ARTICLE
Welcome to the challenging world of the small business owner. We know that communities along the central coast are a combination of small businesses in the core downtown areas of Capitola, Santa Cruz, Scotts Valley and Watsonville plus the businesses that are in the county neighborhoods of Boulder Creek, Felton and Ben Lomond in the San Lorenzo Valley and the small villages like Soquel, Live Oak, Aptos, Corralitos and LaSelva. These small businesses make up approximately 80% of all the businesses in Santa Cruz County. When we say small businesses, we identify those businesses with 10 or fewer employees. However, keeping your business in operation during the COVID era, the winter storms, wildfires and the host of other natural and man-made disasters has taken its toll. In recent weeks we have seen small businesses close their doors and make announcements of future closures. Hit hard is the food and beverage industry and the family-owned restaurants and brewpubs like New Bohemia Brewing Co. , Aptos Village’s Cafe Sparrow and Doon to Earth wine tasting room, and Emily’s Bakery in Santa Cruz being the most recent to announce the decision to close. The COVID era produced the most harmful impact on our small businesses with shuttered doors, employee layoffs, reduction in economic output and the tidal wave of uncertainty. Yet, are there strong signs of recovery from the pandemic and the recent expansion of businesses to opening? The National Federation of Independent Businesses (NFIB) conducts an annual survey about small business trends throughout the country. The March 2024 report states: The NFIB Small Business Optimism Index decreased by 0.9 of a point in March to 88.5, the lowest level since December 2012. This is the 27th consecutive month below the 50-year average of 98. The net percent of owners raising average selling prices rose seven points from February to a net 28% percent seasonally adjusted. “Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds,” said NFIB Chief Economist Bill Dunkelberg. “Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.” The report is here: https://www.nfib.com/surveys/small-business-economic-trends/ Is Santa Cruz bucking that national trend? According to a 2023 news report from the Downtown Association of Santa Cruz, “Downtown Santa Cruz is experiencing an unprecedented resurgence, welcoming an impressive lineup of new businesses bringing vibrancy back to the heart of the city. With a remarkable 27 businesses opening their doors since 2022, Downtown Santa Cruz is once again a bustling hub for shopping, dining, arts, culture and recreation.” There has been an impressive list of openings, including Mariposa Coffee Bar, Pana Venezuelan, Alderwood Pacific (since closed), Gobi Mongolian BBQ, Santa Cruz Art Expressions, Terra & Self, Redwood Records, Golden Bliss, Mad Yolks and Pono Hawaiian Grill each garnered significant attention. Meanwhile, Nicely, Oasis and Front Street Vintage added uniqueness to downtown’s thriving scene of over a dozen vintage fashion and furniture stores. Honey B Market and The Buzz Sushi have become vegetarian favorites, offering a wide selection of plant-based delicacies. And Moon Kissed celebrated a ribbon-cutting with the Chamber in November last year. Firefly Tavern is the latest to open, offering up local craft food, beers, and wine-based cocktails. Each of these establishments has undergone extensive remodeling to create unique and welcoming spaces for Santa Cruz residents and visitors alike. But will the trend continue? Announced earlier this week, the Department of Labor finalized a rule that would expand overtime access to salaried workers. Starting July 1, 2024, the annual salary threshold under which non-exempt workers would be eligible for overtime will grow from $35,568 to $43,888. Then on Jan. 1, 2025, the threshold will grow to $58,656 — a 64% increase from its current level. Additionally, the salary thresholds will update every three years based on new wage data, according to the Department of Labor. “This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” said Acting Secretary Julie Su in a press release. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.” The final rule comes after the Labor Department proposed the new overtime thresholds in September 2023, after which it received more than 33,000 comments. The new overtime rule also contains provisions requiring employers to: - Expand overtime protections for lower-paid salaried workers. - Better identify workers who are executive, administrative or professional and who are thus not eligible for overtime. - Ensure that those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week or gain more time off. Legal experts had said boosting overtime pay would mean businesses would be on the hook for higher wages. As you would imagine, there is opposition from the business community. “Small businesses often struggle with the ever-changing nature of federal regulations,” said Beth Milito, executive director of NFIB’s Small Business Legal Center, after the initial proposal. “The overtime threshold was last increased in 2019, and now is not the time to saddle small businesses with another costly regulation when the small-business economy is still recovering. We urge the DOL to consider the economic impact the new requirement would have on small businesses and avoid issuing the rule.” One small business owner who asked to remain anonymous stated that “the business will follow suit with shorter work days, reduce employee hours when necessary and if necessary increase prices to address the current economic trends we are seeing today. Will we close our doors? It is unlikely in the short term but you never know what disaster will hit next.”
