The lurking red tape problem
Mayor de Blasio, the small business killer
There are a lot of great Democratic candidates running for president, and narrowing the field will be a challenge. But there's one candidate who would never get my vote. That's New York City Mayor Bill de Blasio. His policies, though well intentioned to benefit workers, are killing small businesses in his city. When you consider the damage he's done in his own hometown over the past few years, why would any small business owner outside of New York support him?
Back in April, I wrote about how de Blasio-backed policies and proposals - including higher minimum wages, mandated vacation, sick and family leave as well as rules for predictive scheduling, anti-harassment and a new congestion pricing fee - have caused such problems for New York City's small businesses that many are shuttering their doors or moving out of town.
Because of the mayor and city council, merchants and restaurateurs there are, as one business leader put it, "struggling to make ends meet." Another business leader told me that many local "small businesses are on the brink."
On the brink? How could this be? Don't we have a strong economy with full employment, low inflation and interest, increased industrial production, skyrocketing retail sales and consumer spending as well as historically high levels of small business confidence nationwide? How come New York's small businesses aren't sharing in the prosperity?
It's because de Blasio's regulations are strangling them. And now, just when things couldn't get any worse, things just got worse. New data show that New York City's property taxes are skyrocketing.
According to a recent report from Patch, New York City's retail store buildings were billed a collective $1.5 billion in property taxes last year, an increase of 71.6 percent from 2009. Property taxes in office and residential buildings (which often have ground floor retail spaces) increased 69 and 66 percent during that period, respectively. The average property tax alone paid by a typical small merchant has increased from $46,620 to $78,494 during that period. Remember, this is more than $6,500 per month due just for property taxes, not even rent.
"If it was just the rent, then we would probably be like, 'OK, maybe when our lease is up, we'll look at a different location,'" Natasha Amot, the owner of a Brooklyn cooking supply store, told Patch. "But I think it was realizing in 2017, then again in 2018, that the property tax situation was crazy and feeling like it was only going to continue to increase at a dramatic rate that we said, 'This is not the kind of model that feels very sustainable for us.'" The result of all this? Amot has had to shut two of her three locations.
Of course, this is not entirely de Blasio's fault. He's only been mayor of the city since 2014. He's also not oblivious to city's "vacancy crisis," as reported by The Gothamist, that's behind the startling loss of storefront businesses across all its boroughs. So much so that he's supportive of a recent move by city officials to compile a database of storefronts in order to track vacancies and, according to the Gothamist, "hopefully prompt future policies toward aiding small business owners." A database? Just take a look around. That's all the data you need.
While the "data" are being collected, de Blasio, now a presidential candidate, continues to operate under the delusion that his policies are not only great for the city, but should be applied nationwide. To that end, he's determined to help small businesses everywhere share the fruits. That thinking is behind the recent announcement of his "worker's bill of rights" which includes - wait for it - a national $15 minimum wage, higher overtime pay, mandated vacation and protections for union workers. Awesome!
Not surprisingly, his plan is meeting with a lot of rolling eyes from business leaders in his own backyard. It suggests he "doesn't have confidence in employers to do the right thing," Kathy Wylde, the president and CEO of the Partnership for New York City, told The Daily News. "When regulations like those proposed by Mayor de Blasio apply to all employers, small businesses suffer most because they often lack the administrative and financial resources of their corporate big-box competitors," Greg Biryla, New York state director of the National Federation of Independent Business, also said.
A note to employees and workers who have made it this far: Don't be angry with me and my fellow small business owners. Of course your rights are important. But there's a balance, and a limit. Because what happens if these "rights" take precedent over a business owner's ability to actually stay in business?
Here's what happens: closure and flight. The result? All those benefits go away along with your job. Business owners need to make money, not only to pay you but to pay themselves back for taking the risk that you're not taking. But when the costs get too high we come to the realization that the risk of running a business just isn't worth it.
That's what's happening in New York city right now. Is this what we want nationally?
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC. Follow him on Twitter @genemarks.