President Biden touted his administration’s so-called economic progress at an event in Bay City on Tuesday. Yet Biden’s rosy rhetoric doesn’t match economic reality. Ongoing high inflation, falling real wages, and a declining stock market are making Americans poorer and eroding their living standards. According to Election Day exit polls, 76% of Americans think the economy is in bad shape.
While such economic malaise is the status quo in many parts of the world, it is unacceptable in America. To jumpstart the economy, policymakers must address the burdens facing small business, the nation’s economic engine. As the president of a manufacturing company in Jackson, MI, I can attest firsthand that we face a boa constrictor of problems that continues to tighten around our organization.
Runaway inflation on our input prices and chronic supply chain disruptions are eroding our bottom line. According to the U.S. Labor Department, wholesale prices have increased by 8% annually. Yet that figure is almost certainly an underestimate. Depending on the material and supplier, manufacturers like us have faced cost increases from 10% to 250% over the last year.
In addition, broken supply chains have extended our raw material lead times to 5-7 times their normal delivery. To mitigate risk and ensure we maintain our reputation for on-time delivery, we have been forced to dramatically increase the size of our orders. This bulk buying significantly ties up cash flow, limiting our ability to spend elsewhere.
Meanwhile, our employee health insurance liabilities continue to skyrocket, growing another 12% (or $1,400 per employee) over the last year. I know other local businesses facing 20% health insurance cost increases. According to the Kauffman Family Foundation, it now costs, on average, more than $22,000 annually to insure an employee with a family. That money could otherwise go toward further boosting team member wages.
On top of these significant challenges, starting next year, small businesses will lose the ability to fully expense investments, saddling us with new tax costs. In 2026, all the small business tax cuts associated with 2017’s Tax Cuts and Jobs Act, which allowed entrepreneurs to keep more of our revenues to hire, expand, and raise wages, are set to expire.
What can the new Congress do to help small businesses overcome these challenges? First, it should make these tax cuts permanent, granting entrepreneurs some cost certainty when we need it most.
Second, it must stop the reckless government spending that devalues our currency and causes this historic inflation. The days of trillion-dollar spending bills must end now. Reducing deficit spending will help improve the nation’s fiscal situation and strengthen the dollar.
Third, both Republicans and Democrats need to come together to pass market-based solutions to actually reduce healthcare costs. These can include expanding tax-free health savings accounts, bolstering healthcare price transparency, and deregulating health insurance options to allow for personalized coverage options such as association health plans that allow businesses to band together to negotiate lower costs.
Such reforms will empower patients and employers to shop for less expensive healthcare coverage and prescriptions without jeopardizing coverage quality.
Finally, legislators must look at all available avenues to allow U.S. manufacturing to capitalize on the significant shift in the momentum and mindset of global purchasing caused by persistent supply chain issues and rising freight costs. Now is the time to reshore manufacturing production and jobs we lost long ago.
“Some regard private enterprise as if it were a predatory tiger to be shot,” said Winston Churchill. “Others look upon it as a cow that they can milk. Only a handful see it for what it really is — the strong horse that pulls the whole cart.”
In contrast to Biden’s empty words this week, the new Congress can take real action to return the country to economic prosperity by taking these steps that allow small businesses to do what we do best: pull the entire cart.
Brian Cooper is president of Wire Wizard Welding Products in Jackson, MI, and a partner of Job Creators Network Foundation.