Today’s jobs report shows the downward slide of the labor market continues, with the number of new jobs created last month falling far below the recent average.
The labor market is a lagging indicator, so the current employment picture does not fully reflect the difficult stagflation environment facing small businesses under President Biden. The report shows that average wages have grown more slowly than inflation for 25 consecutive months, meaning ordinary Americans’ living standards have declined for over two straight years.
Unless things change, today’s environment of bank failures, declining real wages, persistently high inflation, and anemic economic growth will throw the economy back into a recession. According to Job Creators Network Foundation’s SBIQ poll, 63% of small business owners are worried they’ll have to close their doors.
No wonder President Biden isn’t running for reelection on his record. In his reelection announcement video released last week, he desperately tried to fearmonger to boost his support, painting his opponents as book-banning, vote-suppressing radicals.
Over the course of his presidency, inflation has increased by more than 15%. Americans on fixed incomes are one-sixth poorer today than before he took office.
The Federal Reserve’s aggressive interest rate hikes, the latest of which occurred on Wednesday, pose a significant threat to the broader economy. Yet Bidenflation has left the Fed with no other choice. First Republic Bank was the latest bank to collapse this week due to falling asset values in this rate environment. Are PacWest Bank and Western Alliance next?
Problems in the banking system have numerous downstream effects on the economy, including tightened lending standards that prevent small businesses from getting the access to credit they need to succeed. Community banks, which provide 60% of small business loans, are disproportionately impacted because depositors are moving to bigger banks in a perceived flight to safety.
Janna Rodriguez, a daycare owner in New York, needs a $2 million loan to expand and extend her daycare business. But all she hears from banks is “no.” She says if she can’t expand, she’ll be forced to close because her current set-up isn’t profitable.
Same story for Stephen Martin, who runs a cleaning business in Duluth, GA. He needs a loan of $20,000 to $50,000 to purchase new equipment but can’t find one. “It’s not an environment meant for small businesses to survive,” he says.
Despite these headwinds, Biden keeps claiming the economy is doing great. This week, his administration released a report detailing how Democrats’ reckless spending programs have helped small businesses, especially in the clean energy and semiconductor sectors. Unmentioned in the report is the ensuing inflation this spending has caused that has burdened ordinary small businesses that aren’t politically connected or part of politically-favored demographics.
Biden has recently claimed that wages are rising, that he’s created the most jobs in history, that he’s cut the debt, and that inflation was high when he took office. The media lets him get away with these falsehoods, but we won’t. JCN placed a full-page ad in the Wall Street Journal last week, correcting the record.
To kickstart the economy and protect the labor market, Congressional Democrats and the Biden administration should support commonsense Senate legislation introduced this week called the Prove It Act that would give American small businesses long-overdue regulatory relief. Sponsored by Sen. Joni Ernst, the bill requires government agencies to consider the small business impact of new regulations before they are imposed. Democrats should also support recent House legislation to raise the debt ceiling in return for sensible fiscal reforms.
Yet this isn’t your father’s Democratic Party, which often supported economically responsible legislation. President Biden, who has transformed from a relative moderate to a full-fledged progressive over his generations in Washington, is Exhibit A.
Alfredo Ortiz is president and CEO of Job Creators Network and author of The Real Race Revolutionaries: How Minority Entrepreneurship Can Overcome America’s Racial and Economic Divides.