NYC is one of the BEST cities for Small Business. While this is true, NYC can always do better to help small businesses. If we wish to continue using tax incentives to drive economic growth, we may need to shift that focus to provide direct support to small and medium-sized businesses and the jobs they create.
NYC is facing a major storefront vacancy crisis. In fact, the amount of vacant storefronts has nearly tripled since 2016.
A survey conducted by Douglas Elliman found that about 20 percent of all retail space in Manhattan is currently vacant, she said, compared with roughly 7 percent in 2016.
In fact, New York small businesses employed 4.0 million people, or 50.2% of the private workforce in 2015 according to the SBA. Importantly, "Small businesses make up 99.8 percent of all New York businesses [in the state]" - SBA If we can find millions of dollars to help large businesses, why can't we do the same for small businesses?
If there is enough political pressure to kill deals like Amazon, perhaps there will be more support to use those funds to help struggling small businesses, or to spur small businesses growth. NYC is a large patchwork of neighborhoods, each with its own flavor and character. These neighborhoods are most impacted by our storefront crisis. Why? We form emotional connections with people we see every day our favorite deli, bar, or restaurant. We, as New Yorkers, rarely share that same connection with the towering glass office buildings we pass every day.
Bureaucratic red tape and fines, and, the near-constant addition of new, complicated, and expensive government mandates adds a tremendous burden for small businesses. If we want to support the storefront businesses and keep New York vibrant and unique, we should expand existing incentive programs to small businesses
Let's take a page from the Amazon example. For instance, the state's jobs program offered to Amazon as a tax incentive should be extended to jobs created by small business. These jobs are vital to NYC, and NYC could help small business greatly with extension of these benefits. Small businesses offer entry into the workforce for people from all walks of life. They provide careers, work schedule flexibility, and create tons of opportunity for workers and job seekers.
NYC is an expensive city. As such, people need to earn a livable wage. However, labor costs have soared in New York City. NYC could help small business by encouraging the State to use its direct wage subsidy to provide a needed financial boost to small businesses. Labor is usually the largest cost for retail, hospitality, and service businesses. Because of this, they are highly sensitive to labor costs. This makes a compelling case for why the tax code should be used to support and preserve these jobs.
Rents in NYC are rising faster than labor costs. This is one key area where NYC can help small businesses, commercial rent regulation. Commercial tenants typically bear the burden of real estate tax pass-throughs in addition to non-regulated rent. We also lose out in the new tax code. State and local taxes are no longer deductible for pass-through entities. Since most small businesses are, we've lost that tax break. If NYC or the State could help small businesses with some remedy, that would go a long way to reverse the damage from the Tax Cut. Also, commercial rent control would help small businesses better anticipate and manage costs.
While I believe in paid part-time sick leave and proposed paid vacation for part-time workers, NYC could help small businesses by including some offsets and/or administrative support to lighten the impact on businesses. Small businesses are ill-equipped to fully shoulder the cost and administration of societal benefits and safety net programs. Perhaps by adopting a collective system, like worker's compensation for instance, NYC or the State could help mitigate burdens and send a message that the NYC wants to help all citizens including small business owners.
The purpose of these tax benefits would not be to subsidize failing businesses or be irresponsible giveaways. Rather, they would help the countless successful small businesses that contribute much to NYC.
Even with these challenges, "NYC is one of the BEST cities for Small Business", as we mention in our blog. Just imagine how much more successful we could be if we put the same rigor and effort behind small businesses as we do large.
If we want to balance progressive ideals with business opportunity, small business is where to do it. It's small business who employs the lower wage works. As such, we could have the most impact.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkedIn profile