I’m hoping this is read by New York politicians.
You know, the ones who continue to push rhetoric of supporting those who need help the most by spreading the wealth and at the same time complain about job growth while stating they are pro small business and entrepreneurs.
Whether you’re a donkey or an elephant, please heed the message:
When politicians come up with lengthy regulations with the goal of protecting employees in lower income brackets by increasing costs to those who hire these people, in the end they wind up doing the opposite and hurting more employees then employers.
So the saying goes, “as the going gets tough, the tough gets going.” This couldn’t be truer when it comes to successful entrepreneurs in tough times like these.
We will always find a way to make our business work because there are only two options for us: quit and close or figure out how to make more profit with the hand that is dealt, which means cutting spending. Either way, the employee is the one who is hurt by both options.
The owner will not continue for long at operating a business that is breaking even with $0 going to him. At the end of the day, an entrepreneur is in this for one reason only – to be successful and reap the benefits of profits for the risk of starting the business.
Yes, maybe I watched one too many Milton Friedman YouTube videos today, but the man had some good points about regulations which are set to help the masses but tend to only hurt the people they set out to protect. I will prove this to you by giving you specific examples from my wonderful industry- the restaurant and bar industry.
There are those in government who are starting to see this logic as shown with the following quote: “Restaurants are obviously a big part of the New York City landscape, culture and economy,” said Stephen Goldsmith, deputy mayor of NYC for operations, “and yet we’ve created a regulatory machine that is difficult and often expensive.”
Example 1: Nearly impossible obstacles of entry created by regulatory agencies. If you see yourself as a masochist, feel free to attempt to open an eating and drinking establishment in New York City. First, there’s the community board process, a minimum three to four month process to simply let you know if the community will give you the thumbs up or down when it comes to recommending you to receive a liquor licence from the State Liquor Authority (SLA).
Although only a recommendation and not law, usually the SLA stands by the side of community boards so if they recommend denial, chances are no matter whom the operator- you will be denied a licence. Most owners quit after being denied by a community board because it’s not worth the risk of going through the lengthy and expensive process of building your space and renting it from the landlord.
Along with the community board process, you have over 10 city agencies to deal with and you need to secure about 30 permits with over 20 inspections. Those dreams so many have about being in the corner of the bar, high fiving their friends and passing out free drinks as the powerful bar owner turn into a nightmare before you even open the door. This whole process usually takes about a year to open which means not $1 of revenue for a year.
Back to the reason I’m writing this. During this first year before opening your doors- do you know how many people get employed full time… zero. Tax dollars… zero. If the time it takes to open would be cut down by two thirds, how much faster would people find jobs in these tough times?
Example 2: labour Regulations: Minimum Wage/Overtime and Spread of Hours In my business, we continue to see rises in minimum wage and overtime rates for service employees – going up around 20% in recent years.
This blanket policy, which doesn’t even factor in the amount of tips an employee makes (the average front of house employee in my company makes over $25 an hour in tips) hurts the employee because as the rates go higher, I find myself staffing only my best employees who can cover the most ground on the floor. I now watch their hours like a hawk because we simply cannot afford overtime. In NYC, service employees need 50-60 hours of work per week to be able to survive day to day life. Now I cannot give them the hours they need.
There is another labour law that is hurting my employees more than the employer, which is the spread of hours law- also known as “working a double.” The law was just changed to state that a mandatory additional hour at minimum wage ($7.25) must be paid to any employee who works one second over a 10 hour shift- not taking into account what the employee was being paid for the double shift. So before, if a person made enough in the government’s eyes, they did not receive an additional hour of pay.
Now, no matter how much money they make for this double shift, you must pay the extra $7.25 to the employee. Double shifts in the service industry are usually the most profitable for employees. They want these shifts to exist. However, with spread of hours, I cannot allow any employees to go over a 10 hour shift because of the penalty of having to pay the extra hour, thereby preventing qualified employees from working the hours they want, need and deserve.
Example 3: Obamacare Health Care for all is amazing. I’d like to shake the guy’s hand who’s going to foot the bill for this… oh wait, how can I shake a money printing machine’s hand?
Last year, I was allowed to offer my employees two types of health care packages: one option for managers (approximately 40 of them in my company) which I would subsidise and the other for everyone else which was a group plan with a lower cost than a normal person would pay- no subsidy so both types of employees would be benefitting. Subsidized for managers and reduced costs for everyone else (approximately 250 of these types of lower level employees) who wanted to take part.
However this year, due to new health care regulations, we were told everyone must be offered the same package from the employer- all must be treated equally. So if I wanted to subsidise, I would have to do it for ALL my employees- approximately 300 people vs. 40. My business would go bankrupt if this was the case so who got screwed, the employer or the employee? Then when they make it mandatory for all to be covered or pay a $2,000 penalty per employee, I’ll go out of business and the employees won’t be able to pay rent let alone have health care provided by me.
When will the government realise that when it comes to small business, we operate based on profits and losses? If you raise our costs of doing business, we will cut our other costs of doing business to maintain profits leaving more employees on the outside looking in, less taxes paid and less growth.
We know how to run our companies without politicians meddling and telling us what to do. If we want to be altruistic by offering perks to work for our company or higher wages, let us do this on our own. Because if it’s not forced, we will be required to raise wages and offer perks like health care ANYWAY to keep our good employees or run the risk of other companies poaching and taking them away.
In my industry, regulations have caused me to adjust the way I operate to cause overall more harm to my employees then the owners/employers. If you regulate more and continue to increase the costs of doing business, you will force me into a corner and I will either lay my king down or be forced to hurt those you aim to protect by cutting salaries, hours they need to survive and offering less perks.
This is simply about survival and the business must survive first before its employees. With all these regulations pushing profits down towards the Mendoza line, I am starting to think New York law makers expect me to work for free and simply be an employment bank.
I guess it’s a logical way to think that because it’s a politician’s job to serve the masses that they should be doing this solely for philanthropy and donate their time just as I am now expected to basically make nothing while helping others… Politicians and law makers aren’t paid for their time, right?
Business Insider Emails & Alerts
Site highlights each day to your inbox.