While there is still uncertainty as to the final majorities in the U.S. House and Senate, one thing that will be true regardless is that the new Congress must reorient policy to create a better environment for American small businesses amid decades-high inflation, unprecedented labor shortages and the specter of recession. Policymakers must undertake a specific list of policy prescriptions to aid our small businesses as they navigate treacherous waters.
According to labor market data from the Bureau of Labor Statistics, the U.S. economy had more than 10.7 million job openings at the end of September 2022 and only around 6.1 million unemployed workers to fill those positions. As a result, about 1.8 job openings currently exist for every unemployed person — a number that would have been unheard of prior to the pandemic (it was roughly 1:1 during the majority of the first three years of the Trump administration) that indicates how difficult it is for businesses to hire. (RELATED: REP. ANDY BIGGS: Pandemic Amnesty? Not So Fast)
While this tight competition for workers might typically mean bigger paychecks, businesses are struggling to keep up with higher compensation costs because of a decline in labor productivity over the past year. Moreover, workers have lost more to inflation than they have gained in pay, resulting in a net reduction in their purchasing power of over 4% since January 2021. This labor shortage is not unnoticed by our small business owners and entrepreneurs.
According to an October survey of small business owners conducted by the National Federation of Independent Business, 90% of the small businesses that were trying to hire “reported few or no qualified applicants for the positions they were trying to fill.” Indeed, the data reveals that too many workers remain on the sidelines. Labor force participation remains substantially below pre-pandemic levels, currently standing at 62.2% as compared to 63.4% in February 2020.
The new Congress must also tackle the root causes of inflation, chief among which is the War on American Energy. Gas prices are still nearly $1.40 more than they were in January 2021, with President Joe Biden recently promising (translation: threatening) that there would be “no more drilling.”
Congress should make clear that businesses and families must no longer be held hostage to the failed climate activist agenda, which has accomplished nothing of note to improve the environment despite all the financial pain it has inflicted on the economy. Congress can go still further by pushing for permitting reforms that streamline the process to utilize all of America’s abundant energy resources to bring down prices.
Looking beyond energy, Congress also needs to rein in overspending. Despite the administration’s rhetoric about declining deficits, the reality is that federal outlays remain over 40% higher compared to 2019. Inflation is often said to be too much money chasing too few goods, and the American economy has seen both too much artificial government money pumped into the economy over the past two years and too many impediments erected to production through higher regulations, threats of tax hikes and disincentives to working.
Unfortunately, the Biden administration announced last month that they would be ending Industry-Recognized Apprenticeship Programs due to strong pressure from labor unions. These America First programs, which came from a 2017 “Expanding Apprenticeships in America” executive order, provide individuals with opportunities to obtain relevant workplace knowledge and skills through public-private partnerships with third-party employers.
These provide market-based solutions to bring more people into the workforce while requiring leadership from Washington to implement policies that foster hiring efficiencies. Union apprenticeship programs can help grow rewarding careers in the skilled trades, but other non-union programs can do so as well. We should be nurturing all skills development paths for Americans rather than rewarding the politically powerful.
The American people recognize that they know how to spend and invest their money more effectively than career politicians and entrenched bureaucrats. The 2017 Tax Cuts and Jobs Act reflected this wisdom and unleashed a historic economic boom that resulted in record-low poverty and record-high income gains, with American businesses once again becoming competitive on the world stage.
Unfortunately, if this law is not made permanent, families and pass-through businesses will experience a reversal of many of these cuts, causing them to lose more money to the government on top of the money they are already losing to inflation. Congress must permanently expand these pro-family, pro-business tax policies to help restore them to their previous economic successes.
While the American public is clearly fed up with politics as usual and unwilling to give a ringing endorsement to either political party, they have spoken loudly and clearly that they expect policies that put them first. They need policies that put them first, and if the next Congress wants to work for the people, they ought to listen.
Linda McMahon is the Chair of the Board and Chair of the Center for the American Worker at the America First Policy Institute. She previously served as the Administrator of the Small Business Administration.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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