Report shows small business owners in NYS less optimistic about the economy. Taxes, inflation, labor costs and competition from larger businesses are major concerns right now, they say
By Aaron Gifford
Owners of mom-and-pop businesses in New York state have been less optimistic lately than their peers in other parts of the country, a recent report indicates.
The National Federation of Independent Business (NFIB), based on a survey of 11,000 of its members in the Empire State, reported that taxes, inflation, labor costs and competition from larger businesses are major concerns right now.
“Indeed, while taxes are a major problem in New York and the United States overall, New York small businesses notably are struggling more with the state’s onerous, multi-level tax burden,” Ashley Ranslow, NFIB’s director for New York state, said in the July report.
Compared with surveys of business owners in other states, far fewer New York respondents rated their businesses as in excellent or good health. The report also said labor costs here are about 25% higher than the national average and are the “single most important problem” facing businesses.
One respondent to the New York-specific survey complained that too much red tape, taxes and laws that restrict high-yielding companies have stifled their operation’s growth.
Others said high disability and workers’ compensation insurance costs, alarming increases in utility rates and excessive building regulations are discouraging.
Statewide, New York has a gross domestic product of $2.53 trillion (third in the nation, followed by Texas, $2.90 trillion; and California, $4.25 trillion), a per capita income of $90,500 (sixth) and an unemployment rate of 4.6% (34th). There are 2.4 million small businesses that employ 3.9 million people.
“New York state boasts one of the largest, wealthiest and most diverse cities in the world — and that’s still only about half the state’s population,” the report said.
“In other words, the state is both its iconic city and so much more — geographically, demographically, economically. But New York is not without its challenges, challenges that include notably high taxes and other weaknesses that impact the small business environment,” it said.
The report includes an optimism index that compares responses from New York (NFIB) members with those of their peers in other states across several categories. This ranges from plans to increase employment to expectations for higher sales, to plans to increase inventory or expand. The scores for Empire State business owners were lower in most categories, but they did score higher than the national average in noting that they have current employment openings, and that they are hopeful that the economy will improve.
“The metrics so far paint a picture of a state with a series of challenges for small businesses, from a slightly below national average Optimism Index to a more seriously below national business health to very substantially below national Employment Index. What is going on with businesses that are creating these differences?” the report stated.
In Central New York, the regional labor force comprises nearly 398,000 workers. The median household income here is $71,463, and the gross domestic product for the region last year totaled $61.3 billion, according to the CenterState CEO economic development and research organization.
About half of the region’s labor force works for small and mid-sized businesses, although the number of people employed in that sector has decreased by 7% since 2010, according to CenterState’s 2026 economic forecast report.
“While record-high employment in large-scale enterprises provides a strong foundation for Central New York,” the report says, “the long-term health of communities depends on a thriving small business sector to serve as a stabilizer.”
Area employers identify several barriers to Central New York’s anticipated growth, including lack of specialized or skilled workers, government regulations, unaffordable housing options and long-term construction disruptions.
In the city of Syracuse, the number of jobs in retail trade decreased by 1,500 or 4.7% between July 2025 and this past July. By contrast, the number of jobs in the leisure and hospitality sector increased by 2.5% or 700 jobs, in the same annual period, according to the New York State Department of Labor.
Still, there’s plenty of interest for new businesses across Central New York.
U.S. Census figures show that the number of applications for new businesses in all four counties increased significantly in the past 20 years. In Cayuga County, there were 324 applications in 2005 compared to 470 last year. In Madison County, the number increased from 385 to 480; Onondaga County, from 2411 to 4132; and Oswego County, from 553 to 836.
Downtown Cazenovia is exemplary of Madison County’s trend: In the past year, the village welcomed a bait shop, a thrift store, a vitamin infusion center, a pizzeria, a Pilates studio and an Italian restaurant. A candy store is scheduled to open on the main drag in the months ahead.
Oswego’s list of interesting new businesses in the past year includes a bubble tea shop, a hot dog eatery in Fulton, a specialty grocery store that features New York state products in Mexico, a beauty and esthetics studio in Hannibal and a hardware and farm supply store in Sandy Creek.
In Onondaga County, the Liverpool area has also enjoyed a steady stream of new shops and eateries in recent years. That suburban community is unique in that, unlike neighboring communities, most of the restaurants are family-owned and not part of a national chain.
Megan Wilmot, executive director of the Greater Liverpool Chamber of Commerce, said independent business owners in her community maintain a strong sense of pride in holding their own against national companies. The chamber helps boost morale with red carpet events, ribbon cuttings, coffee hours and five-year anniversary celebrations for participating businesses.
“We have built such a strong community,” Wilmot said. “Everyone in this business community encourages each other to shop local. Everyone just wants to see each other succeed.”
In Syracuse, the downtown retail occupancy rate last year was about 82%, a slight improvement from 2024, according to the Downtown Syracuse Committee’s most recent annual report. Buildings with the largest amount of vacant space included The Galleries, One Park Place, and Equitable Towers, though not all of those spaces are designated for retail use.
New businesses that opened in downtown Syracuse last year: Better with Time Clothing, Dakshin Curry & Biriyani, Havana Tattoo Society, Milano Bean Café, Miss Daisy, Pausa Coffee, Sweets for Babe, The Society CNY and Yafah Beauty Studio.
The Destiny USA mall’s occupancy rate decreased from 80% in 2023 to 72% by the end of 2024, according to Integra Realty Resources. That leaves more than a quarter of the mall’s retail space vacant.
“Looking ahead, the retail market is expected to see minimal rent growth, with vacancy rates likely remaining stable in community and neighborhood centers but continuing to rise in enclosed malls,” Integra’s report said. “New construction activity is low and redevelopment plans for former malls like Shoppingtown and Great Northern are still in the planning stages. The proposed Micron chip plant may spur development, but challenges remain in finding co-developers for large-scale projects.”
Nationally, the U.S. Chamber of Commerce expects that small businesses will remain resilient and see their sales and revenues eventually improve.
That organization, in a recent national survey, found that 25% of small business owners expect the economy to improve in 2027, while 45% indicated that they plan to increase employment in the next 12 months. And 69% said they believe their small business is in good shape and 70% said they are comfortable with their current cash flow.
Thirty-one percent of small businesses reported raising their prices in July and 28% are planning to raise their prices within the next three to four months, the report said. Twelve percent indicated that this is a good time to expand their business.
“Small business owners voice optimism for future revenues and hiring,” the report said. “High costs continue to be a wet blanket on reinvestment.”
The NFIB reported in July that Main Street, despite gas price hikes, “is OK … for now.”
Its small business economics trend report said sales across the country have been strong compared to last year, but continued inflation and higher prices from mom-and-pop establishments are causing some “cracks” to show.
“If costs stay this high for much longer, reduced investment will have a tangible economic impact,” the report said. “The status quo is OK, but the outlook? The outlook is uncertain.”
