About thirty million (and counting) Americans are officially unemployed, and this number is not likely to budge much anytime soon. At the same time, millions of small businesses nationwide are shuttered and many do not know when or if they will ever re-open.
The $3 trillion CARES emergency funding effort aims to help small businesses. It includes the multi-billion-dollar Paycheck Protection Program (PPP) which has gotten off to a very shaky start.
The PPP loans are meant to keep businesses afloat and especially to help employers of small enterprises keep their staff on the payroll. If they do so, the loans may be forgiven.
But for many small businesses, the loans have been impossible to get. Meeting the Small Business Administration’s paperwork requirements can be daunting, and many applications are refused or lost.
Well-connected large businesses – including many that don’t need the money -- have had an easier time of it, getting a large portion of the funds.
The Fiesta Restaurant group, for example, has a market cap of $189 million and 10,000 employees. They received $15 million from PPP (Hotel and restaurant chains were mysteriously exempt from the PPP’s 500-employee limit.) but, after the public reacted to the PPP's funding of large firms, they were appropriately embarrassed and, to their credit, they returned the money.
Future funding should be restricted to small businesses, period. If this $349 billion PPP program (with an additional $320 billion recently added) comes to be seen as bailing out big corporations while the local hardware store and corner restaurant go under, a backlash is inevitable – and justified.
There are two other pieces of pending legislation that will help small businesses get back on their feet.
First, any small business willing to re-staff and get to work should be allowed to do so without fear of litigation related to COVID-19 exposure.
As long as the business follows the federal safety guidelines to re-open, they should be free to go about their business without being worried about getting sued over coronavirus issues. This is especially true in litigation-happy states like California.
Second, small business owners we interviewed for our book, "Welfare for the Rich," spoke eloquently about how much they just wanted to be able to do their jobs without constantly stumbling over rules and regulations.
All small businesses need a break from onerous regulations, including licensing laws. One in three jobs in America now requires a hard-to-get license, for example.
Getting a license to work can take many months and cost thousands of dollars, putting hundreds of professions out of reach for many.
For jobs like fortune-telling, interior decorating, tour guiding, and flower arranging, licensing requirements are absurd. Especially during tough economic times when we all want to help get our fellow citizens get back to work, licensing requirements constitute a major and pointless barrier.
Those jobs should be quickly and easily available to all who are capable of performing them.
There are many other regulations that strangle small businesses. During our time interviewing Americans about their businesses we heard over and over again how onerous the paperwork could be.
One farmer listed over fifty different regulations he had to watch out for, account for, and stay in compliance with, just to be allowed to grow his Central Valley, California crops.
Boatyard owners find it harder and harder to get work done on boats, with clients waiting while local, state and federal agencies pile on the rules, fees, and fines.
There are regulations that require chemical testing of wooden children’s furniture, regulations that have classified backyard puddles as federally controlled “wetlands,” even regulations dictating the size of olives and apricots.
Small business owners don’t need all these pointless and unnecessary obstacles; they need to get their people back on the job.
In 2019, the Competitive Enterprise Institute published its “Ten Thousand Commandments,” an annual report on the federal regulatory state. In it, they note that the costs of regulatory compliance and intervention come to nearly $15,000 per U.S. household per year.
The Heritage Foundation and the National Association of Manufacturers (NAM) have estimated that total costs of regulation are in the range of $2 trillion annually—about 10 percent of U.S. GDP.
Meaningful public health and safety rules make sense, but regulations that are picayune, duplicative, and serve no public purpose should be eliminated now, when doing so will help America get back on the road to economic prosperity.
Phil Harvey and Lisa Conyers are co-authors of "Welfare for the Rich" (Post Hill Press, August 2020).