Monday, January 26, 2009

Bodegas Begone

We have written extensively about how supermarkets are disappearing in NYC; and now it appears that the city's bodegas are also closing up shop in record numbers. As the NY Daily News reported yesterday: "Freddy Fernandez's bodega on 138th St. in the South Bronx was in the family for 20 years, and business had never been worse. Food and beer prices rose sharply, Fernandez said, and demand for many products plummeted. After watching several nearby stores close down recently - a bakery, a donut shop and the fish market next door - Fernandez finally had to close his bodega, too.'

Why the trend? Well, just like it is for supermarkets, the rising cost of doing business is making the store owner's life difficult: "Bodega owners like Fernandez are struggling to survive the deepening recession as their costs rise and customers pull back on their spending. To get by, owners are stocking fewer products, changing their hours and letting workers go.
"Electricity, gas, everything - we can't cover," said Fernandez, 42, who locked the doors at his Caribbean Deli-Grocery earlier this month. "We can't pay."

In addition, rising food prices and falling incomes are also taking its toll: "Behind the cash register, a case of Goya extra virgin olive oil had gathered dust for four months. In the past, customers went through two to three cases a month, he said. "We only get the inventory people want," Fernandez said before deciding to close the store. "They want to buy everything cheaper."

And, of course, the hard times effects employment in the neighborhood as well: "Other bodegas are laying off workers. Fernandez cut his staff down from eight to four workers just a few months ago, but it wasn't enough. Revenue has dropped by 25% since last year. "Now is the worst," said Ramon Murphy, a bodega owner for 24 years and president of the Bodega Association of the United States."

In the midst of all of this small business calamity, Mike Bloomberg has raised taxes and added payroll-thus exacerbating the problems at the neighborhood level. As the NY Post opined yesterday, pointing to the public employee issue: "As is, for that matter, Hizzoner's apparent belief that New York can weather the economic downturn without scaling back the public workforce: Insufficient state aid, Mayor Mike said, is a recipe for - sit tight - layoffs. Uh, hello?
The whole world is engaged in layoffs these days."

Of course, Mike has no clue about the correlation between public spending, higher taxes, and burdensome regulations-and the plight of the bodegas has its genesis, at least in part, in the failure of government to rein in its costs. Regulatory burdens function just like unfunded mandates do for local government-making it more difficult for their objects to operate efficiently.

And the recession comes on top of the rising rents that had already forced many stores to the brink of bankruptcy. All of which is why adding regulatory burdens like an expanded bottle bill makes little sense in these dire economic times. More costs equal less profit, equal fewer stores, and a real loss of neighborhood jobs. We should be looking to cut costs for local stores-not add to them through higher taxes and regulations.