Democrats Have Been Bad for Main Street

KEY TAKEAWAYS

• American small businesses are bearing a heavy burden after a year of Democrats’ bad policies.
• Persistent cost increases are hitting their bottom lines, and businesses are struggling to find enough workers to fill open jobs. Weighed down by these challenges, small business owners’ optimism has cratered.
• Democrats’ response is to revive their tax and spending spree, a reckless scheme that will only leave Main Street further behind.

American small businesses are bearing a heavy burden after a year of Democrats’ bad policies. Democrats kicked off their agenda with a partisan $1.9 trillion “COVID relief” law that combined oversized, untargeted stimulus spending with programs that disincentivized work. These policies fueled rising inflation and failed to boost workforce participation, hitting small businesses just as they were rebounding from a devastating year. 

Leaving Main Street Behind

Since President Biden took office, wholesale prices have skyrocketed. In December, the producer price index – a measure of wholesale price inflation – increased by 9.7%, the biggest surge on record and well above the 2% historical average. The cost increases are hitting businesses’ bottom lines and forcing them to raise prices to stay afloat. According to the National Federation of Independent Business, the share of small business owners who say that inflation is their single most important problem hit a 40-year high in December.

Businesses also are struggling to find enough workers. NFIB found that 49% of business owners reported job openings that could not be filled in December. In a recent Goldman Sachs survey of small business owners, 97% of those hiring said difficulty in hiring is affecting their bottom line. There are currently almost 11 million open jobs in the country. The labor force participation rate remains 1.2 percentage points below its February 2020 level, meaning there are still 3.2 million workers missing from the workforce since the start of the COVID-19 pandemic. At the same time, the Biden administration’s myopic missteps and constantly changing public health guidance have caused chaos and prolonged pandemic workplace disruptions.

Weighed down by these challenges, small business owners’ optimism has cratered. According to NFIB, the portion of owners expecting better business conditions over the next six months has declined 23 points since last June.

Leaving Main Street Behind

Democrats’ response is to try to revive their tax and spending spree, a reckless scheme that will only leave Main Street further behind.

Their plan would hit small businesses organized as pass-through entities with more than $500 billion in tax hikes. It would also spend billions of dollars to empower bureaucrats against mom-and-pop businesses and target job creators with massive penalties. The bill would dramatically increase Occupational Safety and Health Administration fines for violations, instead of working to promote workplace safety through compliance assistance. Further, the bill hikes penalties for inadvertent overtime and minimum-wage mistakes. It also would give the National Labor Relations Board new authority to impose civil penalties, transforming the National Labor Relations Act from a law aimed at giving workers remedies to one that can be used to punish job creators. Entrepreneurs will have to allow for bureaucratic capriciousness as another cost of doing business, further straining their bottom lines.

Democrats’ plans would also exacerbate the labor shortage. Their legislation includes a Green New Deal scheme to hire 300,000 climate activists-in-training. This massive government jobs program would put the federal government in direct competition with private-sector employers desperate for workers. And they are plotting a permanent transformation of the Child Tax Credit into a universal, government-paid income, with no requirement to work.

Small businesses are already suffering under Democrats’ disastrous policy agenda. Democrats’ plans would put these job creators at an even greater disadvantage to their competitors, threatening the vitality of Main Street in communities across America.