Big City of Small Businesses: Where New York’s Mayoral Candidates Stand on Entrepreneurship
New York is a big city of small businesses. From hot dog stands to crypto startups, ninety-eight percent of businesses in the Big Apple employ fewer than 100 employees. And these small firms are suffering in a big way: Business revenue is down by more than 50%, and some 42% of small businesses in the city have shut their doors since January 2020. These revenue losses and closure rates are among the highest in the nation and are especially impacting the restaurants and nightlife that are essential to maintaining NYC’s status as The City That Never Sleeps. And now that a slate of candidates is running to be New York City’s mayor, we should ask: What will they do for the city’s entrepreneurs?
The good news is that the Big Apple’s small businesses are not being ignored. Nearly every competitive candidate for mayor has pragmatic and constructive ideas for boosting entrepreneurial opportunity in New York City which are worth examining in detail. What is more, their proposals closely align with the Manhattan Institute’s own policy playbook for small businesses, from regulatory “shot-clocks” to markets for micro-loans and startup advocates. New York’s next mayor should rightly aim to make the Big Apple the best place to start and run a business in America — and by doing so set an example for every leading city across this country.
DOLLARS AND SENSE
Nearly every mayoral candidate in New York City wants to offer small businesses a helping hand financially. Many candidates rightly propose temporary relief from city fees and fines, as Kathryn Garcia and legal advocate Maya Wiley do, and incentivize property owners to offer rent relief to local small businesses, including Garcia and Ray McGuire. Tax relief is also on the table, from sales tax holidays to McGuire’s plan to allow firms to keep a share of their sales taxes.
Unsurprisingly, most candidates also want to give money directly to entrepreneurs, even if city hall can’t — and arguably shouldn’t — compete with the private sector and the federal government’s resources. Andrew Yang wants to offer low to no-interest loans and former HUD Secretary Shaun Donovan aims to create city-backed investment funds. Nearly every candidate proposes using lucrative city contracts and purchasing to support local small businesses, though navigating city hall is difficult already. None go as far as Dianne Morales’s Soviet-sounding “solidarity plan” of worker-owned cooperatives and a public banking system, measures better aimed at ending entrepreneurship than reviving it.
If there is any city already flush with private capital and know-how, it’s New York City. For this reason, many candidates want to smartly leverage existing lending markets for small businesses. Eric Adams, the Brooklyn Borough President, aims to provide more funding to community banks for lending, a proposal echoed by financier McGuire, who rightly observes that “these community banks have been underfunded and under-supported for years.” Kathryn Garcia proposes CrowdsourceNYC, a new private fund started with seed capital from the city offering zero interest microloans to small businesses. New York’s next mayor should build on these ideas with others, like the Entrepreneur Backed Assets (EBA) fund model pioneered in the Midwest, which creates a secondary market for the loans originated by community-based micro-lenders.
RED LIGHT TO RED TAPE
Nearly every candidate for mayor of New York City aims to eliminate permit, registration, or licensing fees for small businesses for at least a year, if not permanently. Same goes for fines; Andrew Yang proposes a one-year moratorium on fines, “allowing shopkeepers to fix violations instead of being penalized for them.” Others go further, taking aim at the entire regulatory apparatus for small businesses. Ray McGuire proposes a “red tape commission” to cut regulations on an ongoing basis as well as assign letter grades to agencies on their performance and, ultimately, their business friendliness. McGuire also suggests cutting wait times for regulatory approval to just 90 days — a game-changing notion, if implemented.
One of the most impressive ideas to come out of the mayoral race thus far is Kathryn Garcia’s proposal of a City Permit, “one simple, streamlined permit to get up and running,” filled out on a smartphone app with a response in a month or less. Her universal permit signals the move to a virtual city hall and an experience of government that resembles something like Amazon Prime more than the DMV. New York City already showed with speedy approvals of outdoor dining requires during the pandemic that a permitting process that once took six months to a year, at best—and usually involved hiring a lawyer, architect, and permit expediter — could be done in an instant. And it is in fact this same lesson that Garcia internalizes in her City Permit (while also, of course, making outdoor dining permanent).
Expediting the permitting process is something Scott Stringer has been arguing for as the city’s comptroller for years. In fact, he even created his own red tape commission in 2016 that came up with 60 different solutions, including clear timelines for the approval of permits and replacing private expediters with public business advocates in the Department of Buildings. Doing so would be far easier with a true “one-stop shop” that, as Ray McGuire has proposed, consolidates six different permitting departments into one, and pairs it with a concierge service that helps small businesses navigate bureaucracy. Kathryn Garcia pushes digitizing and simplifying as much of city hall as possible, and even allowing some permit applicants to self-certify.
GRAB BAG OF IDEAS
Small businesses run the gamut — from new and old, to fast-growing startups and mom-and-pop shops — and each of them may look to local government for different things. For many tech-oriented startups, what they need are connections and cheerleaders, a call that Andrew Yang has answered. Not only does he promise to be the city’s cheerleader-in-chief, but appoint a small business czar to coordinate all of the arms of government that deal with entrepreneurs and be their voice in city hall. Ray McGuire says he’ll appoint a deputy mayor for small, minority-, and women-owned businesses who has real authority and spending influence over city agencies. Seattle has a similar role of Startup Advocate in the mayor’s office acting as a campaigner, connector, and convener for a sort of entrepreneur-led economic development vision.
Some candidate ideas are better than others, and just as many beg one to ask “sure, but why?” Scott String proposes building online platforms for entrepreneurs to “broaden their customer base,” and a data base of vacant storefronts so businesses can find them. Others bring up vacancy controls, like Yang, or directly subsidizing wages for hard-hit small businesses, like McGuire. At some point though, it becomes clear that while local governments are limited in their capacity to directly grow businesses, they are well-equipped to harm entrepreneurial growth. City hall has to start with doing the basics well: do citizens get what they pay for in services, is crime low and quality of life high, are there good options in housing and education no matter your circumstance?
You may notice a name missing from this analysis: that of Dianne Morales, a longtime policy advocate running as a hard-core progressive for the Democratic nomination. Morales’s campaign website’s plan to help small businesses remains blank. Also missing here are the Republican candidates, who in a city that’s seven-to-one Democrat face increasingly long odds to win the mayor’s seat, but are nevertheless broadly friendly to business. Guardian Angels founder Curtis Sliwa talks of streamlining regulations and offering small business loans, while taxi advocate Fernando Mateo declares he “will not enforce Communist regulations that will put American businesses out of business.”
CONCLUSION
Entrepreneurship is a crucial route to opportunity, particularly for historically marginalized communities, and small businesses are an engine of growth and renewal that will be all the more vital after the Covid-19 pandemic. Already, startup growth has doubled in historically Black communities in the Bronx and Queens throughout the pandemic. Under a new mayor, New York City can be a successful model for starting and running a small business in America—or not, if instead it becomes an object lesson in the worst way as its economy and people suffer. These choices—and candidates—matter.
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Michael Hendrix is the director of state & local policy at the Manhattan Institute
This piece originally appeared in RealClearPolicy