A crowd of about 250 nail salon owners, the vast majority of them Chinese immigrants, gathered in front of The New York Times headquarters in Manhattan yesterday morning. From behind a police barricade, they pointed up at the 52-story building and chanted, "New York Times, we need answers!"
The protesters held signs with statements like, "New York Times: Please Don't Lie," and "Broad generalizations = bad journalism."
At noon, they marched east through midtown, briefly stopping traffic on Sixth Avenue.
It was the third major nail salon industry protest in just five weeks.
Why are the demonstrators angry with The New York Times? In May, 32-year-old staff reporter Sarah Maslin Nir wrote a front-page series claiming "rampant exploitation" in the nail salon industry. The article alleged that manicurists working in shops in New York City and Long Island are paid shockingly low salaries—when they're paid at all.
The series prompted an immediate reaction from Gov. Andrew Cuomo (D-NY), who the day after the first installment appeared in print created a multi-agency inspection task force to crack down on nail salons. Through an emergency order, the governor later mandated that all nail salons purchase a "wage bond"—a form of insurance meant to give workers legal recourse to collect when owners are found guilty of underpayment.
Nail salon owners say that the Times' original coverage is filled with factual errors and broadly mischaracterized their industry. In July, Richard Bernstein, a former Times reporter whose wife owns two salons, published a scathing assessment of Nir's reporting in the online edition of The New York Review of Books titled "What the Times Got Wrong About Nail Salons."
After spending the last several weeks re-reporting aspects of Nir's story, I've found that Bernstein's article and the salon owners' complaints are valid. My appraisal of the Times' reporting will appear in three parts.
Yesterday, I looked at the Times' claim that nail salon workers are paid shockingly low salaries, which was based on misquotes, misconstrued evidence, and shoddy research. (Click here to read part one.) Tomorrow, I'll examine the Times' contention that working in nail salons causes cancer and miscarriages, which is contradicted by all the available evidence. (Click here to read part three.)
Today, in the second installment, I'll look at the effect that Cuomo's inspection task force is having on workers—in particular undocumented immigrants—and what the labor violations the state is issuing to salon owners really tell us about the industry.
Do the Labor Violations Substantiate the Times' Reporting?
On September 21, when protesters first gathered in front of the Times building to denounce her reporting, Nir tweeted a picture taken from a window in the building:
— Sarah Nir (@SarahMaslinNir) September 21, 2015
Nir's editors have also claimed that the labor violations found by the state task force show that they got the story correct. "[A]t last check, inspectors had issued nearly 1,800 violations after inspecting some 755 salons," Times editors wrote in a public response to Richard Bernstein. "In August, a newly created state multiagency nail salon task force inspected 182 salons and found 901 violations," noted the statement a Times spokesperson sent me after I approached Nir and her editors for interviews. (They declined my requests.)
So do those labor violations prove there's "rampant exploitation" in the nail salon industry? What these small business owners are really guilty of isn't underpaying their workers, but of failing to keep careful payroll records—partially at the behest of their employees—leaving them subject to the heads-I-win-tails-you-lose methodology of state labor inspectors.
To illustrate this point, I've posted a copy here of three violation letters issued by Cuomo's inspection task force. (The names of the businesses and their owners are obscured to protect their privacy.)
In the first two sample inspections, the total hours each employee worked weren't recorded. That's because the workers in these two salons were paid by the day—an industry norm that's also against the law. So the inspectors interviewed the workers, requesting that they estimate how many hours and days they put in each week. When the workers offered a range, the inspectors went with the highest numbers in the range and assumed they had worked that many hours and days every week over several years.
This assumption pushed the workers into overtime territory, which meant they were entitled to pay of 1.5 times their regular hourly rate. Since workers were paid by the day, again it was left to the inspectors to determine the regular hourly rate. They went with a number higher than the legal minimum wage, dramatically increasing the overtime rate.
These assumptions are what led the inspectors to determine that the salon owners were in violation for underpaying their workers. One salon owner was ordered to pay $47,128.01, another $20,901.94, and another $3,697.89.
Nail salons generally don't keep incomplete records because they're trying to hide that they're underpaying their employees. They keep incomplete records partially as a concession to their employees, who know that if all their income was carefully recorded, they could become ineligible for government benefits.
"They fear they might lose their Medicaid or food stamps," says Aiming Feng, an accountant and business consultant who works with both nail shops and their workers.
When boasting that the labor violations validate its claim that nail salon workers earn shockingly low pay, the Times also didn't mention that state inspectors don't count most tips. In one of the examples, this meant that they disregarded about 30 percent of total compensation.
The minimum wage in New York State is $8.75 an hour, but in industries that rely upon tips, the state Department of Labor requires a base hourly wage of at least $6.60 per hour. The state then considers the first $2.15 in hourly tips as part of an employee's compensation, but tips over and above $2.15 an hour aren't considered.
The third sample violation letter shows that a manicurist told an investigator that she earned $75 in base pay and $60 in tips for every 10-hour work day. That works out to a wage of $13.50 an hour, or $135 per day. But the state considered only the first $21.50 in daily tips; the remaining $38.50 wasn't counted. If it had been, the salon wouldn't have been fined and issued a violation.
