I left a job – and a lot of business connections – in Manhattan 20 years ago when I started my own firm. One of my first decisions as CEO of a then one-man company was to put my office in Westchester, not in New York City.
There were drawbacks associated with this choice. Being in Westchester put me off the radar of a large set of potential clients, since people who live in Manhattan seldom see a reason to look beyond it for much of anything, especially not for financial advice. It made it more challenging for me to maintain my network of business contacts and referral sources, especially since in those days we did not have social networking or the other Internet-based tools that have largely removed distance as a factor today. Even now, it takes more work to get together with workplace friends and colleagues for lunch when you don’t work in the same ZIP code, or even an adjacent one.
Still, I gave up those benefits knowingly and happily. It was partly a lifestyle choice. I could walk to my first office, which was about a mile from where my family then lived along the Hudson River. Working near home allowed for more time with my little daughters while they grew up.
But most of the reasons for my decision were commercial ones. Not only were Manhattan office rents much more expensive than those in Westchester, but operating in the city would have triggered a host of unpleasant tax and administrative burdens. The city had (and still has) a special income tax on unincorporated businesses like mine, in addition to its personal income tax (which was repealed for nonresidents a few years after I started the business). It levies another unique tax on rents that businesses pay in Manhattan south of 96th street. Small businesses are exempt but, at Manhattan rental rates, my business would not have had to grow much to trigger the tax. And the city’s tax-collection bureaucracy was, in my professional experience, unduly aggressive and inflexible.
I wanted to spend my time and money building my business, not dealing with the city – or fighting it off. So I stayed out of Manhattan and I never went back, even as my business grew and some staffers wanted us to relocate there.
Now there is one more very good reason not to be in New York City. The city’s new law, enacted over Mayor Bloomberg’s veto, banning discrimination against the unemployed is bound to reduce unemployment – but mainly among lawyers. They will keep busy suing employers, who will now have to justify exactly why an unemployed applicant did not get a particular job.
The real answer that will apply in many cases is simply that the unemployed person was not the best person available for the position. Except when companies go completely belly-up or abandon entire lines of their business, managers pick the employees they want to keep and the employees they want to let go. And – surprise! – managers keep their best people.
So if you want to build a business with the best people around, you generally won’t find them on the unemployment rolls.
This is a broad generalization. There are, of course, many people, especially in times of high joblessness, who are very good workers and are unemployed through no fault of their own. Those with the best backgrounds, the best skills and the best connections will, however, tend to get jobs the fastest, concentrating long-term unemployment among the workers whose work is merely average or less.
I think most employers will have little trouble justifying their hiring decisions on non-discriminatory grounds by showing why they considered the person they ultimately hired to be best-qualified. But the new law puts a target on employers’ backs and lets unemployed workers and underemployed lawyers working on contingency fees, who have very little to lose, take aim. The neighborhoods around the city’s municipal courthouses, especially in boroughs other than Manhattan, are full of such attorneys. A new industry will soon be born: one that sues employers on behalf of unemployed workers and seeks never to go to trial, but always to extract cash settlements instead. Employers who do not pay directly for their alleged sins will pay indirectly, through higher insurance rates if they try to protect themselves.
Who needs this? Not me, not my business and, when managers are honest with themselves, not too many other businesses. I was never happier about my decision to stay out of New York City than I was when the Council, seeking to score political points in a municipal election year, overrode Bloomberg’s veto last week.
The new ordinance will ultimately succeed in providing work for the unemployed, as long as the unemployed are lawyers. For everyone else, it just guarantees that more companies like mine will fill their job openings outside the city limits.