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Another Stake in the Heart of New York’s Small Businesses

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eye on the news

Another Stake in the Heart of New York’s Small Businesses

Even by previous standards, the latest moves by city and state lawmakers are stunningly destructive. December 18, 2020
New York
Economy, finance, and budgets

You’d think the severe dining and commerce restrictions, and threats of looming shutdowns, would compel New York lawmakers to give small-business owners a break. But don’t underestimate their capacity to make a bad situation much worse. The same week that Mayor Bill de Blasio threatened to shut down New York City for business, Albany increased the minimum wage across the rest of the state (New York City’s minimum wage is already $15 an hour), City Hall made it harder to fire fast-food workers, and the New York appellate division upheld a decision that Uber drivers could not be hired as contractors—they must get all the benefits of regular employees.

This may all sound good—after all, it’s more money and benefits for workers who sorely need both. And at least Uber and McDonald’s are big businesses that can pay people more. The fast-food worker bill applies only to chains with more than 30 branches. Still, these moves are just another stake in the heart of New York’s struggling small-business community. Even in the best of times, owners of small businesses live on small margins. They’re hemorrhaging money and now must pay more for labor. And many of those McDonald’s are franchises whose owners earn small profits. The pandemic was already a blow; now, they effectively can’t fire anyone.

Ride shares, or any gig work, is most often not a full-time job but a supplement for other work. The ability to pick up the odd driving shift was a lifeline to struggling workers and business owners. When California threatened a similar regulation, Uber claimed that it would cease operations. If Uber must hire workers as employees, then surely all gig platforms must, too—making deliveries for many restaurants much more expensive.

The total impact of all these policies is to increase the cost of labor just when small-business owners can least afford it. We have come to expect economic illiteracy from city hall and Albany, but even by their standards, these latest moves are truly stunning.

Photo by Stephanie Keith/Getty Images

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