Welcome to the challenging world of the small business owner. We know that communities along the central coast are a combination of small businesses in the core downtown areas of Capitola, Santa Cruz, Scotts Valley and Watsonville plus the businesses that are in the county neighborhoods of Boulder Creek, Felton and Ben Lomond in the San Lorenzo Valley and the small villages like Soquel, Live Oak, Aptos, Corralitos and LaSelva. These small businesses make up approximately 80% of all the businesses in Santa Cruz County.
When we say small businesses, we identify those businesses with 10 or fewer employees. However, keeping your business in operation during the COVID era, the winter storms, wildfires and the host of other natural and man-made disasters has taken its toll. In recent weeks we have seen small businesses close their doors and make announcements of future closures. Hit hard is the food and beverage industry and the family-owned restaurants and brewpubs like New Bohemia Brewing Co. , Aptos Village’s Cafe Sparrow and Doon to Earth wine tasting room, and Emily’s Bakery in Santa Cruz being the most recent to announce the decision to close.
The COVID era produced the most harmful impact on our small businesses with shuttered doors, employee layoffs, reduction in economic output and the tidal wave of uncertainty. Yet, are there strong signs of recovery from the pandemic and the recent expansion of businesses to opening?
The National Federation of Independent Businesses (NFIB) conducts an annual survey about small business trends throughout the country. The March 2024 report states: The NFIB Small Business Optimism Index decreased by 0.9 of a point in March to 88.5, the lowest level since December 2012. This is the 27th consecutive month below the 50-year average of 98. The net percent of owners raising average selling prices rose seven points from February to a net 28% percent seasonally adjusted. “Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds,” said NFIB Chief Economist Bill Dunkelberg. “Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.” The report is here: https://www.nfib.com/surveys/small-business-economic-trends/
Is Santa Cruz bucking that national trend? According to a 2023 news report from the Downtown Association of Santa Cruz, “Downtown Santa Cruz is experiencing an unprecedented resurgence, welcoming an impressive lineup of new businesses bringing vibrancy back to the heart of the city. With a remarkable 27 businesses opening their doors since 2022, Downtown Santa Cruz is once again a bustling hub for shopping, dining, arts, culture and recreation.”
There has been an impressive list of openings, including Mariposa Coffee Bar, Pana Venezuelan, Alderwood Pacific (since closed), Gobi Mongolian BBQ, Santa Cruz Art Expressions, Terra & Self, Redwood Records, Golden Bliss, Mad Yolks and Pono Hawaiian Grill each garnered significant attention. Meanwhile, Nicely, Oasis and Front Street Vintage added uniqueness to downtown’s thriving scene of over a dozen vintage fashion and furniture stores. Honey B Market and The Buzz Sushi have become vegetarian favorites, offering a wide selection of plant-based delicacies. And Moon Kissed celebrated a ribbon-cutting with the Chamber in November last year. Firefly Tavern is the latest to open, offering up local craft food, beers, and wine-based cocktails. Each of these establishments has undergone extensive remodeling to create unique and welcoming spaces for Santa Cruz residents and visitors alike. But will the trend continue?
Announced earlier this week, the Department of Labor finalized a rule that would expand overtime access to salaried workers. Starting July 1, 2024, the annual salary threshold under which non-exempt workers would be eligible for overtime will grow from $35,568 to $43,888. Then on Jan. 1, 2025, the threshold will grow to $58,656 — a 64% increase from its current level.
Additionally, the salary thresholds will update every three years based on new wage data, according to the Department of Labor. “This rule will restore the promise to workers that if you work more than 40 hours in a week, you should be paid more for that time,” said Acting Secretary Julie Su in a press release. “Too often, lower-paid salaried workers are doing the same job as their hourly counterparts but are spending more time away from their families for no additional pay. That is unacceptable.”
The final rule comes after the Labor Department proposed the new overtime thresholds in September 2023, after which it received more than 33,000 comments.
The new overtime rule also contains provisions requiring employers to: - Expand overtime protections for lower-paid salaried workers. - Better identify workers who are executive, administrative or professional and who are thus not eligible for overtime. - Ensure that those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week or gain more time off.
Legal experts had said boosting overtime pay would mean businesses would be on the hook for higher wages.
As you would imagine, there is opposition from the business community. “Small businesses often struggle with the ever-changing nature of federal regulations,” said Beth Milito, executive director of NFIB’s Small Business Legal Center, after the initial proposal. “The overtime threshold was last increased in 2019, and now is not the time to saddle small businesses with another costly regulation when the small-business economy is still recovering. We urge the DOL to consider the economic impact the new requirement would have on small businesses and avoid issuing the rule.”
One small business owner who asked to remain anonymous stated that “the business will follow suit with shorter work days, reduce employee hours when necessary and if necessary increase prices to address the current economic trends we are seeing today. Will we close our doors? It is unlikely in the short term but you never know what disaster will hit next.”