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NYC small businesses are on the ropes: Rising wages and growing regulations are causing real harm to our neighborhoods

2019-02-06

Closing time for St. Marks Comics. (Angus Mordant for New York Daily News)

New York City’s small businesses are fighting to survive. But the empty storefronts that are increasingly visible around the city are not simply a result of rising rents, but also the increased difficulty for businesses with thin margins to operate in the over-regulated environment that New York has become.

For many entrepreneurs in the five boroughs, what begins as a dream quickly devolves into a seemingly endless effort to adapt to countless new laws and compliance forms, new fines and fees, and a minimum wage that continues to climb regardless of a business’ ability to pay it.

In the last two years, local businesses have weathered a barrage of new state and city mandates such as paid sick, safe and family leave as well as new regulations requiring sexual harassment education and restricting employee scheduling. All of these add to the high costs of creating jobs and operating a business in New York.

At the same time, businesses are adjusting to wage requirements that have increased every year since 2013 and, for the smallest businesses, will increase yet again at the end of 2019.

In some industries, the impact is even greater. Restaurants, for example, face the additional burden of increased delivery fines, menu labeling changes, new organics recovery requirements, new packaging requirements, and, significantly, the potential elimination of the tip wage credit which will dramatically increase payroll costs.

Some of these new mandates have been justified and contribute to ensuring the safety, health and basic human rights of New Yorkers; but many are clearly a response to political pressure and reflect the fact that business owners have far less influence than labor unions and other activist groups.

A small business owner cannot often afford to run a fully compliant business, manage their employees, and also attend recurring hearings for seemingly daily proposals of new regulations.

The New Year has brought, among others, the mayor’s latest proposal to require businesses with five or more employees to provide two weeks of paid leave to their employees, and a renewed push for the Small Business Jobs Survival Act — a misguided policy that could actually have the unintended consequence of hurting small businesses that need help.

For some beloved businesses, it is already too late.

Just last year, the Coffee Shop — a Union Square institution — closed, and while some point solely to high rents, the owners stated that the scheduled $2 minimum wage increase would have added $46,000 to their monthly payroll, making it impossible to simply break even.

The outside of St. Marks Comics which announced it will be closing in February.
The outside of St. Marks Comics which announced it will be closing in February. (Angus Mordant for New York Daily News)

St. Mark’s Comics, which had operated in the East Village for 36 years, will close this month. In closing, the owners stated, “There are lots of obstacles to running a retail storefront in NYC; too many of them at once to fight.”

When the Manhattan Chamber of Commerce surveyed our members, businesses with fewer than 20 employees most often cited the already high cost of doing business in New York as the thing most negatively affecting them — more than those that cited slowing sales and real estate or lease issues combined.

Rather than impeding small business success, New York City needs to help local businesses compete through better marketing and an enhanced capability to compete online while driving foot traffic to brick-and-mortar locations.

City government says it wants to help small businesses grow and succeed, but for many business owners, it feels as if there is a permanent target on their backs. While local government speaks about supporting small businesses, imposing endless, catch-all regulations do the exact opposite, hurting local businesses, the employees they support and the communities they call home. Now is the time to rethink this direction and make life easier for small businesses, not harder.

Walker is president and CEO of the Manhattan Chamber of Commerce.