What Zohran Mamdani’s big win means for Main Street business owners

Zohran Mamdani’s system-shattering victory on election night stunned Wall Street and the billionaire class, but it could also rattle the small business community.

Supporters of Zohran Mamdani point out that the mayor of America’s largest city has laid out a detailed policy plan for small businesses. between Mamdani small business policy recommendations We are cutting fines and fees for small businesses in half, including a $1,000 new business registration fee; accelerating permit issuance and facilitating online applications; and increasing funding by 500% to $25 million for a city program that provides personalized support to business owners. New York City’s Business Express Service Teams (BEST) directly assist small businesses with applying for permits and complying with regulations.

As the wealthy and big business threaten to leave New York in the face of higher taxes, Mamdani is trying to stem the tide of small businesses leaving the city, said Mariano Torras, a professor and finance department chair at the Robert B. Willumstad School of Business at Adelphi University on Long Island.

“We have recently seen an exodus of small businesses from New York as business owners find themselves being priced out by policies that have always favored large corporations and especially real estate developers,” Torras said.

Mamdani’s proposal to convert vacant office buildings into mixed-use or retail space could also be a positive for small businesses trying to navigate the complex and expensive New York City real estate market.

Torras said the decline in small business could be reversed through these and other policies that make it easier and cheaper to start or maintain a business in New York City, specifically pointing to Mamdani’s plans to reduce small business fines and fees under the auspices of the small business czar.

Some of Mamdani’s better-known and more controversial policies could also serve as a tailwind for small businesses, according to Michelle Bufano, a New York-based small business consultant:

“Proposals to reduce fines, expand affordable transportation, and freeze certain rents could help residents and workers by promoting economic stability, which in turn benefits small businesses that are often tied to strong local communities,” Bufano said.

Small retailers should consider Mamdani’s proposed rent freeze, says Andrew Stern, CEO of New York-based Quilt Software, which helps small businesses compete with big businesses.

“While he has clearly stated that this is housing for now, he has also previously shared the importance of stability for tenants,” Stern said, noting that this could provide an opening for local retailers to afford to stay in the neighborhoods they started in.

“There are risks after this election as well,” Stern added. For example, proposed city-owned grocery stores are well-intentioned but could create stiff competition for independent local grocers.

$30 minimum wage issue

Bufano says the biggest concern he hears from small business owners is about the proposed $30-per-hour minimum wage by 2030, which could cause a real headache for some. Bufano notes that pay structures at most small businesses are tiered, with more experienced workers receiving higher wages.

“If wages for entry-level workers go up to $30 per hour, small businesses will need to raise wages across the board to keep the tiered structure in place, which will increase quickly for small businesses,” Bufano said, with many small businesses operating at low margins and unable to absorb the cost.

This proposal could create new pressures for small business owners who are already facing high expenses and struggling to recover from the pandemic.

“I work directly with small businesses and entrepreneurs in the NYC metro area and nationally, and as a small business owner, I see every day how even small policy changes can create huge ripple effects,” Bufano said. “This is especially true for small businesses that operate on tighter margins, operate on limited budgets, and lack the financial backing or capital reserves that larger companies can rely on.”

The analysis, shared by Columbia Business School via email on Wednesday morning, pointed to studies that have difficulty answering this question definitively. There is a risk of increased worker productivity resulting from higher wages being offset by profit declines, but real estate costs and red tape are also frequently cited by business owners as a bigger challenge than wages. Some sectors are likely to be more affected by a higher minimum wage than others.

“A $30 minimum wage in New York City could hit the restaurant and food industry like a tsunami, boosting workers’ incomes while also reshaping the entire dining landscape,” wrote Stephen Zagor, an assistant professor of management at Columbia Business School and a longtime consultant to the food industry.

Progressive policies and cities as small business laboratories

According to Bhaskar Chakravorti, dean of global business at Tufts University’s Fletcher School, the big takeaway for small businesses in New York and eventually across the country will be low costs and meeting barriers to entry with high wages. Mamdani needs to prove that reducing the burden of bureaucracies, licenses, regulatory compliance, and all the red tape involved in starting and running a small business can be offset by potentially higher labor costs to deliver a net gain for small businesses, the community, and cities at large.

“Given the complexity and diversity of NYC, this suggests that many other progressive and Democrat-leaning cities will be looking closely at it like a laboratory,” Chakravorti said. he said.

Other cities will be looking at whether small business capitalism can be combined with a progressive agenda and whether there is a coherent progressive message that can counter the dominant Republican narrative that claims small business capitalism represents small businesses when critics say it actually gives big businesses the biggest break.

“I think it will be interesting to see how much of the original Mamdani promises will have to backtrack as the facts come out, and how much of those are politically feasible and keep their core platform and originality intact,” Chakravorti said, adding that he may not have much of a political honeymoon to sort things out.

“This being NYC, Mamdani will need to show some early victories — because there will be many waiting to pounce on her failures,” Chakravorti said.

While the business community waits for the actual policies the new mayor will implement, “a lot of small business owners are nervous, to be honest,” Bufano said.

Mamdani’s ventures come with a lot of uncertainty, which he says is unsettling for small business owners.

“We like consistency and predictability, so we can plan ahead, budget, and grow responsibly. Mamdani’s ventures seem like a wild card right now. No one really knows how her ideas will play out in practice, or even if they will come true. Most small business owners will probably take a wait-and-see approach,” Bufano said.

But he acknowledges that what happens in New York does not stay in New York, because it has become a living experiment in balancing social progress with economic reality.

“Cities across the country are watching and learning from his policy choices. If Mamdani’s approach works, he could redefine what progressive capitalism looks like in America, with small businesses at the center of proving its sustainability,” Bufano said.

Torras says New York City can now serve as a progressive policy proving ground that will expand to other cities.

“Mamdani’s initiatives are likely to be emulated by municipalities in other provinces and states, as it becomes increasingly evident that steps must be taken to stop the exodus of small businesses from everywhere,” Torras said. he said. “While the cost of Mamdani’s proposals will likely be opposed by established businesses and the wealthy, he also counts among his allies many potential beneficiaries directly or indirectly linked to local businesses,” Torras said. he added.