Commerce, Manufacturing, and Trade Subcommittee Examines Unintended Consequences of 2008 Law on Jobs and Small Businesses

February 18, 2011

WASHINGTON, DC - The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Mary Bono Mack (R-CA), Thursday convened a hearing to examine the unintended consequences of the Consumer Product Safety Improvement Act of 2008 on American job creators including small businesses and thrift stores.  It reviewed the impact of the recent legislation on Consumer Product Safety Commission (CPSC ) resources and its ability to protect consumers.  In addition to several small business owners, CPSC Chairman Inez Tenenbaum and Commissioner Anne Northup were also among the witnesses.

"As a mother, I have very strong, passionate feelings about protecting all children," said Bono Mack.  "But as a former small business owner, I know all too well how unnecessary regulations - even well intentioned ones - can destroy lives, too.  This is a rare opportunity to put aside the differences that often divide this great body and put our heads together to make a good law even better."

Rick Woldenberg, the operator of Learning Resources, Inc., a small business making educational products and educational toys, testified on the many difficulties associated with the new, burdensome requirements.

"Children are our business and the safety of children is our number one priority," said Woldenberg. "The CPSIA, unfortunately, purportedly to protect children from vaguely-defined dangers, has dramatically impacted our business model, reduced our ability to make a profit and create jobs, pared our incentive to invest in new products and new markets, and generally made it more difficult to grow our business. Given these considerable sacrifices, I wish I could say the law made our products safer, but the fact is that it hasn't. Our company, Learning Resources, Inc., has recalled a grand total of 130 pieces in a single recall since our founding in June 1984 (these products were all recovered from the market). Our management of safety risks was highly effective long before the government intervened in our safety processes in 2008. The government's "˜help' has not raised our safety game but it has reduced our bottom line and cost some of our employees their jobs."

CPSC Commissioner Northup testified on the exorbitant costs to small businesses, stating, "In March 2009, Commission staff reported that the economic costs associated with the CPSIA would be "˜in the billions of dollars range.' Small businesses without the market clout to demand that suppliers provide compliant materials have been hit the hardest. Many report that the new compliance and testing costs have caused them to cut jobs, reduce product lines, leave the children's market completely, or close According to a brief small business analysis by our agency, the cost to test one toy could range from $3,712 to $7,348 - not taking into account that the toy will likely change to stay competitive for the next Christmas season, or sooner, and every material change triggers a whole new set of tests."

Jolie Fay, owner of Skipping Hippos, which makes handmade children's ponchos provided some emotional testimony, stating, "Our businesses were born from the desire for safe children's products.  We make them with care and attention, most often from materials purchased from our local craft stores.  Our dreams were to build heritage products that will be cherished and remembered, and saved for generations The CPSIA makes no provision for these businesses to be able to operate."

Fay went on to elaborate on the challenges that confront many small businesses.  "For example, at the Hollywood Senior Center in Portland, there is a small retail shop. The items in the shop are exclusively made by their members. Handmade trucks and planes are made by retired loggers in their 70's and 80's. They are on an incredibly small fixed income and would never be able to afford a single ASTM laboratory test. The workmanship that has developed over a lifetime helps contribute a small, but very substantial supplement to their monthly income. These projects keep them active and give them meaning to each day. These are artisans, but this law makes them criminals."

Chairman Upton, who pledged to address the problem, stated, "We all care deeply about our children and their safety - nearly every one of us on this dais has a child or grandchild.  No one wants to put little children at risk.  But this law may be doing exactly that.  By dictating so much of the Commission's work, in too many cases we have shifted its attention to products that pose little or no risk and away from more significant issues.  At the same time, we have deprived the Commission of the flexibility to develop common-sense solutions to the problems of implementation.  The retroactive effect of the law has caused the Salvation Army, Goodwill Industries and thrift stores across the land to destroy used products, including even winter clothing that is sorely needed by millions of American children."  

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