This week’s email is written by Sacha D. Blalock, founder and Executive Director of Spearhead Group. She is also my former student from my days at Bennett College. Sacha will also write next week’s email as we will be on a staff retreat in New York.
Be Well,
Rhonda
The Inflation Reduction Act and Small Business
The weather was rainy in NC this weekend so I thought, what better way to wind down than to binge-watch Netflix? I landed on Working: What We Do All Day, a day-in-the-life docuseries hosted by former-President Barack Obama that follows Americans in the workplace.
I was especially captivated by the story of Jeanette Felton, a registered nurse, founder, and CEO of At Home Care Mississippi, a home healthcare company primarily funded through Medicaid. Like many minority women small business owners, Felton takes a significantly lower salary than most CEOs. In her case, she’s managing a company of more than 100 employees and supporting hundreds of clients in her community but makes only $43K annually.
According to the State of Entrepreneurs of Colors survey, 21 percent of minority small-business owners said inflation and rising prices are among their top challenges this year.
The Biden-Harris administration’s Inflation Reduction Act (IRA) promised to support small businesses. This legislation, which was signed into law last August, has lowered healthcare costs for small business owners and their employees, addressed longstanding tax disparities benefiting large corporations, and invested in domestic energy production and manufacturing. The construction and contracting industry saw a significant uptick last year, coming in fourth among top leading industries for small businesses.
There’s no denying the appeal the IRA would have among America’s small business owners. But I wanted to understand how the IRA would benefit minority women small business owners like Felton.
Women founders make up 32 percent of entrepreneurs of color (See Table 1). As women, they often play multiple roles, wives, mothers, and care providers—while they’re running their businesses. They’re concerned about health coverage for their families and their employees. Some 83 percent of small business owners said rising health insurance costs have impacted their business, according to the recent Small Business for America’s Future survey. The IRA’s incentives on lowering healthcare and drug costs would make premiums cost-effective for families.
Looking at things through the lens of an entrepreneur, the IRA’s climate incentives will bring business opportunities to local small businesses in the mechanical, electrical, and plumbing fields as demand increases for product assembly and other services. However, while construction and contracting are rising, only five percent of these businesses are owned by minorities.
The bottom line is that rising inflation is impacting everyone, but small business owners and vulnerable populations are affected the most. It will be important to monitor the IRA’s continued benefits to small businesses and assess how minority and women small businesses use these legislation incentives. There will always be nay-sayers. Those who represent corporate interest may disagree overall, but the Inflation Reduction Act is a huge win for small businesses making strides to move the economy forward.
