Friday’s jobs numbers confirm what small businesses already know: The underlying economy is far stronger than the mainstream media and financial commentators suggest.
Employers added 172,000 jobs last month, unemployment remained low at 4.3 percent, and previous job gains were revised upward by 93,000. That marks a four-sigma beat over expectations. Job creators are proving the pundits wrong once again.
The May jobs report follows strong ADP private payroll data this week and a spike in employers looking to hire. Taken together, these numbers paint a picture of a labor market that remains remarkably resilient despite months of warnings about economic weakness.
That resilience is especially evident among America’s small businesses. According to the Census Bureau, more than 500,000 small businesses were created in April, the fifth highest on record. Since last year’s Republican tax cuts, small-business creation has been approximately 20% higher than the post-COVID average.
While headlines often focus on market volatility, political uncertainty, or inflation concerns, small business owners are focused on what matters most: hiring workers, serving customers, and growing their companies.
Drilling down into the report, the leisure and hospitality sector added 70,000 jobs in May, and restaurants and bars added 48,000, signaling a strong start to the summer hiring season.
These businesses are often among the first to feel economic headwinds and among the first to benefit when consumer confidence improves. Their hiring surge suggests that Americans are continuing to spend, travel, dine out, and participate in the broader economy despite high gas prices and inflation.
Good public policy, including tax cuts and deregulation, is helping job creators and consumers overcome these costs. Based on their ongoing hiring, job creators seem to realize this time inflation is truly transitory.
When these costs recede, American small businesses will be in a position to lead the country into its next economic boom.
Congressional Republicans can help with a reconciliation package that doubles down on last year’s tax cut victories. Republicans’ top tax priority should be indexing capital gains to inflation.
This long-overdue reform would fix a quirk in the tax code that unfairly requires small businesses, farmers, homeowners, investors, and ordinary Americans to pay capital gains taxes on phantom gains driven solely by inflation.
Under the status quo, Americans face large tax bills when they sell assets, even when the real, inflation-adjusted value hasn’t meaningfully increased. According to the Tax Foundation, one-third of capital gains are attributable purely to inflation.
Small businesses are among the hardest hit. Entrepreneurs who spend decades building a company often find that a meaningful share of their tax bill is driven not by actual growth, but by inflation. Same story for farmers.
But everyday folks are also impacted. According to IRS data, three-quarters of households reporting capital gains earn under $200,000 annually. Homeowners who have benefited from the surge in housing prices often face a falsely inflated tax bill when they sell.
Indexing capital gains to inflation would unlock capital currently trapped by tax penalties, encouraging businesses, homeowners, and investors to sell, reinvest, and allocate resources more efficiently, turbocharging the economy.
It would be a major win to take back to voters during campaign season and support even stronger monthly jobs gains for years to come.
Alfredo Ortiz is CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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