Some small businesses in New York City are struggling to meet the demands that come with the city raising the minimum wage to $15 an hour.
According to a report published Monday by the Wall Street Journal, many business leaders and owners in the Big Apple have said that they are having to cut hours, raise prices, and reduce staff in their businesses due to the rising labor costs that they say come from the recent city law bumping up the minimum wage.
The owner of Lido Restaurant in the Harlem borough of the city, Susannah Koteen, has nearly 40 people working for her restaurant and is worried what the rising minimum wage could do to her business.
While she has not had to reduce her staff, she has had to be more careful about overtime and pull back on some people’s shifts.
“What it really forces you to do is make sure that nobody works more than 40 hours,” Koteen said. “You can only cut back so many people before the service starts to suffer.”
Sarah McNally — who owns the local bookstore chain McNally Jackson Books, which employs 75 people at its four locations in New York City — said that there is “absolutely no benefit” to operating a retail business in the city, and is working to open two more stores to stay profitable.
She has not had to reduce hours or employment to deal with the pay increase, though.
“With raising minimum wage to living wage, it feels now like we’re at the bottom of the pay spectrum,” McNally said. “There’s absolutely no benefit to being a retail business in New York.”
The president of the Queens Chamber of Commerce, Thomas Grech, told the Wall Street Journal that he has seen an increased number of small businesses closing in the last six to nine months. He believes the rising closures are due to the minimum wage legislation.
“They’re cutting their staff. They’re cutting their hours. They’re shutting down,” Grech said. “It’s not just the rent.”
Spokesman for Restaurant Opportunities Centers United Anthony Advincula said that business owners should not place the blame on the rising minimum wage if there are struggling as there are other factors that contribute to a business not succeeding. He also said that the pay increase was a “race, gender, pay-equality issue,” and not just a “business issue.”
The Restaurant Opportunities Centers United had backed the wage increase.
“Increasing to $15 would reduce income inequality, and the number of individuals living in poverty now is ridiculously high,” he said. “This is not just a business issue; this is a race, gender, pay-equality issue.”
A number of Democrats — including freshman firebrand Reps. Alexandria Ocasio-Cortez (D-N.Y) and Rashida Tlaib (D-Mich.), as well as Democratic 2020 hopeful Elizabeth Warren (D-Mass.) — support the idea of raising the national minimum wage to $15 an hour.
New York City business owners are not the only ones worried about wage hikes.
As IJR Red previously reported, business owners in Emeryville, California — which saw a minimum wage increase to $16.30 an hour — are concerned about the effects the increase has on their businesses.
Local business owner Erik Hansen warned that “there is a tipping point” with the wage increase, with his being having to choose between raising sandwich prices and firing employees.
“We may have the highest minimum wage, but I don’t think the people in Emeryville will feel like paying the highest prices in the country,” said Hansen.