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Long Island Center for Socio-Economic Policy

Village of Port Jefferson Mayor Margot Garant suggests Conifer Realty’s Port Jefferson Crossing project, pictured above, may help ease workforce housing shortages. File photo by Raymond Janis
By Aidan Johnson

Decades-old fears over a possible Long Island “brain drain,” or people in their 20s and 30s leaving the region, have not been quelled. Instead, some are worried that the brain drain has spread to other age demographics as well.

Martin Cantor, director at the Long Island Center for Socio-Economic Policy, suggests every age demographic is looking to escape the Island. 

“The young don’t come and stay,” he said. “Most kids, if they go away to college, don’t come back. The middle class is leaving because it’s too expensive.”

‘We’re just too darned expensive to live here.’

— Martin Cantor

While some suggest that this may be due to a lack of housing options, Cantor is not entirely on board with this diagnosis. “There is a general feeling out there that they want to blame people leaving [on the] housing options and, to an extent, yeah,” but this doesn’t paint the complete picture, he said. “It’s because we’re just too darned expensive to live here, plain and simple.”

Sal Pitti, former vice president of the Port Jefferson Station/Terryville Civic Association, is moving to Florida. His case exemplifies how even prominent local leaders feel the squeeze of high costs, fleeing the communities they helped build and grow due to financial pressures.

“I’m retired from the NYPD, so I’m pretty much on a fixed income,” he said in a phone interview. “My wife’s been working, and her salary has gotten better over the last few years … but with the rising amount of taxes and everything else that’s going on on Long Island, it’s pretty much going to be unsustainable.”

Instead of waiting a few more years, Pitti and his wife decided to take advantage of the recent high spot in the housing market and were able to sell their home relatively quickly.

Problems also arise with Long Island’s minimum wage, which currently stands at $15 — the same as for New York City and Westchester, with the rest of the state at $14.20. Even though the Long Island rate is more than double the $7.25 national minimum wage, it is still not nearly enough to afford a two-bedroom apartment at fair market rent. 

According to the National Low Income Housing Coalition’s 2021 Out of Reach report, the minimum hourly wage necessary to afford a two-bedroom apartment in the Nassau-Suffolk HUD Metro Fair Market Rents Area is $39.13. This means that two local adults working full time on minimum wage could still not afford an apartment.

In an interview, Town of Brookhaven Councilmember Jonathan Kornreich (D-Stony Brook) described his conversation with one homeowner who, along with her husband, works a minimum wage job. To afford the mortgage, she had to work two shifts.

The simultaneous problems of low wages and high rents represent a conundrum for policymakers. The interplay of local and societal factors can make this puzzle even more problematic.

“I don’t know what the answer is,” Kornreich said. “I don’t know how we value work in a way that allows people to do important work that’s societally vital” while also paying workers “enough that they can afford just to live a basic existence.”

While Long Island’s minimum wage will continue to increase — set to reach $17 an hour by 2026 — that would still not be enough to afford a two-bedroom apartment.

Village of Port Jefferson Mayor Margot Garant described her administration’s efforts to cater for affordable housing options.

“There is nothing that we’re going to do to stop building more workforce housing as long as I’m involved,” Garant said.

‘It just shows the need for clean, affordable workforce housing.’

— Margot Garant

The village mayor described the heavy demand for affordable housing, with roughly 1,300 applications being submitted for Conifer Realty’s Port Jefferson Crossing project in Upper Port that offers 45 apartments based on the median income in the area.

“It just shows the need for clean, affordable workforce housing,” Garant said.

While new affordable housing units may partially help alleviate some of the housing shortages throughout the region, it is not a solution to the overarching problem of high expenses. 

To ease economic pressures on Long Island, Cantor urged policymakers to worry about costs and cut spending where possible. 

“Nobody is worrying about costs,” he said, suggesting regional income taxes replace property taxes. “This way, people pay based upon what they earn, not the value of their assets.”

