NYC: A regulation wonderland, a small business nightmare

As a lifelong Philadelphian, I’ve never had much sympathy for the plight of New Yorkers, particularly Mets fans. But that’s all changing. I feel pretty bad for people trying to run a small business in that town. Believe me, Philadelphia has its challenges, but for small operators in the Big Apple, it’s a much tougher life.

Of course, businesses in New York City have a much larger pool of potential customers, but they’ve also got a lot of competition as well as higher taxes and rents. Yet, that’s not even the worst of it. The real challenge to New York City business owners is their own local and state governments.

{mosads}In just the past few years, an increasing number of regulations have come into — or are about to come into — effect. And these regulations are slowly but surely strangling small-business owners in the city.

Want some examples?

Paid sick leave: Back in 2013, New York City Council passed legislation that required employers with 20 or more employees to provide up to five paid sick leave days a year to employees who have worked at least four months to care for themselves and their families. But that wasn’t enough. How about families?

Family leave: Since 2018, businesses across New York State have been required to provide up to eight weeks of paid time off work for their employees who have worked for them for more than six months so that they can care for family members (which include grandparents, grandchildren and domestic partners) who are very ill or have a serious health condition.

Paid time off: New York has mandated paid sick time and family leave so what’s left? Oh yes: mandated vacations! In January, NYC Mayor Bill De Blasio proposed yet another regulation that would require most city businesses to provide full-time workers with at least 10 paid vacation days a year.

That number would be prorated for part-timers, so they get some time too. The regulation hasn’t passed city council yet, but considering the council’s track record, I’m expecting it will.

Predictive scheduling: New York City business owners must now be able to see into the future. That’s because those businesses in the food and retail industries that employ more than 20 employees are required to provide each individual employee with a final schedule at least 72 hours before the employee’s schedule begins.

Employers cannot add or cancel shifts within 72 hours. Employers must also keep records of employee work schedules going back at least three years and provide them within 14 days of an employee’s request.

Minimum wage: New York City fast-food workers and employees of businesses with 11 or more workers are now entitled to a $15 an hour minimum wage. New York City businesses with 10 employees or less are required to pay at least $13.50 per hour this year, but that will be going up to $15.00 in 2020. The federal minimum wage is $7.25 per hour.

Lactation in the workplace: As of March 18, businesses with more than four employees are now required to provide lactation room accommodations and distribute this policy to all employees. We all know that real estate is inexpensive there, so finding the extra square footage shouldn’t be a problem, right?

Anti-harassment: In light of the #MeToo movement, both New York State and New York City issued what’s considered the most far-reaching anti-harassment rules in the country. But the rules are confusing.

Although both statutes contain requirements for anti-sexual harassment training and providing written policies for employees, there are both overlap and inconsistencies that are baffling for many employers.

Congestion pricing: Beginning in early 2021, vehicles that are entering Manhattan below 60th street will have to pay a toll. How much? The exact figure hasn’t been settled on, but many are expecting it to be in the $14 range. That’s after other bridge and tunnel expenses.  

Many business owners fear that the toll will not only increase their costs for deliveries into the city but may motivate potential customers from staying away. Can you blame them?

If you’re a New York City business owner and you’ve made it this far, then my hat’s off to you. While all of these rules and regulations are good and fair in theory for the benefit and welfare of workers, they raise costs to such an extent that many small businesses can’t stay in business. Don’t believe me?

According to a Jessica Walker, the president and CEO of the Manhattan Chamber of Commerce, long-time businesses from coffee shops to comic stores are shutting down, and small companies surveyed by the chamber said that the high cost of doing business in the city is “negatively affecting them” even more so than slowing sales and lease issues.

{mossecondads}That sentiment was shared by another business owner who told the Gotham Gazette that “given the high costs of doing business here as well as the costs of complying with local regulations, many small-business owners are struggling to make ends meet, just like the employees who work for them.”

Citing a recent analysis of Brooklyn’s Bushwick district by the city’s Department of Small Business Services that revealed storefront vacancy rates ranging from 15-25 percent, two city council members and the CEO of the Brooklyn Chamber of Commerce wrote in a recent opinion piece for the New York Daily News that “small businesses are on the brink and stores in neighborhoods across New York are in crying need of help.”

I don’t know if it’s the “booming” New York City economy that makes politicians there feel like businesses — even small businesses — are rolling in dough and are able to absorb the costs of all these regulations. What I do know is that I’m grateful that I’m running my business in Philly. 

Gene Marks is founder of The Marks Group, a small-business consulting firm. He has written on economic and financial issues for The Washington Post, The New York Times and The Guardian. He also frequently appears on CNBC, Fox Business and MSNBC.