Chairman Williams: “Prices on the Rise: Examining the Effects of Inflation on Small Businesses”
Chairman Williams' Opening Statement
Washington, June 7, 2023
WASHINGTON, D.C. – Today, the House Committee on Small Business is holding a full committee hearing titled “Prices on the Rise: Examining the Effects of Inflation on Small Businesses.”
Chairman Roger Williams’ opening statement as prepared for delivery:
Good afternoon and welcome to today’s hearing where we will be examining the detrimental effects inflation has had on Main Street America. I want to thank our witnesses for joining us today. Your time here is greatly appreciated.
According to almost every small business economic survey, inflation has been ranked as the owners’ biggest concern going back to 2021. They have seen utility payments increase because of skyrocketing energy prices, distributers charging more to source materials because of supply chain disruptions, and labor costs rising because of not being able to find qualified workers.
In all these instances, small businesses are left with two options: pass along these price increases to the consumer or absorb the cost and watch your operating margins shrink.
The COVID-19 pandemic started this inflationary cycle that we are still experiencing, but we have seen it prolonged by reckless levels of government spending. The Federal Reserve Bank of San Francisco did a study after the passage of the partisan American Rescue Plan that showed government spending made inflation in the United States spike more than other developed economies. This should not come as a surprise to anyone – there are going to be consequences when the government continues to stimulate the economy further than what is necessary. This has led to a prolonged period of high prices that has forced the Federal Reserve to raise interest rates to taper demand.
High interest rates have led to many additional problems that are being faced by small businesses. The cost of getting a loan has greatly increased, and now even the average SBA loan is approaching a 10% interest rate. This is forcing banks to tighten their lending standards as they evaluate if it will make sense to even extend the loan and is forcing many business owners to delay expansion plans because it simply is too expensive in this environment.
There are a few things that I think will help stop the runaway inflation problem. First, we must stop reckless government spending. We all know this was not a transitory issue like so many people claimed when this started in 2021, and we must get the government’s fiscal house in order. Second, we must stop passing burdensome regulations. When businesses are forced to hire compliance officers, it is nothing but a drag on a company’s bottom line. And third, we must find ways to secure our supply chains and expand our domestic manufacturing base. Whether it be energy or our food supply, we must reduce our reliance on foreign influences.
In this hearing, I hope we will explore how each of your businesses and industries have been dealing with this pressing issue that has been affecting every American for the last few years.
As the voice for Main Street here in Washington, the House Committee on Small Business will be working to create an environment where businesses can thrive and grow. We are eager to find solutions that will help pave a path toward success for both now and the future.
I want to thank you all again for being here with us today and I am looking forward to today’s conversation.
With that I will yield to our distinguished Ranking Member from New York, Ms. Velázquez.