Mayor de Blasio announces the expansion of paid sick leave legislation (Rob Bennett, Mayor's Office)
The following entry is part of The Small Business Corner, a collaboration between Gotham Gazette and GoBizNYC:
A recent piece in The New York Times highlighted how heavy regulations have inhibited growth among businesses in France. When French businesses grow to 50 or more employees, they are subject to a host of employment and accounting regulations that significantly increase their operating and administrative costs. As a result, many companies cap their firm size at 49 employees. With unemployment in France stuck at a record high of above 10% as well as continued private sector contraction, such disincentives to growth do not bode well for the country's worsening economic situation.
We have seen a similar trend here in New York City. According to the Partnership for New York City's NYC Jobs Blueprint, since the financial crisis in 2008, there has been a 7% net increase in the number of firms with one to four employees. Over the same period, however, there has been a 1% net decrease in the number of businesses with 50 or more employees. This indicates that though there is plenty of new entrepreneurial activity, the city's start-ups and small businesses are not able to scale up at a comparable rate.
Given the elaborate web of regulations local businesses must comply with, it is not hard to see why this is the case. For entrepreneurs who have enough on their plate managing all of the day-to-day aspects of their business while competing in the highest-cost city in the country, having to also navigate a complex bureaucratic system not adapted to the needs and pace of a small business presents yet another hurdle to success.
That's why the Small Business First initiative that was recently unveiled by the de Blasio administration is so important and timely. Small Business First aims to make the city more business friendly by simplifying regulatory processes across multiple city agencies and promoting compliance through education. This announcement, along with earlier commitments to reduce revenue generated from small business fines, indicates that this administration is devoting the necessary attention and resources to reforming the systemic complexities small business owners face every day.
At the same time, we must ensure that these gains are not offset by new layers of regulation that add to the already heavy burden on small businesses. For instance, small business owners have been scrambling to understand how to comply with new employer mandates like the Paid Sick Leave Law and are worried that there are more costly and burdensome regulations to come.
A tough regulatory environment has long-term ramifications. The International Monetary Fund has predicted that France's unemployment rate will not show any appreciable decline until 2016 and has warned that the country faces a "negative spiral of low growth and falling inflation."
New York City must learn from France's example and not implement policies that could hinder growth and stall recovery during future economic downturns. Our policymakers and elected officials must work closely with the small business community to ensure that the unintended consequences of any new regulations—in the short- and long-term—are minimized. Only through such collaboration will we be able to cultivate an economy that fosters small business growth and job creation and that remains resilient in tough times.
Victor Wong is the Director of Business Outreach & GoBizNYC at the Partnership for New York City
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The Small Business Corner is a bi-weekly column featuring the opinions and perspectives of small business owners and advocates from the GoBizNYC network on the range of issues that concern the city's small businesses.
To all New York City small business owners and advocates: we hope this new platform, The Small Business Corner, will better enable you to engage in the local policy conversation and we look to you to support us in this endeavor by sharing your thoughts, experiences, and voices. To learn more about how you can be a part of GoBizNYC and participate in this effort, visit GoBizNYC.org.
