From Wall Street to Main Street: NYC’s Business Reputation in Jeopardy

The skyline in Manhattan, New York, on Aug. 21, 2021. Andrew Kelly/Reuters

Commentary

New York City, long recognized as a global financial hub and one of the foremost business centers in the world, has faced stark criticism from nearly every industry for tarnishing its business reputation by embracing partisan lawfare and increasing a never-ending barrage of regulatory red tape in recent years.

This shift has undermined the city’s business-friendly climate, deterred investment, and eroded trust in its legal and regulatory systems.

The city has seen a surge in politically motivated investigations and lawsuits targeting prominent businesses and individuals. Despite what New York City’s leaders state, these actions are, quite obviously, less about enforcing the law impartially and more about scoring political points.

The most prominent example has been the case against former President Donald Trump. The aggressive stance taken by state Attorney General Letitia James, as she waged war against the Trump Organization, marks the beginning of a broader trend wherein legal institutions are weaponized for political purposes. This is called “lawfare.” The issue was compounded by the legal persecution of the former president over payments to adult performer Stephanie Clifford, also known as Stormy Daniels, resulting in a guilty verdict on 34 counts. I would like to emphasize that these charges weren’t for war crimes, espionage, embezzlement, or murder; they were for a multibillionaire’s misclassification of a $130,000 payment.

The impact extends beyond former President Trump. Businesses operating in New York now fear becoming collateral damage in politically charged legal battles. This stifles innovation and discourages investment, as companies seek more stable and predictable environments. The city’s competitive edge has been sacrificed to appease left-leaning advocates. Now, businesses feel they must navigate a minefield of legal entanglements driven by political agendas rather than objective legal principles.

City politicians seem immune to any and all criticism. The emphasis on partisan lawfare has detracted from addressing real city issues. New York City faces significant challenges, including crime, housing shortages, infrastructure decay, increasing homelessness, and record numbers of illegal immigrants. The city’s focus on partisan conflicts has sidelined attention to city management, resulting in a decaying business climate and quality of life for residents.

Lawfare aside, business regulations and labor-friendly laws have increased. In most cases, the Democrats’ focus on social causes, when coupled with the laws they create, wreaks havoc. Sure, it sounds good on paper, but, in reality, it becomes a bureaucratic mess, and regulations end up smothering the economy. Here are a few notable examples:

• Noncompete agreement ban—New York restricted noncompetition agreements, raising concerns about safeguarding proprietary information and retaining talent.

• Expanded antitrust laws—The Twenty-First Century Antitrust Act introduced stringent regulations, increasing complexity and legal risk for businesses.

• Regulatory burden on small businesses—Entrepreneurs face more than 6,000 regulations and must navigate approvals from 15 city agencies for 250 different licenses and permits.

• Higher minimum wages and labor costs—Increasing the minimum wage and mandating paid sick leave benefits workers but raises operating costs for businesses.

At the state level, New York is also increasingly becoming antibusiness. Here are notable examples:

• Farmworker overtime changes—Lowering the overtime threshold for farmworkers strains smaller farms financially and reduces competitiveness.

• Workers’ rights legislation—New laws require employers to notify employees about unemployment insurance eligibility, prohibit requesting personal social media login information, and mandate informing applicants about welfare benefits.

• Freelance Isn’t Free Act—This law mandates written contracts, timely payment, and protection from retaliation for freelancers, adding administrative and legal burdens on businesses.

• Paid safe and sick leave law—This law mandates paid sick leave for employees, increasing operational costs for enterprises and greatly affecting small business owners.

New York City is now viewed as a partisan battleground and a haven for big government. As a leading financial center, the city depends on its image as a stable and fair place for businesses to operate. Due to the ongoing political and antibusiness turmoil, New York-based entities are relocating. I expect international entities to follow suit, moving to cities with greater legal and regulatory stability, such as London or Singapore.

Defenders of New York’s lawfare and regulatory system argue that robust enforcement of the law, regardless of political affiliations, is necessary to maintain integrity and accountability. But, in reality, New York is mimicking California’s decline, only hitting harder and moving faster.

New York officials contend that high-profile cases against powerful individuals and corporations demonstrate that no one is above the law. This is hardly the case, because legal processes must be impartial and free from political influence to be credible. Any hint of bias or partisanship undermines these efforts. Good luck going forward, New York City. There is no quick fix to this disaster.