that border. So it's a really important aspect. What we decided to do back in 2011, is to robustly support a second bridge in Detroit, and one that more directly connect freeways; I-75, I-94, to efficiently get them to a bridge that can take them to all of the marketplaces including the ports. Canadian ports on the west side are far more open than the west coast ports and the southeast ports which are extremely crowded and difficult to get to. So there are a lot of reasons that this is important. It was done through an inter-local agreement with Canada. That's a provision of Michigan's constitution. I was one of the people on the team that were engaged in building this agreement with Canada. Canada's paying for the bridge so Michigan has no capital outlay to do it. It's jointly owned by Canada and Michigan; the federal government of Canada and the state of Michigan are the two partners in owning this bridge. The tolls will pay back Canada's original investment. Once that investment is paid back, then there will be split between Michigan and Canada, and of course, go to maintaining the bridge first. In a lot of ways it's like a sweetheart deal for Michigan. It's a piece of infrastructure that we desperately need, that our country needs, especially that our state needs, that industries that are concentrated in Michigan need. We did not have to outlay any cash in order to do it, Canada's fronting the entire deal. It's under construction right now, it's really exciting to see. It would be further down the Detroit River from where the Ambassador Bridge is, the area that is called southwest Detroit. It lands in a neighborhood, the area called Del Rey, it's a heavily industrial area in Detroit, it really needs a lot of new investment. There's a ton of opportunity for logistical style businesses that are right around this area. So very exciting time. The towers are up, the deck is being built right now and it's going to be a new famous landmark for Michigan.
Richard Helppie
Well, it makes so much sense. As a person that obviously likes to build bridges, The Common Bridge versus building walls...you might not be able to get another country to pay for your wall, but demonstrable now that you can get another country to pay for your bridge. There's probably a lot of implications there. Also on the Canadian side, the current bridge to get to Canadian customs, it's a mile and a half, then to get on to the 401, which goes up to Toronto, the largest city in Canada, there are 21 stoplights. So in terms of energy, you could probably get a climate argument out of this. Now the new bridge will be connected into the 401 directly up to Toronto, and then on the Michigan side, out to the two major airports in Detroit. All of that land in western Wayne County and eastern Washtenaw County got bought out for warehouse facilities and other logistic businesses. We've actually been able to see the fruition of this investment coming together. Again, I think this is another great example of public/private partnerships and what they can do. Brian, this has been a great talk. I know we could talk a long time about all of the policies related to workforce development. Before we close today, what would be some of the best policies that you'd like to see the federal government or state government or even local governments [undertake]? Like, this is a policy that we're going to back in order to have a great workforce; what is it, if you could throw a switch? What would that be?
Brian Calley
Well, there are no real simple answers, but I'll give you the ones that I think are most important. I would put at the top of the list the K-12 system. I'd look at states like Maryland, for example, [their] education commission created a plan to transform that state. Look at places like Tennessee, that went from a bottom state to a top performing state in a relatively short period of time. Michigan has been sliding in our educational performance and attainment; we cannot afford to have so many people graduate without being able to read and not up to standards in science and math. So I would put [that] at the top of the list. There's actually a K-12 framework that was negotiated by a strange bedfellows group of organizations, including SBAM, but also the Michigan Education Association, the labor union for teachers, some administrator organizations, philanthropy, other business organizations/business leaders for Michigan. It's called Launch Michigan. It's a framework for educational reform that looks at transparency, governance, accountability and funding for our education system and really tried to model [it] a bit off that Maryland approach of an education commission to drive that work forward. It's exciting. So I would put that at the top of the list. There's all the other stuff that we talked about, if our primary education system does not move from bottom ten state like we are today...if we don't move out of that type of position, I don't think any of the other efforts that we have are going to bear the type of fruit that we need.
Richard Helppie
That's powerful, and we were such a strong education state for so long. I know it's all over the map where there are some of the greatest places and some of the worst that are pulling it down. Any legislation that you see coming down the pike from the feds or the state government that are particularly problematic, other than the ones that we've already talked about?
Brian Calley
I would say that there are proposals that get in between employers and employees. So it might be defining and determining what benefit requirements have to be. There's a new proposal for family medical leave to create an unemployment insurance trust fund where employers pay a new tax into a fund to pay for family medical leave. But what ends up happening is there are a slew of proposals...predictive scheduling, we talked about as well, the idea that changing job descriptions would have to be signed off by the employee before a business owner could change a job description. These sorts of things stack on each other and they get in between the employer and the employee. Remember when I told you that employers or small businesses are finding a lot of success and flexibility? Well, when the government says no, here's exactly the box that employment has to fit inside, then really the only competitive thing is what the pay is. And in that case, and even a lot of cases, the government is trying to control that too. But smaller enterprises find themselves in a position where they're competing against large employers that have advantages; they can provide health insurance under a RISA law, instead of under the Affordable Care Act, which is a huge, huge advantage. I mean, so enormous. I could hardly describe how big of an advantage that big businesses have over small businesses when it comes to offering health care for their employees. The idea of taking flexibility away from small businesses where they can't just tailor to, I've got this talent, I've got this employee, I'm going to build a package around what's important to them - when the government says no, we're not going to give you that flexibility, every employee has to fit inside this box that we're going to give to you, I think that hurts small businesses in a way that is profound compared to their larger counterparts.
Richard Helppie
I find it interesting you mentioned healthcare, the time for healthcare being provided by your employer, I think, has come and gone. I've talked about it; we're just about there at this point anyway, given the growth of Medicare and Medicaid and VA and such. We need to be realistic about that. Anything that we didn't talk about today that you wanted to share with our listeners, or readers, and our viewers, or perhaps any closing comments? This has, again, been very informative. I'm very cheered that we have good people like you who have a longitudinal view and an ability to go solve a problem.
Brian Calley
I think it's really important that entrepreneurs find their way into a community with other entrepreneurs. There's something magical that happens when business owners get together with other business owners. It can be a very, very lonely place to operate as an entrepreneur; you're sweating out payroll this week...it's not like you can confide in your employees about that so it can be an isolating type of a place. One of the things that we try to do at the Small Business Association of Michigan, is to create a community of small business owners, that's really who we're here for, are the owners of the business. When you find your way to a community of other entrepreneurs, I think there's some power in that. It's not about selling to each other, although they do sell to each other. It's really about that camaraderie and understanding, challenges and problem solving together, getting ideas, bouncing situations off each other. It's a powerful force. So for any entrepreneur that is watching this, there's one thing that I could highly, highly recommend: find your way to either a cohort of small business owners or an organization that has opportunities to spend time with other business owners and make that a part of your daily, weekly, monthly activities to connect in with other people that understand the types of challenges, opportunities and struggles that you're facing.
Richard Helppie
I will tell you, as a person that was that startup entrepreneur, I would highly endorse that. For me, the choice was the YPO - Young Presidents Organization - back when I qualified under the "Y" part of that. It's really good to hear that the small business group that you're running has that type of service. So today we've been with our guest, the president and CEO of the Small Business Association of Michigan, our former lieutenant governor, former representative in the House and former county commissioner, as well as private sector banker. We hope everybody will aspire to a career like Brian Calley and serve the citizens of your community, your state and our great country. With our guest, Brian Calley, this is Richard Helppie, your host, signing off on The Common Bridge.
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