Biden: Small businesses are being left out of the supply chain conversation

Biden: Small businesses are being left out of the supply chain conversation

The U.S. is being hit hard by supply chain disruptions, which have rattled businesses around the world as demand surges in the wake of the COVID-19 pandemic. As Congress and the administration work toward resolving this supply chain quandary, American small and medium-sized businesses, as the backbone of the country’s economy, need to be at top of mind.


Are today’s supply chain interruptions this year’s Ebenezer Scrooge?

Whether it’s at the gas pump or checking off items on Christmas wish lists, it has been hard to miss the rise in prices, and in some cases, total lack of options.

With inflation rates at a 30-year high, businesses around the world are all struggling with supply chain bottlenecks in the wake of the COVID-19 pandemic. These disruptions are the direct result of a surge in demand from a more active public colliding with struggling industrial production that has been stymied by COVID-19 shutdowns.


What’s most worrisome, however, is the fact that issues related to the supply chain, coupled with labor shortages and inflation, don’t seem to be getting any better. That’s why President Biden’s most recent roundtable discussion with business executives regarding the supply chain dilemma was troubling.

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On Nov. 2, President Biden hosted four chief executives of major retailers and shipping companies to discuss how his administration could work alongside the private sector in order to combat these supply chain disruptions. 

At the table were the CEOs of corporate behemoths, including Walmart, UPS, FedEx and Target. The conversation centered on the president’s action plan to ease U.S. port bottlenecks as well as the recently passed infrastructure bill, which provides funding for various components of the domestic supply chain.

Empty shelves are seen at an IKEA store on Oct. 15, 2021 in the Red Hook neighborhood of Brooklyn borough in New York City.  (Michael M. Santiago/Getty Images / Getty Images)

Although this discussion was a step in the right direction, and no doubt productive, it missed a critical element that could have added a vital voice to the conversation: leaders of American small and medium-sized businesses. 

Approximately half of the U.S. workforce, where the majority of economic growth occurs, is employed by small businesses. Helping these struggling companies is tantamount to helping their workers.

According to recent reports from the U.S. Census Bureau Small Business Pulse Survey, nearly half of all American small businesses claimed to have at least some level of supplier delays. This number is an increase from the 26.7% reported during the first week of 2021.

The survey also showed that two-thirds of manufacturers alongside more than 50% of foodservice and hospitality businesses are also feeling pressures from supply chain delays.

President Biden discussed details of his action plan during the roundtable, which includes allowing port authorities to redirect unused funds in order to address supply chain issues.

This is certainly a useful change, however, most small businesses in the U.S. don’t have the same luxury as the Amazons or Walmarts of the country that can spend millions to charter their own planes or ships in order to move supply.

Small companies across the country face unique challenges when it comes to our struggling supply chain, and those challenges need to be addressed.

Despite the fact that some businesses are willing to absorb steeper costs in the immediate by airlifting product from overseas in order to avoid the loss of customers and revenue, that isn’t an option most.

As American small and mediumsized businesses scramble to find new suppliers, there are options that Congress has in the immediate that can help. In order to help businesses manage these scarcities and issues on the supply chain, Congress can rectify an error that was just made with the recently passed infrastructure bill.

The recently passed Infrastructure Investment and Jobs Act cut short one of the most valuable business incentives available to companies hit hard by the pandemic: the Employee Retention Credit

The eligibility for the payroll credit, which has been used by thousands of American small businesses in order to keep employees and access much-needed capital, was initially intended to run through the end of 2021. However, with the passage of the infrastructure package, eligibility for the incentive now stops short at the end of the third quarter of this year.

Congress should immediately reinstate the tax credit, which incentivizes businesses forced to shut down as a result of COVID-19 to maintain payroll. Doing so would open the opportunity for struggling small businesses to have instant access to much-needed capital at a time when the effects of the pandemic have not fully worn off. 

At a minimum, Congress should contemplate reinstating the credit, or something similar, for those small businesses that employ under 500 employees where the company has experienced business disruptions as direct result of domestic supply chain bottlenecks. 

Congress should also debate the merits of an enhanced tax deduction or credit for expenses related to anticipating and working around these current supply chain disruptions. Technology has emerged that will help businesses better predict breaks in the supply chain, but those costs are out of reach for any but the largest businesses. Incentives like these could help give these businesses the extra cushion or tools they need to weather the storm.

President Biden’s supply chain action plan also includes the Transportation Department awarding approximately $240 million in grants through its Infrastructure Development Grant program. As an alternative, or coupled with reinstating the Employee Retention Credit, the administration should consider a similar program directed solely at American small and medium-sized businesses that again are impacted by the struggling supply chain.

Dire times call for dire measures. Small businesses have never been able to match the buying power of larger companies, but now, many owners of small businesses are in a position where they aren’t able to buy necessary supplies or products at all. 

An estimated 800,000 small businesses permanently shut their doors during the first year of the pandemic, and those that are left continue to struggle. Even grimmer is the fact that the U.S. consumer price index jumped to 6.2% higher than last year’s reported October figures. 

These are sobering statistics that are certain to hit America’s lower and middle class the hardest. And although recent economic numbers are promising, including a strong uptick in jobs numbers, there is still a long road ahead. 


Now is the time to strategize on a plan that fits companies of all sizes.

There is certainly no “quick fix” to easing supply chain tensions overall, however, there are simple changes that could be enacted in the immediate that will help move things forward and give all American businesses some muchneeded support. 

Rick Lazio is currently a Senior Vice President at alliantgroup, and is a former U.S. Representative from New York. Lazio served in Congress from 1993-2001. After Congress, Rick moved to the private sector working for JP Morgan Chase as an Executive Vice President and then Managing Director.