Small Business Update: Inflation, Workforce Shortages, and Retail Crime

The U.S. business market is at a crossroads of intersecting challenges of politics, the economy, and global events. Despite these obstacles, the future for small businesses continues to look bright.

During the U.S. Chamber of Commerce’s America’s Top Small Business Summit: Ready. Set. Scale, Neil Bradley, the U.S. Chamber’s Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy, in conversation with Jenna Shrove, Executive Director of Strategic Advocacy and Advisor to the Chief Policy Officer, also of the U.S. Chamber of Commerce, gave a Small Business Update, where he highlighted how businesses are compensating for inflation and the workforce shortage, as well as how retail crime continues to impact small businesses.

Compensating for inflation

Small businesses are feeling the impact of recent inflation — the likes of which we haven’t experienced in over 40 years, said Bradley. According to the 2023 Q3 MetLife & U.S. Chamber of Commerce Small Business Index, 86% of survey respondents said small businesses are the most vulnerable to rising interest rates.

Bradley commended small business owners for pivoting their strategies to adjust for inflation. He also expanded on employers’ challenges with navigating their employees’ need for higher compensation in a tight labor market.

“It costs more to live,” Bradley emphasized. “So, [employee] compensation goes up and [your balance sheet] becomes really tight. And it’s especially tough in a tight labor market to figure out how you maintain a mix of compensation that gets you the employees, but [keeps] you competitive.”

[Read More: Missed the Summit? Catch the replay here!]

Navigating the tight labor market

Businesses continue to face difficulties attracting and retaining talent. However, small businesses have the advantage of being more flexible when adopting remote work and other practices to help their employees balance work with their other responsibilities.

Bradley thinks the government can improve the policies needed to help alleviate the workforce shortage crisis.

“We’re not getting a lot of help,” said Bradley. “We have a demographic problem here. We have the retirement of the baby boom generation and the generations that are coming after it are smaller … which means we’re trying to serve a bigger economy with a smaller pool of workers. And this is going to continue to be a challenge.”

With the shrinking sizes of cohorts entering the workforce, Bradley believes legal immigration can be part of the solution.

“[This comes back] to the public policy challenge and the fact that we’re really having a hard time in Washington … addressing some of these structural challenges, like making sure that we’re allowing people who want to come here, and want to work hard and want to do it legally, the pathway to be able to do that,” he noted.

[Read More: How Hiring Immigrants Can Help Reduce the Workforce Shortage]

Combating organized retail crime

Organized retail crime continues to plague small businesses. While there has been progress concerning prosecuting for multiple offenses and more stringent guidelines for online marketplace sellers, Bradley believes there’s still more work to be done — especially in terms of the government’s role in public safety and property protection.

“This is [the] foundational rule of law,” he said, “and in a lot of places in this country, we’re failing to get it right. There are things that we can do. If there [are] failures of government, there are ways that we can make this better.”

Bradley highlighted some of the law reforms put in place to help combat the resale of stolen merchandise and prosecute those accused of retail crime.

“[In 2022, we] managed successfully to implement some changes in the law to curtail the ability of people to anonymously sell large quantities of goods online,” he explained. “Now we’re working with states to make sure they update their laws [to prosecute and punish those caught committing these crimes] ... we’ve done that in about half of the states now. And then, finally, we’re getting prosecutors to commit to going after and prosecuting these folks.”

[Read more: America's Top Small Business Awards Gala 2023]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.