Small businesses in the United States have it bad. This is true because of too much regulation, high taxes, and now an increase in minimum wage.
So many rules and regulations exist its hard to keep up with the sheer volume of it all. With over 160,000 pages of rules, small businesses are having a hard time making sense of what is right and wrong. Alison Fraser, Director of the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation, says this is “a regulatory assault on our system of free enterprise and on our job creators” and I have to agree (1). The only people who will be able to withstand and flourish alongside more regulation are big businesses. This is because they have the capital, resources, and power to manage operations according to any new rule the government spits out. In comparison, small businesses will be scrambling to make ends meet.
What’s worse is that the United States also has one of the highest corporate tax rates in the world. At a rate of 35%, corporations of all sizes are suffering. Corporate taxes consume the part of revenue that could otherwise be spent on research and development, more efficient technology, and on job creation. In direct relation to operations management, Laura Tyson, a contributer to Business Insider, says that “corporate-tax expenditures narrow the base, raise the cost of tax compliance, and distort decisions about investment projects, how to finance them, what form of business organization to adopt, and where to produce” (2). And when project costs go up, the burden indirectly falls on consumers and shareholders: “American workers, consumers and shareholders bear the greatest part of the cost of higher corporate rates and a complex tax system because it ultimately can raise product prices and lower investment and growth in the United States” (3).
Finally, on February 12, 2013, President Obama asked Congress to increase minimum wage to $9. This proposal sparked negative outcries from all across the country because at a time when people are asking, ‘Where are the jobs?’ why would you want to make it harder for small employers to hire people? (4). Raising the minimum wage simply reduces the availability of entry-level positions across all industries. “The minimum wage is a learning wage, the first rung on many workers’ career ladders. A higher minimum wage saws off this rung” (4). By raising the minimum wage, high school students, college students, and disadvantaged adults will suffer not only monetarily, but also they will have less chances of learning valuable disciplines like getting to work on time and interacting with customers. This can only negatively impact future business environments.
All in all, we can conclude that our current government is slow at trying to build a better foundation for small businesses. If they cannot act more quickly, the economy’s recovery will stall and there will be increasingly less work and productivity in America.