A new Gallup poll of small-business owners provides evidence about what they’re worried about. Gallup themselves title an article on the survey results “Gov’t Regulations at Top of Small-Business Owners’ Problem List”. They present the following table, which is topped by “complying with government regulations”.
One thing that jumped out at me is that complying with government regulations is the most important problem for 22% of respondents, compared to 18% in the most recent NFIB survey. One explanation for this difference could be simple margin of error: it is, after all, only 4 percentage point. However, Gallup respondents perceive regulation to be an a even bigger problem if you include “new healthcare policy” and/or “poor leadership/government/president”.
Another explanation for the difference could be the wording of the question. Gallup asks:
“What is the most important problem facing small business owners like youtoday?”
whereas NFIB asks:
“What is the single most important problem facing your business today?”
The subtle wording difference here could be consequential. It is quite easy to imagine a small business owner allowing his ideological bias to affect his beliefs about the problems facing businesses like his, but having more realistic understanding of the problems facing himself. It is likely that the latter mistake would be more costly than the former anyway.
Another difference is that in the Gallup survey, “lack of consumer demand” was cited by 12% compared to 28% who cited “poor sales” in the NFIB. However, Gallup also has “consumer confidence” as the most important issue for 15%, which you could combine to 27% for “consumers” as the biggest problem, which is close.
When it comes to what businesses would need to see in order for small businesses to thrive, the evidence again favors demand explanations over regulatory ones. Only 12% felt that “fewer government regulations” would be sufficient, and 6% cited better tax laws. Growth in sales was 15%, consumer confidence was 5%, and an improved economy was 8%. How many of these can you pin on aggregate demand?
Overall, signs continue to indicate aggregate demand is a more important problem problem than regulations. Hat tip to Catherine Rampell.