Report: Michigan’s small businesses grapple with inflation, taxes, and regulation

The National Federation of Independent Businesses (NFIB) published 11^t release of its quadrennial report – Small Business Issues and Priorities. The report was first published in 1982 and is issued every four years by the NFIB Research Center.

The 2024 report is based on a national survey of small business owners and is a comprehensive guide to 75 issues and their impact on Main Street.

“There’s no doubt that Michigan small businesses are grappling with a variety of economic and regulatory challenges,” says Amanda Fisher, Michigan State NFIB director. “This survey shows that owners have serious concerns about ongoing inflation and the future of their businesses.

“To complicate matters further, the Michigan Supreme Court recently exacerbated the problems facing Main Street with an unfair ruling on paid sick leave and the minimum wage.”

For the past four years, small business owners have been grappling with record inflation, tax pressures from all levels of government and uncertainty about what will happen next, said Holly Wade, executive director of the NFIB Research Center.

“This study helps the public understand the issues affecting the small business sector,” Wade said. “Small businesses employ nearly half of the private-sector workforce, and this publication clearly shows where policymakers should focus to strengthen Main Street and every community in which they operate.

“Despite headwinds and economic challenges, small business owners are working hard to create jobs and grow their companies, but the threat of rising costs, taxes and uncertainty is making Main Street hesitate.”

Key study findings include:

Cost pressure fuels small business concerns

• The cost of health insurance, unchanged since 1986, remains the number one, chronic concern for small business owners.
• “Material/Inventory Cost” rose from 12th place^t in 2020, currently ranking second – a direct result of historic inflation over the past two years.
  • The percentage of owners who consider this a critical issue has increased from 9 percent in 2020 to 20 percent in 2024.
• “The cost of natural gas, propane, gasoline, diesel and heating oil” is 6^t most serious problem cited by small business owners. Nearly one in four reports it as critical.
• Similarly, “Electricity Costs (Rates)” is the most important concern for small business owners, ranking 10th^t in 2024 and 16 percent considered them critical.
• The increasingly important topic of “Interest rates” topped the list, rising 43 places from 56.^t in 2020 until 13^t in 2024.

Two of the top 10 problems are tax-related

• The most serious tax issue is “Federal taxes on corporate income.” It ranks 4th^tdown one spot from 2020. The Tax Cuts and Jobs Act benefited most small businesses, but many still find the federal tax burden a significant problem.
  • A quarter of small business owners say this is a serious problem – a five percentage point increase from four years ago.
  • If Congress allows the small business tax credit to expire at the end of 2025, it would result in a drastic tax increase for small businesses and likely exacerbate the federal tax problem.
• “State taxes on business income” ranks as the second most serious tax issue, with 22 percent calling it critical, up from 19 percent four years ago.

Uncertainty dominates top 5 concerns of small businesses

• “Uncertainty about economic conditions” and “Uncertainty about government actions” have gained importance since 2020.
• Small business owners see “economic uncertainty” as third factor^rd the most serious problem their company faces has moved up from 9th place in the ranking^t in 2020.
  • Twenty-two percent of small business owners say it is critical.
• “Uncertainty about government actions” ranks 8th^t and is crucial for 23 percent.
• “Location of skilled workers” ranks 5th^t and is crucial for 28 percent.

The publication aims to better understand which issues are most and least important to small business owners. The report also helps state and federal lawmakers set priorities for pro-small business legislation in the coming years.

The publication’s findings are based on responses from 2,873 small business owners/NFIB members to a postal survey conducted from February to mid-April 2024.

Owners individually assessed 75 potential business issues and rated their severity on a scale of “1” for “Critical Issue” to “7” for “Not a Issue.” An average for each issue was calculated and used as the basis for ranking or ordering the issues.

For 80 years, NFIB has represented the interests of America’s small and independent businesses, both in Washington, D.C. and in the capitals of all 50 states.

NFIB is a nonprofit, nonpartisan, member-led organization. Since its founding in 1943, NFIB has been dedicated exclusively to small and independent businesses and remains so today.

For more information, visit https://www.nfib.com/.