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Why majority of small business owners are optimistic the worst of the pandemic is over

Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, joins Yahoo Finance Live to discuss the outlook on small businesses amid pandemic recovery and inflation woes.

Video transcript

- Well, perhaps no part of the American economy was hurt more badly throughout the pandemic than small businesses. But according to a new report from the US Chamber of Commerce this week, those small businesses may be coming back more quickly than we thought. Joining us now is Tom Sullivan, vice president of small business policy at the US Chamber of Commerce. Tom, good to have you with us.

We just saw a graphic there, pointing out that a majority of small business owners-- 65%-- are more optimistic that the worst of the pandemic is behind them. What is fueling their optimism right now?

TOM SULLIVAN: Well, reopening and vaccines. And you know, those two go together. We certainly see from our data that there is a lot of really, really good news. You know that at the US Chamber of Commerce, we represent three million businesses. About 96% of those have fewer than 100 employees, and 75% have fewer than 10 employees.

So, we partnered with MetLife to do a quarterly survey and, again, as we had just covered, a lot of good news coming out of that index today. I found particularly interesting the fact that expectations for increased revenues this year. We saw an uptick of 6% compared to the beginning of the year. And that reaches about a 27% of the small businesses saying the US economy is doing pretty well.

So, even with an uptick of 6%, which is good, we still have to kind of step back and realize that we've got a long way to go before we get up to the 60% of small businesses that thought the US economy was doing well immediately before the pandemic, when we asked them the same question.

- Now Tom, as you're talking to some of these small business owners, I know that the vaccinations is really fueling that optimism. We are seeing some larger companies still trying to figure out how they are going to create mandates or requirements around vaccinations.

How are small businesses right now-- as you mentioned, only having a handful of employees-- how are they approaching the whole vaccination situation? Are they requiring that their workers become vaccinated? Are they trying to help them get vaccinated? How are they approaching that narrative?

TOM SULLIVAN: Well, Christian, small business owners are doing everything they can to make their current employees happy. And they're doing everything possible to attract qualified employees. So, when it comes to vaccines, we see in the survey data that an extremely high percentage want to require proof of vaccination for customers, and they want to require employees to be vaccinated.

And the reason for that is actually very simple. They see higher vaccinations equating to staying open, and they have to stay open to recoup the losses that have had over the past 15 months. But make no mistake about it, small businesses will do anything they can to make sure that they can find and hire qualified and willing employees. And when we surveyed our local chambers of commerce-- because you know we partner with over 1,600 chambers of commerce-- 90% of them said that their business members are stalled from growth because they can't find workers.

And so, we have got to convince lawmakers to resist the temptation to micromanage Main Street towards recovery. And if we can do that, then we'll see small businesses being able to hire, being able to scale up their business, and recoup the losses that have occurred over the past 15, 16 months.

- Tom, I want to bounce off that labor shortage issue. It's a big one, and it's affecting businesses of all sizes.

Are you finding from your members that they are being forced to raise prices? I mean, it's tough. You can't take blood from a stone. But are they having to pay workers more to attract these employees?

TOM SULLIVAN: Alexis, yes. We're seeing, at the national level, we're seeing those wage rates go up. And the market is working. When small business owners are desperate for employees, they're going to pay more, to the extent they can.

Very important to know that there's a difference between an ice cream shop and a sheet-metal fabrication manufacturer. Their margins are different. And where a small business owner can afford in those margins to pay their employees more, they will.

- All right. Tom Sullivan, VP of small business policy there at the US Chamber of Commerce. Thanks for being with us.