"A Grinding Existence"?
There are nail salon workers who've sued their employers for underpayment of wages. Nir profiles a handful. Yet she never considered that the plaintiffs in these lawsuits could be acting in bad faith.
Nir introduces readers to Nora Cacho, an Ecuadorian immigrant who "initially saw the industry as her financial salvation, as do many other immigrants," but found that "what seems a way up usually gives way to a grinding existence." In 2013, Cacho participated in a class-action lawsuit against her employer, Envy Nails, for failing to pay minimum wage and overtime; Nir says that her pay worked out to "about $3 per hour" for an average work week of 66 hours.
A closer look at the details complicates that narrative. Cacho had an arrangement with her employer to be paid not by the hour, but by the job, with the first $2 going to the salon and the remainder split 50-50.
Given that a manicure cost about $10 in the two Manhattan shops where Cacho worked, and each manicure would have taken about 30 minutes to complete, Cacho would have earned $8 in base pay for every hour she was with a client. And that's a conservative estimate, assuming that Cacho never provided services like crystal tips, silk wraps, or spa treatments, which are the higher-margin, more pricey offerings that nail salons rely on for their profits.
Since she claims to have made just $3—Envy Nails did not keep careful records—Cacho must have been sitting idle for at least 60 percent of the time she was at work. This went on for four years. If anything, Cacho's experience sounds more dull than "grinding."
Cacho's remedy was to sue her employer. Nir seemingly never thought to ask Cacho why, before turning to the courts, she didn't consider finding a job at a salon with more foot traffic.
I posed that question to Lloyd Ambinder of the law firm Virginia & Ambinder, who's representing Cacho (and others) in the class-action lawsuit. It's a "good question" to which "I don't know the answer," he said. Ambinder added that the clients he represents tend to be "very unsophisticated" and incapable to acting in their own best interest. Ambinder said Cacho is very hard to track down, so I wouldn't be able to address the question to her directly.
Making Life Harder for Undocumented Immigrants
Nir frames her coverage as a story about nail salon owners exploiting workers—many of them recent immigrants with poor language skills, undocumented, and lacking in opportunities. The Times reporting inspired a state crackdown, which in turn had the unintended consequence of further limiting the opportunities of nail salon workers.
Before the Times series ran, the government mostly looked the other way and allowed salon owners to hire who they wanted. Business owners are required to fill out a federal I-9 form to verify that their employees have a legal right to work in the U.S., but the government rarely came by to check.
Assemblyman Ron Kim (D-District 40), who represents Flushing, Queens, where many nail salon workers reside, says he has received assurances from state officials that they're not penalizing nail salon owners who hire undocumented workers. But there's so much confusion, many nail salon owners have stopped hiring undocumented workers anyway as a precaution.
"If a worker is undocumented, they now feel uncomfortable using them on the floor," says Kim.
"There's no direction," said Connie, a Long Island-based salon owner who asked that I not include her full name. "One week they say that if they have a license, you're allowed to hire them, and then the second week they say that if they don't have a social security number and tax I.D. number, we're not allowed to hire them."
"We got so confused—yes or no?," she says.
"A lot of undocumented workers already working in the industry are afraid to come to work because of the inspections," says Feng.
Salon owners have also stopped hiring unlicensed workers, whether they're undocumented or not. By law, every manicurist working in New York State must complete 250 hours of training at a beauty school, which costs about $1,000, and then obtain a government-issued license. This is a barrier to entry, and some aspiring manicurists can't afford the time or tuition. There are some salon owners in the industry who, up until recently, were willing to hire them anyway because they were desperate for employees and the state rarely checked. Cuomo's task force changed that.
Kim sponsored a state law, passed in July, that attempted to remedy the situation. The bill made it legal for nail salons to hire workers as apprentices receiving on-the-job training. After a year, they're eligible for a state license without attending beauty school.
Few are utilizing the apprenticeship program. "It needs tweaking," Kim admits. Despite assurances to the contrary from state officials, Kim says he's hearing on the ground that when signing up for the program, applicants are being asked their citizenship status, which is scaring off many would-be apprentices.
Licensed workers legally working in the U.S. have also been hurt by the inspections. "Workers themselves prefer to be paid in cash, and it's not just at nail salons," says Kim. Salon owners have started recording every dollar that passes through their shops to avoid getting fined. The inspection task force has had "unintended consequences," he says.
The biggest victims, however, are people like Jing Ren, the main character in the Times series. Ren, 20, is undocumented, penniless, and "recently arrived from China." Instead of paying $1,000 for salon school, she signed on as a trainee at a shop in Long Island. By the end of the article, she's making $65 per day in base wages.
When weaving its cartoonish tale of evil bosses and oppressed workers, the Times never considers what would happen if all of the nail salons willing to hire Jing Ren disappeared. Would future immigrants like her be better or worse off?
That scenario is becoming a reality.
Tomorrow, I'll look at the second-installment in the Times' series, in which the paper lent its imprimatur to medical claims about nail salon workers that have no basis in systematic research. (Click here to read part three.)