Downtown Kings Park. File photo by Rachel Shapiro

There have been rumblings recently regarding the state of the commercial real estate market. With the onset of the COVID-19 pandemic, people were forced to leave the workplace and instead work virtually, if possible.

Though going back to the office full-time is now an option for many businesses, some are satisfied with employees working from home. Experts now worry that remote work could be driving down the demand for commercial real estate. 

“If these commercial landlords can’t make money, they’re going to file for … property tax relief,” said Martin Cantor, director of the Long Island Center for Socio-Economic Policy, in a phone interview. “And if they get it granted because they’re not making money, that property tax is going to be shifted to residential.”

Deputy Comptroller for New York City Rahul Jain also shed light on the topic, noting that the industrial market is doing very well right now but office markets remain questionable.

“Real estate generally pays a higher rate on the value of the property than residential does,” he said in a phone interview. “If you have a real decline in the value of that property … that means somebody else has to pick up the remainder. And so that burden could end up potentially falling on residential taxpayers.”

Phil Shwom, president of the Long Island-based industrial and commercial realtor Schacker Realty, added further context.

“We’ve seen a couple of deals where they’ve taken an office building and converted it to industrial,” he said in a phone interview. “There’s also been talk about taking down some office buildings and building residential, which I think is happening in the city, but less so on Long Island, although I wouldn’t be surprised if it does happen at some point.”

When asked if commercial property owners might consider repurposing some locations as residential developments, as Shwom said, Jain agreed that that could be a possibility.

“When you look at the economics of it, it might make sense not only on the demand side,” Jain said, referencing that there are now fewer people going to offices to work. “But on the supply side, there’s clearly some push to increase the number of housing units because housing in the metro area has always been more expensive than the rest of the country.”

Jain emphasized that the burden of commercial taxes potentially falling on residential taxpayers and the possibility for commercial spaces converting into residential development are very complex issues. 

It may still be a few years until the full effects of the pandemic on commercial office spaces become evident and what domino effects may result from that.

Rising energy prices, rents and wages are all applying greater pressure on small business owners. Pictured above, storefronts in downtown Port Jefferson. File photo by Julianne Mosher
By Rita J. Egan & Raymond Janis

Residents of communities throughout the area came out on Saturday, Nov. 26, to support local downtowns during Small Business Saturday.

Small Business Saturday was a campaign first developed by American Express in 2010. Martin Cantor, director of the Long Island Center for Socio-Economic Policy, detailed the history and purpose of this effort.

“Because everybody was focusing on Black Friday, American Express wanted to focus on small businesses,” he said.

Mary Joy Pipe, owner of The East End Shirt Company and president of the Greater Port Jefferson Chamber of Commerce, described this year’s iteration of Small Business Saturday as a success. She forecasts a favorable holiday season for the small business community this year based on the turnout.

“Am I optimistic about how I did on Small Business Saturday and over that weekend, and that things should go well?” she said. “Yes.”

The success of these business initiatives, according to Pipe, is primarily contingent upon the weather. She characterized the clear skies on Friday and Saturday as fortunate for the business community.

Tandy Jeckel, owner of TandyWear in Commack, said Small Business Saturday was similar to last year saleswise but that Black Friday was better.

Black Friday “was major,” she said. “We beat last year. Small Business Saturday was pretty much the same as last year.”

Confronting difficult times

While some storefront owners saw favorable returns over the weekend, others discussed the several factors working against their businesses. Among these are nationwide economic instability and inflation, soaring prices and hardships related to the COVID-19 pandemic.

Jeckel said her business did well during the pandemic by making masks to match outfits and so drawing in customers. She added she had noticed customers opting for dressier outfits where people were looking for more comfortable loungewear for a while.

Joe Schwab, co-owner of Schwab’s 2nd Wind in East Setauket, said he didn’t experience an increase in traffic on Small Business Saturday. He said that the special shopping days did not necessarily boost sales, even though Black Friday was better this year than it has been in years past.

“I would love to have a big excitement about shopping days again, but for the time being it seems to be a bit lost or fizzled out,” he said.

