Thousands of small businesses are attempting to come back after a very difficult year because of COVID. Restaurants, and businesses in fitness, service, and entertainment were particularly hurt the most. Online businesses like Amazon did great with record sales. Big box stores like Wal-Mart did very well. But small businesses faced arduous restrictions by governors and mayors that have essentially put them out of business for over a year. Most of these businesses have tried just to keep their heads above water.
On Friday, the April jobs report came out with an alarming result of only 266,000 jobs created. The expectation was 1 million. The results are a warning sign for all small businesses.
There are multiple factors crushing small businesses today. Although there are 7 million job openings across the country, businesses are having a hard time finding people to fill those jobs. Small businesses are having a particularly hard time finding employees. With their small margins, they have a hard time competing for employees with companies like Wal-Mart. As you drive around town, you will see help-wanted signs everywhere.
First, the biggest factor is people are making more on unemployment than what they would make by working. The federal government is paying $300 in enhanced benefits. These enhanced benefits are scheduled to continue until September. On Friday, President Biden was asked, “Do you believe enhanced unemployment benefits had any effect on diminishing return to work in some categories?” The president’s reply was “no, nothing measurable.”
What American in their right mind would not recognize that giving people more money to stay at home was the biggest reason for people not returning to work?
The next factor is inflation. With the federal government’s out-of-control money printing, prices of goods and services will soar. Small businesses will have to weigh how much to increase the price of goods and services and still retain customers. This will lower the number of employees a business has while still expecting the same work performance. The last two are Democrats wanting to raise the minimum wage to $15 an hour and also raise the taxes on their business.
Will your favorite restaurant still be in business in a year or two?