According to the Bureau of Labor Statistics, the producer price index, which measures strong wholesale spending, has increased by 10% over the past year. This significant increase in input costs is rapidly creating a dilemma for small business owners in the United States who operate on razor-thin profit margins. Sadly, a congressional hearing last week on the health of small companies proved that congressional Democrats are completely disconnected from this complex issue.
Speaking of Congress
Dina Rubio, owner of West Palm Beach, Don Ramon Restaurant in Fla., Spoke before the House Committee on Inflation about the challenges facing her small business. He details how, in terms of his restaurant, prices are rising faster than the official report. For example, a box of lime that he used to buy for $ 30 has gone up to $ 90. Wholesale steak prices have risen roughly $ 7 to $ 12 per pound.
Rubio has been forced to increase menu prices to stay effective, offending some loyal clients of certain incomes who do not understand its plight. In addition, he had to remove some items from the menu due to their declining profitability. He has been forced to make product alternatives, such as making mojito with lemon instead of lime, although the taste has diminished. Entrepreneurs across the country are being pressured to find innovative solutions similar to rising product costs.
To make matters worse, consumers are becoming poorer as a result of the biggest consumer inflation in 40 years, including record-high fuel prices. When prices exceed wages and a tank of petrol reaches $ 75, people are less likely to make thoughtful purchases, such as food. Since small businesses lack the scale and economy of preferential purchase agreements enjoyed by larger competitors, they are disproportionately affected by inflation.
Rubio testified before the committee that policymakers were to blame for the horrendous inflation, the trillion-dollar government spending, their opposition to domestic energy production, and the social welfare policy that rewarded people for staying out of the workforce. He called on the government to do more or less empower small US companies to expand the supply of goods and services and curb inflation.
The chairman of the committee is not listening
Sadly, the chairman of the committee, Rep. Jim Hims (D-Con.), Did not find this message acceptable He expressed frustration that Rubio also raised this real-world issue, saying he would like to focus on the alleged “structural” barriers to racial justice facing business. Although inflation is the most serious problem facing small businesses in the United States, committee member Rep. Alexandra Ocasio-Cortez (D-New York) made no mention of it in her comments.
Hims blames business owners and suppliers for the rising inflation, showing a seemingly lack of economic knowledge who have voluntarily increased their prices. In fact, small companies often hate price increases because it means losing consumers, and they do so only when they are forced to cover their margins. The committee’s Republicans have underlined that inflation is not the fault of the business, but the result of excess money by chasing goods and services.
Hims argued that Rubio was reckless in opposing inflationary government spending as a result of his paycheck protection program debt during the COVID-19 issue. This is a misleading analogy. The PPP provided a lifeline for small enterprises that were forced to close due to the severity of the epidemic. Funds are used to cover immediate salary costs. The next expense, the most recent unnecessary $ 1.9 trillion American rescue plan last year, was reckless and unnecessary.
Inflation hurts small businesses
This session justifies the biggest suspicion of American small business owners that democratic leaders in the Washington Beltway do not understand how painful inflation is in the real world. They seem to have forgotten that not all members of Congress automatically increase their annual living expenses.
The first step towards resolving this inflation crisis is for Congress to acknowledge that its policies are responsible. By removing government intervention and allowing the free enterprise system to operate, the American small business economy can be strengthened and expanded, restoring the country to its pre-epidemic level.