I recently wrote a blog post about entrepreneur Eli Amsel, who reached out to me about how nanny state regulators and lawmakers have waged war on his New York City-based small business. My first post address the state’s new insane minimum wage law. Now we turn to regulations on plastic and even paper bags that may be the last straw, shutting down Amsel’s business permanently.
First, let’s do a quick review. Amsel contacted me a few weeks ago desperately looking for help, and I oblige because not only do I like him as a person, he represents what makes America great: hard work, entrepreneurialism, and determination. Inspired by his grandfather, who was a Holocaust survivor, Amsel launched his enterprise more than 37 years ago in his dad’s Brooklyn, New York basement. It took him decades to build his client base, which consists of most retailers who need unbranded plastic and paper bags. Now he operates out of his own warehouse rather than a basement and employs about ten people. He’d love to leave this business to his kids and theirs, but that may not be possible.
Amsel had fourteen employees, but the state’s new minimum wage law forces him to cut staff and hours, and he tells me business is down 20 percent. Barely surviving that, he now faces a potential ban on the primary product he sells, plastic bags.
New York City launched its assault on plastic bags in 2016 when the City Council passed a measure to place a five cent tax on bags. Fortunately, New York State Sen. Simcha Felder, a Democrat who caucuses with the Republicans, sponsored a bill to preempt the city from imposing the tax and it passed. Amazingly, Gov. Andrew Cuomo (D), signed Felder’s bill, but not because he’s reasonable. He indicated that he simply didn’t like the idea that the shops would keep the plastic bag fee.
After getting attacked as not being green enough by his potential primary opponent, Cynthia Nixon, Cuomo proposed a state-wide ban on plastic bags. So to gain a few green credentials, Cuomo is willing throw the entire plastic bag industry down the river.
Opposing the ban, Sen. Felder pointed out some of its unfair attributes. “The wealthy people are having their groceries delivered to them in limousines, and having somebody bring it in, don’t give a hoot about it,” he observed on Rich Lamb’s WCBS 880 radio news report. “It’s the small guy who has to come home from work and drag the groceries from the local grocery store up three flights to be able to feed his kids, is either going to be slammed with a ban or tax or some sort—and it’s just nuts. It’s just nuts,” said Felder.
Indeed, it’s always the little guy who gets crushed with this type of senseless regulation. Moreover, I’ve discussed before (see here, here, here) how such nanny statist policies harm consumers and don’t necessarily help the environment. But less often considered is the impact on small businesses. Amsel told me that after he explained to a City Council member the burden that a bag tax would have on is business, the councilmember was surprised because he had never bothered to think about how such taxes and regulations harm small businesses. “He didn’t even entertain the thought,” Amsel told me, which is both astonishing and shameful. Unfortunately, that’s the state of play: few people think about the hardships associated with such bans.
For example, clueless anti-plastics advocates claim that banning plastic bags is a “no brainer,” as if it’s easy and harmless. But it’s only a “no brainer” if you don’t use your brain to consider the tradeoffs.
First of all, lawmakers need to remember why consumers like plastic bags. They are lightweight, easy to carry, and don’t fall apart if they get wet. This is great for us all, especially for senior citizens and disabled people who might find themselves carrying groceries home in paper bags on a rainy day.
And as Amsel pointed out to me, New York City is a “subway city”—a place where many people carry bags of groceries and other items from store to subway to subway stop to home. If they decide to stop for goods on the way home, will they always have a reusable bag on hand? Doubtful. Many people will likely spend several dollars on a regular basis to buy a reusable bag, which, as I have pointedout elsewhere, are not necessarily better for the environment. Reusable bags must be used many times—more than 100 for cloth bags—before there’s any environmental benefits. They also harbor bacteria.
Plastic bags’ cost-effective and lightweight attributes explain why they are a marketable product for Amsel’s business. Amsel says that for the type of bags he sells (mostly unbranded bags for liquor stores), the difference in price, size, and weight between plastic bags and paper replacements is substantial.
Paper bags designed to serve his client needs cost 4-8 times more than the plastic ones they buy now. If that were not bad enough, a switch includes other costs related to the fact that paper is both bulkier and heavier.
“We sell paper bags too and other packaging items are very, very heavy. I did all the dragging in and out of my parents’ basements for many, many years. Driving the van, delivering it to stores across the city.” Eli told a committee of the New York State Assembly.
Consider the impacts of the heavier bags on not only Amsel’s operating budget and product prices, but on his workers, clients, and even city traffic.
Greater potential for employee injuries. Because paper is heavier, Amsel’s workers will face increased physical labor and greater potential for workplace injury. Remember the bags have to be moved around quite a bit for storage and delivery. This is no small trade-off. Perhaps if Cuomo or any of the legislators who want to ban this product had to do the loading and unloading, they’d take a different stand.
Need for more warehouse space. And in a city where real estate prices are very high, the additional need for storage in Amsel’s warehouse is no small cost to his business.
Storage issues for shop owners. Amsel’s clients, many of which are small shops, likely don’t have excess space to store the paper bags. Considering New York City’s excessively expensive real estate market, businesses need to maximize the value of every inch and needless consumption of space for bulky bags hardly constitutes the “highest and best” use of that real estate. Rents in Brooklyn for retail space, for example, often exceed $100 per square foot annually and many areas are hundreds of dollars per square foot. Forcing these businesses to find space to store paper bags when they could easily store plastic bags in fraction of the space is absurd. For more details on Brooklyn rents see this report; and this one for Manhattan, where rents are insanely high.
More air pollution, greater energy usage, and more traffic. If paper requires 4 to 8 times of storage space for Amsel, it will also require more trucks and trips to deliver the paper, which is costly for Amsel and means more wear and tear on city streets, more air pollution, and greater energy usage. To top it off, while Amsel currently ships some of his plastic bags via UPS, the weight and bulk of paper bags makes USP shipping cost prohibitive, which means more of his products will need to go via his own trucks.
All this is not to say that paper does not have a place in the market; and some businesses may choose to offer to their clientele who can afford to pay more. But not everyone would chose paper over plastic and not everyone can afford to; it should be their choice. And a ban is the worst form of control, far worse than the tax, which was bad enough, Amsel explained to me.
Thanks to New York state’s onerous regulatory environment, Amsel’s American-dream-come-true story may soon come to an end. And you can be sure he’s not alone as many residents and business are already try to escape from New Yorkby moving to states with lower taxes and less regulation.
Competitive Enterprise Institute
