The Big Story: Congress needs to act on child care challenges
The nation's critical child care challenges, which undermine participation in the startup ecosystem, were in the spotlight this week at hearings held by two key Senate committees. The hearings underscored the role exorbitant child care costs and government underfunding play in slowing economic growth, preventing many from being able to work. These problems have been repeatedly highlighted by startup founders—especially women founders. Congress should immediately act to ensure entrepreneurs can afford child care and participate in the startup ecosystem.
Senators and hearing witnesses stressed that child care is not just a social issue, but a critical economic concern. For many startup founders, access to affordable, quality child care is a crucial component to their ability to launch and grow businesses. Despite its importance, policymakers let critical child care stabilization funds expire in 2023 and the Senate has yet to pass the Tax Relief for American Families and Workers Act, which includes multiple critical provisions to support startups, including a temporary expansion of the child tax credit (CTC)—especially as the CTC is slated to shrink in 2025. The issue is so important that 15,000 people, led by advocacy group Moms First, successfully petitioned to have candidates asked about it at the first presidential debate, a question that unfortunately went largely unanswered.
As women founders increasingly take on the roles of both breadwinner and primary caregiver, addressing the child care crisis is more important than ever. Engine has repeatedly called for Congress to support women founders, including through greater funding for child care centers, subsidies, and through a permanently expanded CTC. Women founders concur—60 women startup founders called on Congress to expand the CTC, citing gains in entrepreneurship and reductions in child poverty under a past expansion. And child care access centered discussions during our recent Innovation for All fly-in, as women founders led a panel highlighting barriers they face in the startup ecosystem. Congress must act to ensure childcare is a national priority—creating accessible and affordable options, especially for women in the startup ecosystem.
Policy Roundup:
Mississippi's broad age verification law halted, likely unconstitutional. Last week, a federal judge issued a preliminary injunction blocking a Mississippi law requiring age verification for users of digital services from taking effect. The ruling underscored that the law would impact “all users (both adults and minors),” saying “it burdens adults’ First Amendment rights, and that alone makes it overinclusive.” This is part of a nationwide trend that has seen several states pass similar measures requiring age verification, despite concerns about how the mandates will create burdens for startups, undermine user privacy, and run afoul of the Constitution.
Hearing shows divisions in Senate on privacy legislation. On Thursday, the Senate Committee on Commerce, Science, and Transportation held a hearing focused on data privacy and AI, where lawmakers discussed the proposed American Privacy Rights Act (APRA). That legislation—which has already hit obstacles in the House, where a key committee canceled a markup last month—was panned by committee Republicans as detrimental to innovation. Congress keeps coming up against familiar stumbling blocks, like issues of state law preemption and private rights of action, but states are continuing to pass their own privacy laws. Unique state laws have created a fractured regulatory environment for startups that Congress must press on to solve with a uniform federal privacy standard.
Multi-industry coalition calls on Biden administration to step up on trade. On Thursday, Engine and a coalition of nearly 50 organizations from all corners of the economy sent a letter asking the White House to collaborate on a “positive and proactive U.S. trade policy that benefits all U.S. enterprises and citizens.” The administration has eschewed the negotiation of free trade agreements, and the letter comes among the specter of many rising barriers to trade, especially in the digital space. U.S. startups need a robust trade agenda that lowers barriers to digital trade, facilitates entry into markets around the world, and increases opportunities for global success.
District court partially blocks rule to ban noncompete agreements. On Tuesday, a U.S. District court in Texas partially blocked the Federal Trade Commission (FTC) from implementing its rule to ban worker noncompete agreements. The rule, which bans the enforcement of new noncompete agreements for all workers and nullifies most existing ones, is slated to go into effect in September. Engine has consistently emphasized the detrimental effects of restrictive non-compete agreements on the innovation ecosystem, which impede startups from recruiting essential talent and deter potential founders from starting new companies. Though many states have independently banned noncompetes, federal policymakers must act to ensure noncompetes are banned nationwide, including by passing the Workforce Mobility Act.
Telecom agency budget hearing spotlights net neutrality and Internet funding priorities. On Tuesday, a House subcommittee held a hearing to review the Federal Communications Commission’s proposed budget request, which involved discussion of key Internet provisions impacting the startup ecosystem. Chairwoman Jessica Rosenworcel highlighted the Commission’s extensive initiatives over the last year, including the reinstatement of net neutrality, and called for funding to revive the recently-lapsed Affordable Connectivity Program (ACP), which provided 23 million households with high quality broadband access. FCC efforts to bridge the gap in Internet access and the restoration of net neutrality support startups and their users nationwide by increasing broadband affordability and ensuring an open Internet.
Startup Roundup:
#StartupsEverywhere: Green Bay, Wisconsin. The video game industry is concentrated in a handful of locations, leaving incredible talent in underserved areas frequently overlooked. Ben Kvalo started Midwest Games to change that narrative, supporting underrepresented game developers because increasing diversity in game development leads to better products and bigger markets. Ben recently joined us to talk about Midwest Games, the challenges of raising capital in the Midwest, the importance of small developers in maintaining a healthy video game ecosystem, and the potential benefits of AI for the industry.
