Korean Biz Owners Fret Over Minimum Wage Increases

A Korean nail salon in Manhattan. Nail salon owners will be affected the minimum wage increase. (Photo by Jiwon Choi for Voices of NY)

Korean business owners in New York State are expressing discouragement as they face increases in the minimum wage in the New Year.

New York City’s standard minimum wage (for businesses with 11 or more employees) will rise $2.00 to $15 an hour starting Dec. 31, 2018. Other changes depend on the geographic region and the size of businesses.

The minimum wage will be $13.50 per hour [up from $12.00] for employers who have 10 or fewer employees.

[Employers may also be considered “large” even if they usually employ fewer than 11 people, but have had more than 11 employees on a part-time basis.]

Compared with the increase from $7.25 to $8 on Dec. 31, 2013, the minimum wage increase amounts to a gain of 107% in only 5 years since then.

Korean business owners in New York City have been through harsh times to pay the labor cost. In fact, according to a person familiar with this situation, some Korean owners are planning to cut down on their employees or reduce working hours, while a few owners are considering closure of their stores. That’s because the income of the owners has dropped to one third previous levels due to rising labor costs and weak sales.

The previous president of KAMA NY (The Korean Apparel Manufacturers Association of Greater New York), Su-heum Eom, who is currently running a sewing factory located in Manhattan, said that he will cut back on employees in the new year. He added: “There have been fewer clients who ask for work during the last several years. Now that I have another burden of rising labor costs, I’m not able to make my business profitable. I already reduced the staff to half the level of four or five years ago but, I need to have another cutback in the new year.”

The Korean nail salon industry, regarded as a labor-intensive business, will take the biggest hit from rising labor costs. Even if “tip credits” are applied, the minimum wage will be up to $11.25, exceeding $10.

The overtime will also increase to $18.85. A Korean owner of nail salon located in Brooklyn, New York, Kim, said that he considered many ways to reduce his labor cost before the new year. Kim mentioned: “The labor cost doubles in a short time, but the price for services has only risen 10% in five years. Net profit for this year decreased to 30% of the average net profit during last five years.”

Many Korean businesses are getting ready for the new rule, as some of them are having staff trainings about the new minimum wage law. The Korean-American Nail Association of New York sent a notice to its nearly 2000 members with information on how to calculate the new minimum wage and overtime.

The president of The Korean-American Nail Association of New York, Kyung-eun Park, said: “Many nail salon owners with 5 or 6 employees barely make a profit, especially during the off-season, winter. It can be the case that some employers make less money than their employees, encouraging the owners to close up the stores.” She added: “Now, the employer should pay attention to calculating and paying overtime for workers, while scheduling work hours effectively. All of these things will discourage the small business owners.”

The minimum wage for other areas in New York State will be lower than in New York City. As of Dec. 31, 2018, It will increase to $12 per hour at large employers (with 11 or more employees) for Long Island and Westchester County. On the other hand, it will be $11.10 for the other areas in New York State.

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