Earlier today, the US Department of Labor Statistics issued data that indicated 266,000 jobs were added during the month of April. This fell far short of expectations as observers anticipated over a million new jobs. The unemployment rate ticked higher to 6.1%.
The news undermined the Biden Administrations’ plans for higher taxes and a more stringent regulatory environment. The numbers arrived following the Biden Administrations’ $1.9 trillion “COVID relief” legislation as “stimy” checks were delivered across the country. Meanwhile, COVID cases are decreasing as vaccinations have become widespread and, effectively, anyone who wants the vaccine can quickly get one.
“The weak jobs data is not a surprise to those keeping in touch with local small businesses. The uncertainty, driven by a host of issues such as enhanced employment benefits and supply chain shortages are causing challenges for small business owners in terms of their ability to ramp up in response to demand. In addition, the severe turn in the direction of federal policy, which threatens to impose more costs on businesses through higher taxes and more regulation, is having a piling on effect in terms of uncertainty and confidence,” said Kerrigan. “Small business owners and entrepreneurs are facing enormous challenges on the hiring and supply chain front, and the prospect of added cost burdens from Washington is a kick in the teeth. Small businesses are still digging out of the financial and economic disruptions of the pandemic, and saddling them with additional taxes and regulation will be another drag on their recovery and job creating capacity. President Biden and Congress need to listen to small businesses to guide their policymaking. They need policy stability and relief, not higher taxes and more regulation.”
The US Chamber of Commerce echoed the sentiments held by the SBE Council. Chamber Executive Vice President and Chief Policy Officer Neil Bradley, stated:
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market. We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions poses to our economic recovery from the pandemic. One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working.”
This most recent disappointing twist of economic data follows another statement by the SBE Council that has worried that proposed higher taxes, including a dramatic increase to capital gains, may hobble the entrepreneurial sector. Last month, SBE Council chief economist Ray Keating said policy must fuel growth, but instead, various policies being pursued by President Biden “would restrain or even derail our economic recovery.” A recent Techcrunch article wondered if Biden’s tax policy will “create a significant, if unintended, burden to startup employees more than anyone else.”
Studies have shown that higher taxes can be harmful to growth because they diminish work incentives and entrepreneurship. As most people know, smaller firms, including early-stage ventures, drive much of the economic growth in the country – not to mention innovation.