‘I am trying to stay alive.’ Jobs at mom-and-pop shops are disappearing

By Matt Egan, CNN

New York (CNN) — Shirley Modlin started her manufacturing business 20 years ago in her garage with her husband. Now, she fears the company won’t survive.

Modlin’s tiny company based in Powhatan, Virginia, faces major delays on components and price hikes of up to 400% that she blames on tariffs. She is struggling to pass those costs on to clients and has fallen 90 days behind on payments to vendors.

“Everything is delayed or high-priced. The customer is screaming. It’s killing us,” Modlin, owner of 3D Design and Manufacturing, told CNN in a phone interview.

Mom-and-pop shops are under increasing pressure from a confluence of factors: tariffs, high interest rates, expensive health insurance and now surging energy costs.

Small businesses with fewer than 10 employees have cut jobs 13 months in a row, according to according to a new analysis by the Democratic staff at the US Congress Joint Economic Committee that was first shared with CNN.

That’s a big change from the spike in small business optimism that accompanied President Donald Trump’s 2024 victory.

Modlin already had to forgo raises for her workers this year. Now she’s being forced to contemplate what was once unthinkable: whether to sell the business or lay off any of her highly-skilled machinists.

“I am trying to stay alive. I can’t sleep at night,” Modlin said.

Steeper layoffs than Covid

Trevor Frampton owns a feed and pet supply store in Santa Rosa, California, with his wife. They have been unable to pass costs on to cash-strapped consumers because he fears they will turn to larger rivals or e-commerce options instead.

Now, Frampton is considering letting employees go for the first time in a decade.

“There is something so wrong with this economy right now. My customers are buying less and they are buying down,” Frampton said. “The only option left is reduction in force – and that just makes my stomach turn.”

Employment at mom-and-pop shops tumbled by 292,200 jobs in 2025 alone, according to the US Congress Joint Economic Committee’s analysis, based on the Intuit QuickBooks Small Business Index. That’s the most since tracking began a decade ago. By comparison, mom-and-pop shops lost 87,800 jobs in 2024.

In fact, these smallest businesses cut four times more jobs last year than in 2020, during the pandemic, according to the Intuit data. The data is based on a sample of small businesses that use QuickBooks to manage payroll and invoices.

However, a different metric from ADP that tracks slightly larger businesses (those employing between one and 19 people) finds an increase of 526,000 jobs last year. ADP said these small businesses have added 236,000 jobs so far this year, including 43,000 jobs in April.

‘Lifeblood’ of the economy

Trump had promised to use a mix of tax relief and deregulation that would spark a Main Street jobs boom.

Speaking at a National Small Business Week event this week, Trump hailed his administration’s efforts to cut red tape, slash taxes and allow businesses to deduct 100% of the cost of new facilities, equipment and capital investment.

“You’re essentially the most important factor business-wise in the whole country,” Trump told the gathering of small business owners. “You’re the lifeblood of the American economy. And with your help, we are truly making America great again.”

Trump’s tax overhaul included a new provision that allows some workers to avoid taxes on tips.

Jaja Chen, co-owner of three tea cafes in Texas, said the policy is a positive for restaurants like hers and their employees.

However, Chen said her business is still grappling with breathtaking price hikes on everything from packaging to key ingredients like Japanese matcha.

“Restaurant profit margins are already so low – often under 10% – that any kind of tariff or inflation can be make-or-break,” Chen said.

White House spokeswoman Taylor Rogers responded to the report by stressing last year’s tax cut law made the small business deduction permanent, allowed 100% expensing for equipment and expansion investments, increased take-home pay and expanded Opportunity Zones.

“President Trump has worked diligently to empower small businesses by providing historic tax relief in the Working Families Tax Cut, eliminating more than $110 billion in regulatory costs, and putting American workers first through critical SBA reforms,” Rogers said.

Higher inflation, lower employment

The smallest businesses in tariff-exposed industries have been most aggressive in layoffs since April 2025, when Trump rolled out his controversial global tariffs that the Supreme Court later struck down.

Between April 2025 and April 2026, employment at firms with fewer than 10 employees is down in retail (-41,700), manufacturing (-38,600), construction (-17,700) and wholesalers (10,400), the Joint Economic Committee report found.

Likewise, those industries have all experienced significant declines in monthly revenue since April 2025, according to the Intuit data.

“These small firms simply did not possess the capital depth or adequate margins to absorb the increase in trade taxes,” said Joe Brusuelas, chief US economist at RSM.

Brusuelas noted that smaller firms face three options when facing a shock like tariffs: Eat the cost, raise prices or lay off workers.

“While many employ a combination of the three or all three, the net result is higher inflation and rising unemployment,” Brusuelas said.

Even as tariffs pressure some small businesses, others continue to be launched.

Business applications totaled nearly 492,000 in March, down about 1% from February, according to the Census Bureau. Entrepreneurs filed 1.56 million business applications between November and January, the most in a three-month period since at least 2004, according to a CNBC analysis.

‘This is not a game’

Rachel Klein, owner of Fire Starter Studios in Los Angeles, said her small production company has been hurt by higher costs for food, transportation, software and clothes.

“We’re getting trounced right now. It’s just a big, muddy pile of expensive everything,” Klein said.

The latest pain point? Spiking energy costs as the war in the Middle East lingers.

“Diesel is $7 a gallon now. It’s insane,” Klein told CNN this week.

Klein’s company has struggled to pass along costs because many of its clients have been shrinking their marketing budgets. She has resorted to layoffs.

Modlin, the owner of the Virginia manufacturer, is pleased with Washington’s focus on returning manufacturing jobs that have been outsourced to other countries. However, she is fed up with the unpredictability and tariff volatility that have become the norm.

“Small businesses are getting frustrated. They can’t make ends’ meet, and some are going out of business,” Modlin said. “Stop the game-playing. This is not a game. This is people’s lives.”

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