This week, the House Committee on Small Business is holding a hybrid hearing titled, “Entrepreneurship in the New Economy.”
Ranking Member Luetkemeyer’s opening statement as prepared for delivery:
Thank you, Madam Chair, and good morning. We meet today for a hearing on “Entrepreneurship in the New Economy.” Regrettably, as we’ve all witnessed over the past year, the outlook for our nation’s entrepreneurs is dismal.
Small business owners, entrepreneurs, and startups are known to be resilient and skillful – easily adapting to changing conditions. They are fast and can adjust to meet the needs of their customers. They can pivot with speed and capture market share. These small business attributes, along with vigilant risk-taking and investing, are key ingredients to growing an economy.
But the COVID pandemic coupled with Biden and the Democrats’ failed economic policies have brought severe economic challenges to Main Street U.S.A. Entrepreneurs across the country, from both coasts to the middle of the country, faced incredible obstacles.
This fall, economic growth ground to a halt as all businesses confronted severe supply chain disruptions; ongoing labor shortages; skyrocketing inflation; higher costs of nearly everything; and threats of tax increases from the Democrats. To follow, an overreaching vaccine mandate has been proposed with very limited information. Small business owners and entrepreneurs require clear and concise rules and information to make business decisions. Unknown next steps bring their planning to a complete halt. With each of these issues coming to the forefront, let’s review them.
We can begin with supply chain disruptions and higher costs. Small businesses, which operate on thin margins, have been shocked by recent supply chain failures. NFIB’s September Economic Trends survey found 90 percent of small businesses have been affected by these disruptions, and nearly half of all small businesses have experienced product delays from their suppliers. With empty shelves continuing to be a common sight in our local communities, the fourth quarter and the holiday season could be a rough stretch for the nation’s job creators. At the same time, demand for goods has increased, pushing prices even higher.
Labor. Across all industries, labor shortages have hindered the ability of companies to get products made, shipped, unpacked, and transported. Once the products and goods have arrived, the businesses often do not have a full staff ready to meet and greet customers. The Biden administration’s worker shortage means that employers now have 10.4 million job openings. Let me repeat that: 10.4 million job openings and no one willing to fill them. NFIB found fifty-one percent of small businesses have unfilled job openings, a staggering and record number. In addition, employers are facing record numbers of workers quitting their jobs, and according to the Federal Reserve, the pandemic has resulted in a record three million early retirements. This is a dreadful situation as we head into what should be the busiest time of the year for businesses: the holiday season.
Inflation. Despite the Biden administration denials, it is very clear that inflation is no longer “temporary” or “transitory.” In October, the Department of Labor reported that the Consumer Price Index, one trusted measure of inflation, is now at a 13-year high of 5.4 percent. Even the Federal Reserve’s Chairman, who had insisted for months that inflation is transitory, recently admitted that inflation is expected to remain high well into next year. Overall, inflation means higher prices for small businesses along with higher prices for their customers.
Tax Increases. Could there be a worse time to threaten entrepreneurs and small firms with tax increases? In February, President Biden said the U.S. had lost more than 400,000 businesses since the pandemic began, and many more were at risk. Yet the Biden administration and Congressional Democrats have proposed a huge number of tax increases to fund their massive spending programs. We’re not sure, however, which tax increases are still on the table – it seems to be changing by the minute. But surely the last thing small businesses need coming out of a pandemic are tax increases.
Employer Vaccine Mandates. In September, President Biden announced that his administration is developing a regulation that will require all private sector workers employed by a business with 100 or more employees to be vaccinated or submit to weekly testing. According to the Society for Human Resource Management, 89 percent of employers fear at least some of their employees will quit as a result. The uncertainty surrounding these rules is putting the brakes on small businesses as the try to get back on their feet and serve their communities. A labor shortage crisis accompanied by an employer vaccine mandate are a grave threat to American small business prosperity.
How much more can small businesses withstand? Taken alone, each of these policies is devastating. But taken together, their impact is likely to have serious, long-term consequences for entrepreneurship.
Madam Chairwoman, we should be enacting policies that will empower entrepreneurs. Attentive risk taking and investing are what will grow our economy. However, entrepreneurs are facing an economic storm that is preventing this progress.
I appreciate our witnesses being with us today, and I look forward to their testimony. I yield back.