To be the backbone of the economy, small businesses have certainly not been treated with care.
Although they account for around half of pre-covid jobs and GDP, including around 64% of new jobs, they have borne the brunt of government overreach over the past two years. And, if we are to turn the economy around and avoid a long, deep recession, they deserve everyone’s attention.
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Small businesses were among the first and longest shut down via local and state government mandates. They received a tiny fraction of all federal COVID relief funds, certainly not enough to offset the subjugation of their property rights. Larger competitors, which have often benefited from the advantage of staying open during the pandemic, have also benefited from the Federal Reserve’s cheap and available credit policy, strengthening the balance sheets of these large companies and giving them an unfair advantage. on small businesses.
Then the small businesses that survived, battered and bruised by incongruous and incompetent monetary, fiscal and other government policies, had to deal with the long-term effects caused by them. Inflation, labor shortages and supply chain issues have dealt blow after blow to the fundamentals of the economy.
If we want to ensure that America’s backbone is preserved and healthy, it must be a priority.
It should be easier to start. It should be easier to hire your first employee. It must be easier to stay in business. All of this can be accomplished by removing government barriers imposed at all levels on small business owners.
On the labor front, we have too few people in the labor market, especially for job openings; approximately 1.8 jobs available for each worker seeking. Allowing small businesses to hire more flexibly, for example by expanding the use of contractors or gig workers, and not having additional costs and penalties associated with hiring workers would be a good start. .
This would allow small businesses to raise wages, helping to close the gap that currently exists between inflation and wages. These price increases and flexibility on how work is done are also key to bringing more workers back into the labor market to even out the imbalance between labor market supply and demand.
Removing or reducing other government-imposed barriers, regulations, costs, taxes, and the like that prevent small businesses from competing with larger, better-capitalized entities can also help avoid a recession. With the Federal Reserve tightening policy in an effort to calm demand, the most vulnerable to these measures are small businesses. After the last two years of policy abuse, they need a government cost and restriction holiday, or else we risk even more of them shutting down permanently.
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Not all of these decisions are made at the federal level, but the federal government can certainly do its part and also provide direction for state and local jurisdictions to follow.
Additionally, many small businesses are domestically focused, and spending with local small businesses supports local economies. American Express’ Small Business Impact study estimated that approximately 67 cents of every dollar spent with a local small business stays in the local economy. The simultaneous failure of a number of small businesses could wreak havoc on entire communities.
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Providing more support for small businesses ensures we don’t erode GDP, shore up jobs, reduce consumer choice or stifle innovation. It preserves economic freedom and wealth-creating opportunities for modern-day Americans and immigrants who come to America from around the world to pursue the American dream.
Big business has long had the upper hand. They receive special treatment, as well as policies and laws designed in their favour. It’s time to shift the playing field to support the backbone of America, small business. If we don’t, we will all pay the price.
Carol Roth, a former investment banker and entrepreneur, is the author of “The War on Small Business.”
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