Owner Michael Rogak of the 71-year-old chocolate business, JoMart Chocolates, merged with Liddabit, another Brooklyn chocolatier earlier this year to share production space and cut costs.
Rents are rising exorbitantly throughout New York City, but a newer rising expense is labor. The minimum wage will increase from $11 to $13 for businesses with 11 or more employees at the end of this year.
Some businesses have started investing in automation to offset these costs, others have reduced employees’ hours or positions and some even move out of the city to avoid increased labor expenses.
But while it may seem like a blow to some of these businesses, James Parrott, director of economic and fiscal policy at the Center for New York City Affairs at The New School, sees the wage hike as being a positive thing for everyone involved – even for the small businesses.
“I truly think businesses are better off. It’s better for them to be more efficient and they’re going to have more stable work forces now,” he said.
Parrott explains that with the added pressure of the wage hike, businesses are forced to be more efficient. Last year, many got rid of the “low-hanging fruit” – whatever that may have been.
Since JoMart and Liddabit merged, revenues are up. They just need to pay close attention to the numbers and keep in mind the wage hike as they expand.
Some businesses have already worked unexpected rising costs into their expenses are mostly unfazed by the wage hike. At Colson Patisserie in Park Slope, a shop that sells handmade baked goods both in a store and wholesale, owner Jonathan Israel says that anticipation and preparedness for change make a business sustainable. Israel already pays his employees above the minimum wage.
“Change is something we do on a regular basis. We’re very comfortable with it,” he said.
Higher compensated workers also tend to be more productive which results in larger profits for businesses.
This is exactly what Francesco Brachetti was thinking when he opened Avocaderia, the self-proclaimed world’s first avocado bar earlier this year.
“We want to have happy and reliable employees,” he said.
Bracchetti explained that he started the company off by paying his employees higher than minimum wage. And that these higher salaries imply a level of trust between employer and employee, causing them to work harder and stay longer – something that can be hard to find in the food industry.
If Eileen Garcia, a cashier at a Popeye’s in Bushwick, consistently works as many hours as she usually does, her yearly salary will increase by $2650.
“Every little bit helps,” said 47-year-old Garcia, who provides for a family as well as herself with the money she earns.
Looking towards the coming wage hike at the end of this year, however, brings up some concerns about the unintended “trickle-up” effect. Employers have to not only increase the wages of the employees at the bottom of the totem pole, but they have to raise them for higher-up staff as well.
Across the street from Popeye’s in Bushwick, 50-year-old Rokhshana Uddin manages younger workers at a KFC. She says that it’s great her hourly wage will increase, but she wonders if she’ll be making the same amount as the cashiers despite having more responsibility.
“I do not want to work as a manager if I am making the same amount,” she said.
She’s currently making only 50 cents more than the cashiers per hour.
While these details get wrinkled out, the larger picture speaks for itself. It has been estimated that these wage increases have lifted 281,000 New York workers out of poverty since 2013. And over one million New York City residents either have or will experience almost 30 percent income boost due to the wage hike.