How to Strengthen the Middle Class

Date: May 15, 2014

The best way to boost the middle class is to support small business.

Owning a small business can set you on a path to a comfortable and rewarding life. Still, many owners are members of the middle class. More than 17 percent of NFIB owners grossed less than $249,000 in fiscal year 2012, and typical labor costs account for 70 percent of sales. By contrast, it takes an adjusted gross income of about $389,000 to be in the top 1 percent and about $120,000 to be in the top 10 percent.

Small business owners employ half of the private sector workforce—most of whom either are, or aspire to become, members of the middle class.

Unfortunately, there are 1 million fewer people employed today than there were in January 2008, when employment peaked at 138 million. Many of today’s unemployed people are members of the middle class or were new members of the labor force working their way up before the recession.

It seems obvious, then, that the best way to help the middle class is to restore the employment status of these people.

Back to Basics

The U.S. Senate Finance Committee recently invited NFIB to testify about innovative policies to invigorate the middle class. Our suggestion was to take a look at what small business owners’ needs are, as they are members of the middle class and employ members of the middle class as well.

In NFIB’s most recent Problems & Priorities Report, NFIB members identified the top issues that are preventing them from growing their businesses and hiring new workers. This list of concerns provides Congress with an array of items on which to focus its efforts to improve the economy and get people back to work. The best thing for the middle class—all of us, for that matter—is a healthy economy. In 2000, small business employed a record 64.5 percent of the adult population. That was good for everyone, and we can do that again with the right set of policies.

The Wrong Focus

Small businesses are not optimistic about the future course of the economy, in large part because of Washington’s failure to deal with the issues that are most important to them. 

Unfortunately, the president’s 2015 budget doesn’t address the issues that small business owners feel are most important. Until this changes, small business is likely to languish, with uncertainty preventing spending commitments that would boost the economy and create jobs. The 2014 election is unlikely to resolve this problem. Even if the Democrats were to lose the Senate, the president still sits atop the legislative heap with a veto pen.

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