Local Small Businesses Feel the Brunt of Government Mandates

NEWS
Typography

“We’re focusing on trying to keep our f***ing doors open,” Terence Tubridy, owner/managing partner of In Good Company Hospitality said, as he and other small business owners across the state and city are trying to work through the complexity of new government mandates on businesses, like increased minimum wage and paid time off.

In 2014, the City of New York enacted mandatory paid sick leave for employees, up to five days. At the beginning of 2019, New York State mandated yet another increase for minimum wage to $13.50 for businesses with 10 or fewer employees, or $15 for businesses with 11 or more employees. Then recently, Mayor Bill de Blasio proposed making New York City the first in the country to offer mandatory paid vacation, up to 10 days. That proposal will have to make its way through the legislative process before being enacted, but with all of the other recent legislation now in place, mandating businesses to provide things that were once considered bonuses or incentives in the workforce, small businesses are paying the price and feeling the impacts.

On January 9, de Blasio announced that he’d be pushing for mandatory Paid Personal Time, which would require businesses with five employees or more, to offer 10 days of paid time off for any purpose, such as vacation. The announcement was applauded by various organizations and elected officials, including local Senator Joe Addabbo, who said, “I believe this city proposal deserves strong consideration. Offering paid personal time off for workers across New York City holds great potential for increasing employee satisfaction, loyalty, and productivity – all of which will benefit our overall economy.”

Yet opponents quickly shot back, such as the NYC Hospitality Alliance, which advocates for restaurant and hospitality businesses. The organization released a statement saying, “Workers in New York City already earn up to a week of paid time off via the paid sick leave law. And, while giving an additional two weeks paid vacation sounds like a nice idea, it has a significant cost for businesses, especially at a time when vacant storefronts plague our city streets and employment growth at city restaurants has gone flat, due in large part to other government mandates."

This consistent increase in government mandates, while beneficial for employees, is taking its toll on businesses, especially small ones, and local business owners say they’re feeling the effects and are already taking action to stay afloat.

Tubridy, whose In Good Company Hospitality, incorporates 11 bars/restaurants, including local Bungalow Bar, says he sees the good intent behind some of the mandates, but believes the government isn’t taking the effects on small mom and pop businesses into consideration. “These are all good, progressive things, but there’s going to be a counter reaction to this. It’s starting to look like it’s not worth it for business owners to invest in the city anymore. The city’s counter argument is that business has never been as good, but I don’t think they’re differentiating between small mom and pop restaurants and larger chains like your Shake Shacks and Dunkin Donuts. You see a ton of Dunkin Donuts’ and Shake Shacks opening, but on the other side, you see diners closing, and other small restaurants and businesses struggling to keep up with the pace,” Tubridy said.

As a small business owner of Thai Rock and Rockaway Jetski, Robert Kaskel believes the mandates go against what the country was built on—capitalism. “This type of behavior is anti-capitalist and the government is chipping away at the cornerstone of what our country is founded on with the right to prosper. Government is becoming more stifling and the impositions they place on businesses in general is hurting small businesses. Large businesses can more easily adapt and change with this increasingly complex bureaucratic system. Many large businesses are already providing many of these things, but when you’re forcing smaller businesses to provide higher pay or more vacation or paid time off, these things negatively impact small businesses. Large businesses are the ones to become more successful because small business is being driven out,” Kaskel said. He went on to add that he feels these changes requested by Mayor de Blasio are being done for personal political gain for a potential votes in a future presidential run, but small businesses are the ones suffering in the meantime. “From my view of how NY government is treating us, I feel that small mom and pop businesses have become the sacrificial lamb for this administration,” Kaskel said.

Matt Mazzone, who owns the Rockaway Mazzone Ace Hardware store and two others in Brooklyn, believes that the mandates are ultimately going to have a negative effect. “This situation is unfortunate. It’s being enacted by people that have never run a business before and I think they’re going to wind up hurting many of the people that they’re trying to help. They want to help the uneducated or people who grew up in poor families or even youth looking to help their families, but how are these people supposed to get a job and get ahead in life? How are you going to give a 16-year-old high school kid who’s just starting out, $15 minimum wage and paid sick leave and personal time? It’s hard to justify that for someone sweeping and cleaning around the store. It’s a great way to introduce people to the workforce and teach them about work ethics and hopefully they go on to move up and command the highest salary, but if you’re already paying such a high salary, you have to start hiring people that already have skills. Who’s going to want to take a chance on that kid when you can hire someone with real experience?” Mazzone said.

