Howard Nielsen, owner of Sticky Lips BBQ, is currently in the process of renovating the 33,000 square foot building at the corner of Culver and Atlantic. He plans to rebrand the complex into a neighborhood entertainment district called “Photo City Junction” (derived from Rochester’s history in film and camera manufacturing).
Last week Nielsen went to New York City to speak at the NY State Wage Board hearings. He says his concerns for New York State’s proposed minimum wage increase led him to represent business owners like himself. Nielsen sent a copy of his speech from June 15 to RochesterSubway.com. Here it is in its entirety…
Hello, my name is Howard Nielsen, founder and owner of two Sticky Lips BBQ restaurants in Rochester, NY. I have been self-employed for 33 consecutive years, starting a pizza shop when I was 21 years old. I have employed over 3000 people and currently have over 180 full and part time employees on my staff. And that is an awesome responsibility.
I am a job producer. I ask how many people in this room ever took their life savings and produced a job, or ever had a weekly payroll to meet?
I am proud to be back in the city where my immigrant grandmother Anna Koener settled, after coming through Ellis Island by herself, with 40 cents in her pocket, just before the start of World War I. She worked as a domestic for upper west side wealthy families.
Prior to her arrival, she paid for and enrolled in the prestigious Heitz cooking school in Vienna, Austria. At the age of 14, the oldest of 10 children, her father was killed in an accident as the family had to be split up.
She worked hard, saved her money and by 1917, she was leasing a building, a boarding house at 311 West 30th Street. She would in turn rent out the rooms for $1 a week. Considering that women didn’t even have the right to vote until 1920, this was quite a feat and it shows what the human spirit can achieve.
At last week’s public hearings in Buffalo, I heard a lot of stories of fast food workers who said that they worked 26-28 hours per week at $8.75 an hour and could not make ends meet. You can thank the Affordable Health Care Act for making 30 hours the new full time work week. Another mandate with intentions to help people, but actually hurting them by cutting their hours back. As for the people who come up with these humanitarian ideas, they have very little knowledge of business economics.
The restaurant business is labor intensive, low profit margin, and highly competitive. We work on only 5-10% profit margins and that is if we are the successful ones. I am against big one-time wage increase jumps and more in favor of smaller, more gradual increases to the minimum wage.
You see, even before our customer gets their meal, there are a lot of people who help in that process. There is the host, the server, the expo, the food runner, the dishwasher, the managers, the chef, the line cooks, the busser, the food prep, and the morning cleaners. All of that goes into that one meal. Taking your family and friends out to a restaurant is one of those simple pleasures that we Americans love to do after a long work week. Well, that simple pleasure is again going to cost you more.
In 2014, protein and dairy prices hit historic levels. Now in 2015 and 2016, due to historic labor law changes, new taxes, health care mandates and these new big minimum wage increases, we will again see more consumer price increases. I’m worried that upstate NY cities have been reporting actual average wage decreases to the 2007 levels. If these mandates go through, this could be the perfect storm for government mandated inflation to thrive.
Here are some examples of how those increases will affect my business. The tipped service workers’ minimum wage increase from $5 to $7.50 will take $178,000 from my bottom line. That $178,000 includes a 25% in payroll taxes and insurances.
By the way, my servers on average make from $20 to $30 per hour.
Because I have been successful and have hired more people, I am getting penalized for having over 50 full time employees. The health mandate could potentially take another $88,000 per year.
The governor’s proposal to increase the minimum wage from $8.75 to $10.50 per hour will take another $120,000 from my bottom line.
Add in the recent Added Unemployment Tax. In NY State, we were all too willing to extend unemployment benefits from 26 weeks up to 2 years during the last recession. This new tax in 2013, took $11,000 directly out of my business banking account. By 2014, it went up to $17,000. This is a tax that only the business community seems to shoulder the responsibility for.
Do the math, that’s $400,000 a year from my bottom line, which puts me out of business. And that’s only the half of it, since there has been at least another dozen labor law changes that also nickel-dimes small business.
How come nobody talks about how many small business people live under the national poverty level?
There is no magic pill. This is why the business community HAS to push back, in order for our survival. We are talking about the potential of thousands of upstate and downstate NY businesses closing their doors. And not to mention the thousands of jobs that will go with them.
In my opinion, this issue speaks directly to the poor economic condition of New York State and the high tax structures that have New Yorkers leaving this state faster than any other in the country.
In 2015, we find ourselves in a situation whereby a fast food job is of such value that a family bread-winner relies on that job as their primary source of income. A short 20 years ago, that same breadwinner, the same people in this room, would be working at a large profile employer.
Ask your NY State government what happened to those jobs. Did government mandates and laws push costs up so high that businesses moved to more friendly states or overseas? The unions also have to share the responsibility of driving up business expenses to the point of not being able to compete. If the fast food minimum wage goes to $15.00 per hour, and then as we all know, the next movement will be for everyone else to get $15 an hour.
As for the unions who are going for the fast food worker… has there been mention of weekly union dues that will be taken from this new wage?
The businesses that will survive these major wage hikes will do so by spending heavily in technology and reducing their work force. These tests are being done right now as we speak.
Don’t get me wrong, I would love to pay all my workers $20 per hour with full health insurance, but we all know that would not be sustainable unless the American public doesn’t mind paying 40 to 60% more for their goods and services. If that’s the case, let’s be honest with the American people and let them know that consumer pricing has to go up in order to bring everybody’s wages up to these historic minimum wage levels.
If everybody’s good with that, then this discussion is over!
I beg of you to please keep the wage increases at a rate that both businesses and consumers can adjust to.
The first business on the Atlantic side of Photo City Junction is now open; a mircrobrewery called The Lost Borough. Photo City Improv & Comedy Club is scheduled to open this July 16, followed by The Pink Flamingo Restaurant. Neilsen says his new complex will create between 200-300 part and full time jobs.
Tags: Affordable Health Care Act, fast food restaurant, Howard Nielsen, labor, local business, minimum wage, New York state, Rochester, Rochester NY, Sticky Lips BBQ, workers
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