Cantor maintains that the broader economic trends are squeezing small businesses and local downtowns. Ballooning costs associated with energy prices, rents and wages are making it harder for small businesses to stay profitable. At the same time, consumers have less discretionary income and, therefore, less to spend in these downtown settings.

“Right now, small businesses are caught between trying to recoup the high rents, energy costs and things like that,” he said. “And then they’re running into the competition and the fact that consumers don’t have the money to spend.”

Competing with big businesses

Inflation and other economic pressures are driving consumers to try to stretch their dollars, Cantor said. This is adding even greater strain on small businesses compared to big businesses.

“The reality is that these big businesses can buy goods and services at much cheaper prices, and consumers are certainly looking for bargains,” he said.

Despite this popular narrative, Patty Kaczmarczyk, owner of Cheese & Spice Market in Wading River, insists that her prices are competitive and often outperform her larger competitors.

“People sometimes feel, ‘I’m going to go to the supermarket where I can get things cheaper there,’ but now that’s not so true,” she said. “I’m a small business, so I’m trying not to kill people in pricing to stay very competitive. That’s my goal.”

Contrasting the business models of large and small businesses, Kaczmarczyk said smaller stores are better adapted to meet the needs of consumers. Whereas large retailers emphasize bulk purchases, she said small vendors allow for smaller, often cheaper orders.

“I carry so many loose spices, which are way cheaper than buying them in a grocery store,” she said. “I sell it loose, and you can buy smaller amounts.” Maximizing these advantages, she suggests, can keep small businesses afloat while competing against their larger counterparts.

Susannah Meinersman, owner of Huntington-based Bon Bons Chocolatier, said the store has been busy in general, which she attributes to making a great product. Meinersman said she appreciates Small Business Saturday: “I think the day brings awareness to the small Main Street business, so that’s a good thing.” 

Giving back to the community

David Wolmetz is co-owner of Urban Air Adventure Park in Lake Grove. He described the small business sector as an extension of the greater community. Through various interactions of small businesses with community members, he said these businesses foster a greater sense of local cohesion.

“It’s not only about money for us,” he said. “It’s about connecting to the community.” 

For example, Wolmetz sits on the board of the Stony Brook Cancer Center Community Advisory Council. Maintaining connections between small businesses and other local institutions is crucial, Wolmetz said, for community prosperity.

“We look for them: Girl Scouts, Boys Scouts, anything that’s related to our demographic of a youth, family oriented connection,” he said. “I’m very familiar with that connection, and that’s my reason for having the business.”

This connection will be imperative as businesses transition into the post-pandemic era. For Suzanne McEnroe, owner of This n’ That Gifts in St. James, the turnout on Saturday was encouraging. 

She said she appreciates resident support as the business owner opened the gift store in February 2020, just a few weeks before the COVID-19 shutdowns. She is grateful to be open.

In general, she noticed a difference in business this year with more people out shopping. “They love to have a town shop to be able to just come and get a quick gift,” she said.

A critical juncture

While Small Business Saturday primarily targets the retail and service sectors, Long Island’s regional economy consists of small businesses across many other industries. 

John Hill is the founder and CEO of the Long Island Advancement of Small Business, an organization committed to the growth and development of small businesses that do not interface with customers, such as financial planners, bankers and IT service providers, among others.

Hill contends that these small businesses are struggling, too. “They’re not growing, they’re not failing, they’re just eking out a living right now,” he said.

Given the high living costs on Long Island, Hill sees more small business owners closing up shop and heading to more affordable regions in the country, a startling trend for Long Island’s regional economy.

“We’ve had four people leave our organization to move off of Long Island,” he said. “Two moved to Florida, one to North Carolina and one to Tennessee.”

To stay afloat, Cantor suggests business owners will soon have to find creative ways to attract consumers to downtown areas while eliminating operating expenses.

“Businesses are at a critical juncture,” he said, noting that Small Business Saturday is “super.” He added, “We want all these small businesses to survive, and it’s great that Long Islanders are coming out to the downtowns to shop on Small Business Saturday. But they have to continue to do it.”