Tubridy agreed that the mandates could impact that longtime community tradition of hiring local kids for entry-level jobs. “Most of these jobs are starting off points for people. It’s entry-level and it’s up to the individual to take it from there. We love that people have made careers out of our businesses. The biggest thing we’re proud of is seeing kids from Rockaway or Broad Channel grow up and see them choose this as a successful career path. Our responsibility as owners is to them, it’s not about maintaining profitability, but maintaining growth, and it’s scary to think we might lose that,” he said.

To make up for having to pay higher minimum wages, employers now have to cut back on the hours for employees. “Every single employee has had a reduction in hours, so now we have to do more with a little bit less,” Kaskel said. “It’s unfortunate because we had to cut hours on some of the staff and had to cut on overtime. Payroll has to be a certain percentage of the business and with those costs getting too high, we had to cut down,” Mazzone said. “This isn’t just an increase to $15 an hour. What many people don’t realize is that businesses also have to pay a payroll tax. So you’re really paying about $17 an hour. The last thing a business owner wants to do is lose good people, so instead you start cutting back on hours,” Tubridy said.

The owners say the changes may also impact customers, as prices may need to go up. “I don’t think this was very well thought out because at the end of the day, it’s going to cause inflation. The economy is strong right now and unemployment is low, but the quickest way to stifle growth is with regulations and little by little, you’ll see it slow down and you’ll start to see inflation," Mazzone said. "If labor costs go up, you have to start increasing prices. Vendors are already starting to hit us with higher prices to make up for their labor cost and we have to pass those increases along. We have no choice but to raise prices on some things. I’m all for giving people a fair wage, but that dollar isn’t going to go as far because of inflation.”

Kaskel and Tubridy are trying to make raising prices a last resort. “What happens to businesses like mine, when I’m now forced to pay two weeks of vacation time? That alone will add a $25,000 cost to my bottom line if it passes. How do I add $25,000 to my costs without adding cost to my services? I already get people complaining about the prices, so what happens when I raise it further? People say, ‘Oh, it’s just noodles, how expensive can it be?’ but I need people to make those noodles and purchase them for me and prep the food for that dish and wash the dishes after. So that’s why I’ve had to cut back on hours and ask my workers to do more. I’m doing everything I can without having to ask my customers to pay more,” Kaskel said.

“This will eventually impact customers but our policy is that the last thing we try to do is raise prices, so you figure out what other things you can come up with to save some money,” Tubridy said. As the minimum wage has doubled over the course of a few years, Bungalow Bar has already made small changes to try to keep up, such as switching from rolled up linen napkins, to instead leaving paper napkins in the middle of the table for people to use as needed. “That was a huge cost savings just doing that, so now we’re looking at other ways to save,” Tubridy said.

Although trying to overcome them, Tubridy says the government mandates have been nothing short of a challenge. “We want to be able to give our employees pay raises, but there’s no real answer for any of this and we can’t focus on any of the answers because we’re focusing on trying to keep our f***ing doors open,” Tubridy said.

Now focusing on opening the Rockaway Beach Hotel, Tubridy says he’s having second thoughts on building out his brand beyond the hotel. “It’s giving us second and third thoughts about building other businesses in New York City for sure,” he said.

Mazzone also says he’s now hesitant to expand. “This has become very disheartening. We were looking at different locations and now I don’t think I’d do it in the city. I don’t think it pays anymore,” Mazzone said.

For Kaskel, he’s just focusing on trying to keep Thai Rock and Rockaway Jetski afloat. “I love what I’m doing and I don’t want it to go away, so I’m going to work as hard as I can to keep my doors open, but these are not nice things that the government is doing,” Kaskel said.

BLOG COMMENTS POWERED BY DISQUS