As President Joe Biden’s economic policies continue to unfold, small businesses across the country are grappling with rising operational costs and labor shortages in 2025. While the Biden administration has focused on worker protections and increasing minimum wage, critics argue that these policies are creating an environment where small businesses are struggling to stay afloat. In the midst of high inflation, supply chain disruptions, and regulatory hurdles, many small business owners are finding it increasingly difficult to maintain profitability and keep their doors open.
The Strain on Small Businesses
Small businesses, which employ nearly half of all American workers, have faced unprecedented challenges in the past few years. The economic effects of the COVID-19 pandemic, combined with the rise of inflation and supply chain bottlenecks, have made it harder for these businesses to recover. Many owners report that rising wages—part of Biden’s broader labor reforms—have led to significant increases in their overall costs. With a shortage of workers and competition for talent fierce, small businesses are struggling to offer competitive pay while managing to keep operations afloat.
For example, in the hospitality and retail sectors, businesses are feeling the squeeze as the federal minimum wage increase drives up payroll expenses. Small restaurant owners in cities like New York, where the minimum wage has already been raised to $15 per hour, have found themselves facing an even higher cost of labor, further exacerbating their financial troubles. “Our margins were already thin before the wage hike,” says Sarah Thompson, owner of a popular restaurant in the city. “Now, we’re seeing increased labor costs and inflation driving up food prices. It’s becoming impossible to keep up.”
The Supply Chain Crisis and Inflation’s Impact
Even though supply chains have made progress in recovering since the pandemic, many small businesses are still experiencing significant delays and price hikes from suppliers. Shipping costs, once expected to stabilize, remain high, particularly for small businesses that lack the bargaining power of large corporations. The price of raw materials, from construction materials to food ingredients, has surged, pushing operational costs even higher.
Contributing to these problems, the U.S. continues to experience inflationary pressures that have persisted since 2021. While inflation rates have slightly decreased in 2025, they remain higher than historical averages, placing a heavy burden on small business owners. For instance, energy prices remain volatile, and as the country shifts toward renewable energy sources—a move supported by Biden’s administration—some small businesses in sectors like manufacturing are feeling the added financial burden of compliance with new energy regulations.
A Deepening Divide Between Small Businesses and the Administration
The Biden administration’s economic agenda, while designed to support the working class, has drawn sharp criticism from conservative and small business groups. The administration’s push for expanded social safety nets and worker protections has been seen by some as an overreach into the private sector. Critics argue that the burdens placed on small businesses to comply with regulations, offer paid sick leave, and increase wages are not being adequately addressed by the benefits of these policies.
John Kennedy, a small business owner in Texas, shared his frustration with the policies: “Small businesses are the backbone of our economy, but the government’s regulations make it harder for us to survive, let alone thrive.” Kennedy’s statement echoes a broader sentiment shared by many small business owners who feel the weight of increased regulations and the inability to absorb rising costs. The increased federal taxes and the push for a more comprehensive social safety net are contributing to an already difficult environment for entrepreneurs.
While critics point to these challenges, it’s important to note that Biden’s policies are intended to protect the broader workforce, especially lower-income workers. Advocates of the administration’s agenda argue that the increase in wages, paid leave, and protections for workers is long overdue. However, as the debate between state and federal regulation intensifies, many small business owners feel caught in the middle.
Tech Startups and Clean Energy Investments Benefit
While many small businesses struggle, certain sectors have seen benefits from Biden’s economic agenda. The administration’s commitment to clean energy investment and infrastructure upgrades has led to a boom in the tech and renewable energy sectors. Small businesses in these industries, especially startups focused on green technologies, have found new opportunities for growth. Tax incentives for companies investing in renewable energy and the administration’s infrastructure overhaul have created a more favorable environment for these types of ventures.
In cities like Austin and Silicon Valley, tech startups focusing on renewable energy technologies, battery storage, and sustainable manufacturing have benefitted from both federal and state incentives. While traditional small businesses may be feeling the squeeze, the transition to a more sustainable economy has created new growth opportunities for companies at the forefront of clean energy and infrastructure development.
The Push for Regulatory Rollbacks in Conservative States
The tension between federal policies and small businesses in conservative states has been intensifying. Lawmakers in states like Texas and Florida have pushed for regulatory rollbacks, seeking to relieve small businesses from what they see as burdensome federal policies. These states have become battlegrounds for the future of economic governance, with state-level initiatives to either oppose or roll back federal labor laws, minimum wage increases, and environmental regulations.
In Texas, Governor Greg Abbott has voiced strong opposition to federal regulations that he believes stifle business growth. “State policies should reflect the needs of our local businesses,” Abbott said in a statement. “We need less federal interference, not more.” Other states with Republican-led governments have followed suit, advocating for greater autonomy in determining wages, labor protections, and business regulations. As the 2028 presidential election approaches, the clash between federal economic policies and state interests is likely to play a central role in shaping national discourse.
Looking Forward: The Future of Small Business in America
As we move deeper into 2025, the future of small businesses remains uncertain. While some industries may find growth in new federal initiatives, many small business owners continue to navigate a challenging landscape filled with rising costs and complex regulations. With the economy still in recovery mode and inflationary pressures persisting, the Biden administration faces mounting pressure to address the needs of small businesses, especially those in the most affected industries.
At the same time, the growing divide between federal and state-level economic policies suggests that the battle over business regulations and taxes will remain a defining issue in American politics. As lawmakers continue to debate these issues, the outlook for small businesses will depend largely on the balancing act between economic growth, labor protections, and regulatory reform.
