Ben Parker/Sun Assistant Photo Editor

Like most Collegetown restaurants, the pandemic caused a downturn in business for Cafe Pacific.

February 22, 2021

Struggling Ithaca Businesses Hold Breath for Biden Stimulus, Potential Wage Increase

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The Watershed, a bar on West State Street, was closed for three months, struggling to meet staffing costs during the lockdown period. The Ithaca grocer Greenstar worried about even keeping its doors open.  

Since the beginning of the COVID-19 pandemic, Ithaca businesses have suffered from lockdowns — just like ones nationwide. Local favorites John Thomas Steakhouse and Ten Forward Café both folded permanently just months after university students returned home.

In the past year, businesses found support through crucial federal aid, which extended paycheck protection, rent relief and small business loans. With a new administration and falling COVID-19 cases, some Ithaca businesses are looking forward to Biden-era policies that they hope will potentially bring support on their way to a full reopening. 

As Ithacans wait for Biden’s $1.9 trillion dollar stimulus proposal to pass the Senate, questions remain as to how the money will be allocated, and whether Biden can successfully use it as leverage for his policy goals, which include raising the federal minimum wage to $15 an hour.

Although some business groups have argued that such a raise would slow economic recovery, it is unlikely to make a difference for businesses in Ithaca because wages are, on average, already high — the mean hourly wage for service and food preparation workers is $15.46 in Ithaca. 

For this reason, potential increases in minimum wage aren’t likely to increase labor costs in the Ithaca community, said Jen Tavares, the president of the Tompkins County Chamber of Commerce. 

“Hospitality has been so negatively affected by the pandemic I think the last thing are worried about is wage increases,” said Chuck Schwerin, managing director at Ithaca Area Economic Development, a nonprofit that supports emerging businesses. 

“We’re actually living wage employers,” added Zach Rohrer, a manager and part-owner of Greenstar Food Co-op. “So we [already] pay $15 an hour.”

Rohrer does anticipate some positive effects from Biden’s proposed stimulus bill, which includes low-interest loans and $15 billion worth of grants to small businesses. Even if there isn’t money flowing to small businesses, Rohrer said the stimulus would likely bring more customers and cashflow to his business either way.

Up until now, business owners like Ashley Cake, an owner of the Watershed, have survived by making major adjustments to their operations: “We’re only doing takeout. No indoor seating for eight of the last 11 months,” Cake said. 

Despite a 90 percent loss in revenue — due to stay-at-home orders, salary losses and fears of the virus that have kept customers at home — Cake wants to stay open “to keep the folks employed.” 

Rohrer said that he “definitely experienced some loss of spending,” from the dip in spending and economic activity. At the beginning of the pandemic, he worried about compensating his employees, paying rent and keeping the doors open — he even had to temporarily close his Greenstar location at Dewitt Mall after sales dropped by 40 percent from the year before. The grocer reopened in September. 

Critics have attributed these challenges to the way former President Donald Trump handled the COVID-19 pandemic and the implementation of the Paycheck Protection Program that has been taken advantage of by large companies at the expense of small businesses. 

In the first few weeks of March, the former president downplayed the pandemic threat by telling Americans to “relax” and that the virus would “go away.” 

In a September economic survey conducted by FiveThirtyEight, 74 percent of economists surveyed said the U.S. would be in a better economic position — in addition to better virus spread conditions — if lockdowns had been more aggressive at the beginning of the crisis. 

Although Trump ran on a pro-business platform, Cake said she felt the policies of his administration thwarted the actual interests of small business owners. 

“The degradation of all of our support networks, the constant assault on members of our community, 500,000 people dying?” Cake said. “No, none of that was good for business.”  

Cake added that Trump’s aggressive immigration policies have harmed service and agricultural workers in her community. 

“Folks I know were detained,” Cake said. “Then you had the Muslim ban, which affected people in the community and the colleges. Then the tax cuts which hurt low-income people, teachers and civil servants, nonprofit organizations”. 

Some members of the Ithaca business community, however, expressed support for the kind of economic policies Trump passed while in office, including tax cuts, deregulation and stimulus during the COVID-19 recession. 

Tavares said that in general, policies involving tax cuts are helpful for boosting the reinvestment of savings into further business development. 

“When business owners and individuals have lower taxes, there is a good chance they might invest the funds they’ve saved back into their business, into the community or make other investments which benefit the local or regional economy,” Tavares said. 

But both Rohrer and Cake said they didn’t benefit from the tax cuts. 

“We’re not a big enough corporation or high enough earners to be able to take advantage of this. So it hurts the infrastructure of our city and our state,” said Cake. 

However, business owners have received financing and relief through some of the aspects of the Trump administration’s programs. Cake used the economic injury disaster loan and the Paycheck Protection Program — which provided loans to businesses so they could continue employing their workers — to pay the bar’s rent. 

Cake herself is making efforts to support the local economy by continuing to meet rent payments despite the option of rent relief. Rent payments have multiplier effects on the economy: Rent payments to the landlord translate into property taxes for the local government, fees to utilities companies and wages to maintenance workers. 

“It was important to me to pay our full rent for as much as the pandemic as we possibly could, because Urban Core as a commercial landlord is extremely important critical to the local economy,” she said. UrbanCore is a real estate developer that focuses on reusing and repurposing old buildings in Ithaca. The Watershed is Urban Core’s largest commercial tenant.

Yet, without greater relief, Cake said that she will be unable to continue paying her rent. “We have a very fair rent level, but our rent costs were premised on the way of doing business before the pandemic,” Cake said.

Despite many challenges facing Ithaca’s business community, some are optimistic that the city’s strong support for local businesses and unique position as a dense city in a rural county are factors that will help it recover quickly and spur economic growth. She added that industry surveys predict the continuation of activity and growth in the future as soon as it becomes safe to conduct business again. 

“Our community is quite supportive of our local vendors, whether they be in agriculture or the artisan sector,” Schwerin said. “One only needs to visit the Ithaca Farmers Market to witness that fervor.”