Supply Chain Challenges Worsen for Small Businesses

By at 24 September, 2021, 12:54 pm

by Raymond J. Keating –

We’ve heard a great deal about supply chain challenges as the U.S. and our economy work to emerge from this pandemic. We also have heard much talk about labor shortages when discussing supply chains. Those labor shortages are quite real, as many small businesses can attest, but so is a less recognized challenge: the loss of small businesses.

The U.S. Census Bureau’s Small Business Pulse Survey, which has been providing insights on the impact of the pandemic on small businesses since April 2020, offers information on supply chain issues (and others) for small businesses.

The latest survey week covers September 13-19, 2021.

On the question of delays/difficulties, 43.3 percent cited domestic supplier delays and 18.2 percent foreign supplier delays.

Let’s see how this compares to some earlier assessments.

Supply Chain Challenges Worsen

The latest results actually are worse than two months earlier (July 12-18, 2021), when 38.8 percent cited domestic supplier delays and 15.9 percent foreign supplier delays.

And they are markedly worse than at the start of 2021 (January 4-10, 2021), when 26.7 percent noted domestic supplier delays and 8.6 percent foreign supplier delays.

It also is much more serious than a year earlier (September 13-19, 2020), when 28.0 percent noted domestic supplier delays and 9.3 percent foreign supplier delays.

Of course, as the economy has recovered, demand has risen, which explains part of the recent supply chain issues. But at the same time, a market economy is designed to respond to such changes in demand.

The problems we are experiencing come from a series of issues related to the pandemic and related partial economic shutdowns. Those issues not only include labor shortages, as workers have been relatively slow in returning to the labor force, but also the loss of small businesses themselves.

The economy cannot experience closures of hundreds of thousands or millions of small businesses, and not suffer accordingly. Small businesses not only depend upon supply chains, but are major parts of supply chains.

More Government Spending and Taxing is Not the Answer

This speaks to the need to policymakers to snap out of their deeply mistaken and troubling dreams of more government being the answer to all our woes, and instead recognize that governmental burdens need to be rolled back – such as by reducing tax and regulatory costs – so that entrepreneurship and investment are incentivized, and will drive our economy forward.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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