PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Dear USPS: Stop Harming Small Businesses

By at 17 August, 2021, 11:36 am

By Karen Kerrigan –

Never doubt the ingenuity of American entrepreneurs or those who see a business opportunity in the marketplace. Even in the midst of a pandemic, Americans across the country – in record numbers – are starting their own businesses. For example, recent data found that there were 492,333 new business applications in January 2021 – an increase of 73% from the previous year!

Despite the closure of 34% of small businesses due to the COVID-19 pandemic, American entrepreneurs remain resilient. Even if the face of supply chain challenges, higher inflation and labor shortages, entrepreneurs continue to grind it out in their pursuit of the American Dream. Government policies should support small businesses, not add to existing challenges. But some agencies seem clueless about the plight of small business America.

A decision by the Postal Regulatory Commission (PRC) to increase prices by an average of 6.8% is ill-informed and badly-timed. It will test small-business resiliency even further.

SBE Council urges USPS and the PRC to reconsider this flawed price hike.

Lawmakers on both sides of the aisle recognize that such a decision will be “premature and counterproductive.” It’s a decision that will bolster (and provide a competitive advantage) to larger companies while harming consumers and small businesses like the members of SBE Council.

According to research from McKinsey, it took an average of six years for small businesses to recover from the 2008-09 recession. Their research anticipates that recovering from the pandemic could take even longer. Action taken by the PRC only add uncertainties and operational costs on small businesses, which only add to the weight of existing challenges. Small business owners and their employees should not have to worry about increased postal rates due to years of bad management and fiscal mismanagement at the USPS.

The PRC recognized and even admitted that small businesses would experience price increases “above what the previous [inflation] rate authority provided due to the proposed categories of additional rate authority.” It is for this reason that both Democratic and Republican members of Congress have urged the USPS to postpone the rate increase until at least January 2022.

As the chief advocate for our SBE Council members, I have seen first-hand the devastating impact that the pandemic has had on both decades-old small businesses, and new ones driven by entrepreneurs with big ideas. Delaying this rate increase is critical to their recovery and competitiveness.

Small businesses serve a critical role for local economies and their vibrancy.  They employ 47.1% of private sector employees, and in 2019 they created 1.6 million net new jobs. Especially now, government agencies like USPS should not be harming these fragile small businesses.

In response to the criticism about the price hike, the postal service says that it was “an essential component of our plan to achieve fiscal solvency.” But why should the onus of years of financial mismanagement and losses fall on the backs of small business owners and ordinary rate payers?

It should not.

The USPS may want to consider altering its so-called “Market Dominant” products to ensure that entrepreneurs just starting their businesses will have choices when it comes to sending mail. As it stands now, if small businesses send first-class mail, they only have one option: the USPS. In the end, it could be that small businesses will move to seek out other methods and alternatives to first-class mail, which means the USPS will lose even more customers – and the money it sorely needs.

The PRC must refrain from raising postal rate prices. The increases will disproportionately harm small businesses and the very ratepayers who can least afford higher costs. As small business owners continue to assess their financial outlook and survivability in a year that is becoming more uncertain by the day, this proposed price increase adds yet another burden that simply cannot be absorbed or passed on to customers.

Especially now, small businesses need support and relief. Government policies and regulations must promote their financial sustainability, growth and innovation. The plan from the PRC does the opposite.

Karen Kerrigan is President & CEO of the Small Business & Entrepreneurship Council.

 

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