Jodi Loomis, owner of Modify Hair Lounge on Stone Way in Wallingford, just signed a new four-year lease on February 1. Not great timing, obviously. A few weeks later, all non-essential businesses, including hair salons, were shut down on orders from the governor.
Nevertheless: "I'm responsible for my lease for the next four years. I have to pay my rent regardless of no income coming in right now," she said when I reached her by phone a few days ago. "If I could find someone to take over my lease, I could get out of my contract, but obviously in this case, no one's going to take over my lease."
Asked whether her landlord will give her a break on her rent, she said, "I'm waiting to hear if my landlord can help in any way." Mayor Jenny Durkan did announce a moratorium on evictions for small business, but even if a business is not evicted, overdue rent still accumulates and business owners are still responsible for it. "We can delay our payments but that doesn't mean we don't owe them. That will just mean we're in more debt in a couple months."
Loomis declined to say how much Modify's monthly rent is, but she did say that rents in Seattle range anywhere from $2,000 to $10,000 a month depending on size and location. That doesn't include federal taxes, state taxes, the water bill (but "hopefully that will go down significantly since we're not using water in the salon"), the electricity bill (which will hopefully go down now that the curling irons aren't on), and her insurance bill.
Some hair salons give their stylists a commission, but that's not how Modify works. Modify is made up of more experienced stylists who have already built up a book of business elsewhere. These stylists come to Modify and rent a chair from Loomis, and each chair is its own business. In a typical month, Loomis takes in $5,500 in "rent" from her stylists.
Because no one is allowed to cut hair right now, Loomis has been trying to figure out how to give her stylists a break on chair rental, while trying to figure out how she is going to pay Modify's rent to the landlord. And if she doesn't pay that rent to the landlord? "If they can't get that money from you then they can go after your personal assets."
Meaning, they could take her home. "We've had our house for about four and a half years," she says. "We live in Shoreline, that's all we could afford." By "we," she's referring to her husband, a trainer at Orange Theory Fitness, who's also just been laid off. On Sunday, he will go on unemployment. "So now we're looking at both people in our household out of work."
Until yesterday, independent contractors—for instance, the stylists who rent chairs from Loomis—were not covered by unemployment benefits, because they are technically businesses, not employees. But a law passed yesterday by Congress expanded unemployment benefits to independent contractors.
Nick Demerice, at the Washington State Employment Security Department, confirmed that "the new federal legislation is really designed to catch some of these folks who cannot qualify for traditional unemployment insurance."
Robin Salas, who's rented a chair at Modify for more than two years (and has been a stylist for 16 years in this state), was encouraged by Congress's actions yesterday. But she says that for her, being able to go on unemployment "may cover the bare minimum. You can tread water, maybe. Maybe. Having access to unemployment will pay our fixed costs. Fingers crossed the resources are enough to pay our fixed costs so we don't go into debt. I still won't be bringing income into my household." She and her husband have two kids.
Each stylist at Modify has to have a city license to practice business, a state license to practice business, a cosmetology license, and a salon license. Each of those things has rules and fees associated with it. It's a dizzying array of requirements just to be allowed to bring in money that the city and state will then tax. Though there is no personal income tax in Washington, the state makes up for that by charging a B&O tax on businesses like Modify and on each independent contractor who works there. "It's essentially an income tax for me, as a single operating person," Salas says.
On top of all that, Salas estimates that the cost of her doing business per month is $1,750. That includes her rent for the chair at Modify, the monthly credit card processing fee she pays, the monthly online-booking-software fee she pays, and a few days per month of childcare.
When I called Loomis to confirm all this, I expressed shock at the number of hoops individual stylists working within a salon like Modify have to jump through—the licensing and certifications alone. Loomis agreed it was nuts. "Every individual has to have all four of those things," she said. "Any other state I've lived in we've never had that many licenses and things to pay into. I consider myself a liberal person but I've never felt myself so conservative. When you own a small business it's a little different. But I'm not a conservative by any means."
As for not being able to make an income styling hair right now...
Why not reach out to clients and make private appointments and cut people's hair at their own homes?
"Because I don't want to lose my license," Salas said. "I had one person ask if I would do a home haircut, and the answer is just no. First of all, it's not legal—I don't have the license to cut someone's hair in their kitchen." That requires a whole other license.
She also doesn't want to help spread COVID-19 around. "It's not worth me going into someone's home. And I don't want to bring something home, or bring something to someone else. It doesn't do me any good to be sick even if I'm going to be okay [because I'm not in a high-risk group]. And it doesn't do the rest of the city any good for me to go out there and spread it."
Salas added, "I'm trying not to panic. Yet."
As for unemployment benefits having just become available for independent contractors like her, Salas pointed out that they weren't actually available yet. "At some point hopefully in the near future, I'll be able to apply for unemployment. It's not technically there yet for us to claim. It just comes down to how long it takes the state to work in those elements. So that's a relief to know I will be able to bring in some kind of income to cover my overhead for working."
But she reiterated that unemployment checks will not provide an income for her and her family. The most they will do is help her cover the costs of her monthly overhead as an independent contractor so that she has a business—a chair—to return to when this is all over.
Demerice, with the Washington State Employment Security Department, said that "it will take several weeks" for the program Congress enacted yesterday allowing for independent contractors like Salas to receive unemployment benefits "to get up and running."
Meanwhile, Loomis said yesterday she had finally heard back from Modify's landlord. "They're as stressed out as us," she said. "Their offer was pretty much a joke. Not sure what to do about that."
She negotiated with her landlord to shave ten percent off her rent for April and May. "Ten percent is not a huge amount. And I get it. They need to make their money too," Loomis said. "This is why we've taken things into our own hands."
Like many businesses facing financial hardship brought on by social distancing—including The Stranger—Modify is now asking for donations from the public.
"To say that things are challenging right now is an understatement," begins the ask on Modify's GoFundMe page, launched three days ago.
"We asked for $10," Loomis said. "Some people have paid $10, some people have paid $500. That's what we're doing to help us and to help the economy. This is to keep the place open to have a place to go back to, so we're not in the hole." This also means she can refrain from charging her stylists for their chairs during the next two months. "But that doesn't change the fact that we still don't have any income."
Loomis has been in this industry for 21 years. Contrary to the caricature some people have in their minds of business owners—that they are all wealthy, otherwise they would not be owning businesses—Loomis says her annual income does not reach six figures. "I don't make a huge living here. I do okay."
Asked about the GoFundMe, Loomis said: "I've been amazed by how many people are helping us in just the last three days."
Asked what would help small businesses like hers the most, she said: "I wish there were more resources that were not loans. All they're proposing for small businesses to get through is more debt."
Salas said that, financial worries aside, she really misses her clients. "It's really hard. I feel like most hair dressers are pretty extroverted people. Most of us are artists or musicians or are doing creative things. Your conversation changes every 45 minutes. There's so much activity. So to be at home and not have that? It's such a cool industry because it's a human touch, you know? It's just such an enriching career for me because I get so much out of the people. I miss being behind the chair because I miss the people so much."