We have been lobbying on behalf of small business for the better part of three decades, and what was true thirty years ago, is true today: Politicians run for election on a small business agenda, but typically govern on behalf of big business.
That being said, this is not a good time for the folks who are crazy enough to want to be an entrepreneur in NYC--particularly a neighborhood retailer. In the first place, as numerous surveys have indicated, this town is one of the worst places to try to do business in the entire country. That's not only because of the city's high tax environment, but also because it is in New York where the regulatory demiurge gets its most profound expression.
The challenge of trying to succeed in NYC has been exacerbated by the current occupant of City Hall. From the beginning, in 2002, when Mike Bloomberg jacked up the commercial real estate tax--in reality a 25 percent rent increase for all small stores here--the small business community knew it was in for a rough ride. This was after Bloomberg had met with the Korean Small Business Service Center and told them--later memorialized in a letter--that the tough, post-9/11 recession necessitated even greater concern for the little guys who don't have all of the same resources as large firms.
Some concern! Almost immediately afterwards, Bloomberg raised the cigarette tax 1800 percent, the largest single tax increase in the city's history. When told that the increase was creating a huge black market that had transferred $250 million a year (over 50 percent of the sales) from the legitimate cigarette retailers, the mayor famously remarked, “That's a minor economic issue.”
Over the next few years, the Bloomberg administration dramatized its disdain for the city's small businesses on quite a few fronts--beginning with an unsuccessful charter revision effort that would have given the Department of Consumer Affairs judge-and-jury authority over the city's food stores. This at a time when the department's budget--predicated on the fines it levies--was growing fat.
We should also mention the arbitrary nature of the regulatory regime. One example is emblematic. We were brought in to help a Brooklyn green grocer who was fined for violating the DCA stoop-stand law. His sin? Well, the law says that the stand can't extend more than five feet onto the street, The fruit stand owner was fined $1,000 because his watermelons actually protruded a few inches over the stand
Speaking of fat, we can't leave out all of the mayor's health initiatives-from trans fat banning, to menu labeling; all of which created more costly mandates and another reason why an inspector needed to come into the store to whack the hapless store owner with yet another kind of fine. And the calorie posting rules are collectively costing fast food franchise owners--predominately minority--millions of dollars a year in extra compliance costs; with studies showing little to no impact on generating healthier consumer choices.
And now we have the Scarlett Letter regime that the DOH is imposing on the city's restaurants--a regulatory nightmare that is one heck of a job generator … for administrative law judges, that is. Restaurant owners are forced to take time away from their business in order to try to upgrade their DOH rating. And this is for an industry that is notorious for bankruptcies in the first year of operation. But, hey, business at court is booming at least
The Bloombergistas, in their mania for imposing a healthier life style for all New Yorkers, forget that the health of small business is as important, especially for those poorer neighborhoods where local retailers are job generators. But if you walk into a neighborhood bodega or green grocer you will see more than thirty permits adorning the walls, each needing to be, “prominently displayed,” and with an inspector for every permit to make sure that they are.
And if the taxes and regulations weren't bad enough, we have the chain store takeover of the neighborhood commercial strips--a situation that has more to do with sky-high rents, and a national trend, then with the actions of City Hall. But, as a result, Mom and Pop is simply being priced right out of the neighborhood.
Leave it up to the mayor, however, to make a bad situation worse. The linchpin of the Bloomberg economic development strategy is the intensive malling of NYC. Beginning with Deputy Mayor Doctoroff's sweetheart deal to deed the Bronx Terminal Market over to his BF Steve Ross at Related--and evict over twenty mostly minority wholesalers--we have a series of mega malls all over town that put more pressure on local retailers struggling to survive as they suck customer right out of the neighborhood commercial shopping strip.
As bad as things are for small business in Bloomberg's New York, they could be getting a great deal worse, cheered on by the mayor. We're referring to the fact that Wal-Mart is planning an aggressive invasion of the city with scores of smaller urban prototypes. Staring with a proposed Wal-Mart Super Center in East New York, we may have smaller facsimiles low balling prices as the company usually does in order to capture market share.
So, to paraphrase Dickens, this isn't the best of times for small business in New York. Already operating under a challenging local economic environment, they are staring right down the barrel of federal tax increases and health care mandates that will just make it nigh impossible to be a successful entrepreneur here.
The saddest aspect of this predicament is that New York has a businessman mayor. Unfortunately, that business experience has given Mike Bloomberg little sympathy for the little guys. Where the mayor responds most forcefully is when someone proposes a tax or regulation on his beloved Wall Street. For the local candy store or newsstand, not so much.
What NYC needs is a chief executive who understands that job creation at the micro-level is a function of lower taxes, smaller government and fewer regulations. Until that time comes, the successes of small business in this town are a function of the incredible grit of minority entrepreneurs who are really pursuing the American Dream against all odds. They succeed in spite of the NYC environment, and not because of it.
This City Conversation piece is a web exclusive for City Limits Magazine's November 2010 Issue.