The economics of small manicure/pedicure spas in NYC

December 27, 2012 9:42 PM

What are the economics of the tons of small manicure/pedicure spas and their employees in Manhattan? There are multiple places on many blocks, and when I pass them there always seems to be at least a dozen technicians in each, most of whom are just waiting for the next customer.

How are these stores and people making money with so much competition and what looks to be a lot of downtime for each employee? In my experience, this situation is common in many parts of Manhattan. Does anybody know what someone working there makes? (I know tips are a large percentage of their income.) I've done some research on this, but I feel that the information I'm seeing is for higher-end facilities.

posted by unionsquarepark to work & money (6 answers total)

Nail Salons and Human Trafficking
posted by mollymayhem at 10:02 PM on December 27, 2012 [6 favorites]

Many salons also do not employ the technicians, they are there "renting" the space as independent contractors. I have heard their working conditions compared to those of sharecroppers, often exploited and treated poorly. Many labor advocates believe that a large number of salon owners knowingly misclassify employees as independent contractors in order to exploit their employees.
posted by dottiechang at 12:09 AM on December 28, 2012

FWIW it's hard to be low-profile with a street-level storefront in Manhattan, so I have always assumed that the women in those nail bars are likely being compensated like crap through a system I assume is usurious, though not being sexually prostituted.
posted by DarlingBri at 9:02 AM on December 28, 2012 [1 favorite]

Not speaking to the human trafficking issue, but independent contractors (booth rent) versus employee is a big thing in the salon industry. Basically, as an employee you are subject to a set schedule, usually under a commission based payment system (X% of the service total, plus tips, plus commission on product sales). There are occasionally hourly wage positions, but usually not for stylists.

As an independent contractor, you rent the space at a monthly rate and in theory are your own business within the salon. You can set your own hours, charge your rates, and pay for the product you use in services. You also pay your own taxes. If you are an established stylist with a list of clients, there is a specific point where booth rent could make you more money than as a commissioned employee. This comes with risk, your booth rent is the same regardless of your income.

The issue arises in most booth rent people being treated as employees, with set schedules, rules of conduct, and - surprise! - the business does not pay your taxes. So the business avoids the tax burden, gets a set monthly income from the booth rent, and still treats the independent contractor as an employee.

It is tax avoidance. Cut and dried, but for the most part it goes under the radar in the salon industry.
posted by shinynewnick at 9:03 AM on December 28, 2012 [1 favorite]

I'm not certain how similar it might be in NYC vs here in California but there are also a lot of nail places here (probably 6-8 within walking distance of my suburban Northern California apartment). Recently one of the local salons was sued as part of an attempt on a class action lawsuit by some current and former employers over wage and labor violations. I'm not sure if this will work but here's a link to some of the cases: http://www.sanmateocourt.org/midx/strip.php?kase=9di9b - if you look at the filings you can really go down a rabbit-hole of information about how this place allegedly operates, which is probably not much different than others in the area here.

Mostly, there's a lot of sort of questionable practices: paying wages on a "day rate" that doesn't include overtime, fines for various infractions, some "fees" on credit card tips - all alleged though not really unproven. I think much of what goes on is sort of shady and exploitive as far as legal American business operations but in these cases not outright slavery (sex or otherwise). That isn't to say it doesn't happen but I think there's more shady accounting than anything.
posted by marylynn at 11:29 AM on December 30, 2012

Not sure if it's the same in New York, but in Southern California almost all nail shops are run by Vietnamese owners. There's clearly a huge demand for pedicures, so that's the main answer to your question. Asian businesses tend to work on a low profit high volume business model. So price comes down, more people can afford pedicures, demand goes up. You can see the same with foot massages. A few years ago they didn't exist here. Then suddenly there are tons of them and the pricing is ridiculously low and therefore attractive to more customers. That particular business seems to be run by Mainland Chinese owners rather than Vietnamese, but the same principle applies. And of course as others mentioned, there may be illegal immigration and employment practices involved as well.
posted by Dansaman at 10:19 PM on December 30, 2012