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Commentary By Joshua Hardman

A Possible Win for Golden State Street Vendors

Economics, Economics Employment, Regulatory Policy

A new California bill (SB 946) would end many regulations that govern sidewalk vending throughout the state. Liberalization of California’s sidewalks would benefit consumers and sellers alike, because vendors would be able to offer more goods and consumers would be able to purchase them.

The losers would be brick-and-mortar shops, which are objecting to the bill. San Francisco businesses already have to contend with one of the highest minimum wages in the country, and many have to either hire fewer workers or raise prices. Because of this, demand has increased for alternative sources of employment and merchandise. Street vending provides both. It is not the fault of established business owners that San Francisco voters approved the recent minimum wage hikes, but the city government should let its citizens adjust to the new conditions.

As it stands, San Francisco limits competition with its vendor licensure program. The city’s police department admitted that “restrictions on legal peddler and pushcart-peddler locations are severe and should be carefully considered prior to submitting an application.” Restrictions include nine specific provisions about the location and size of a vendor’s operation, down to the inch.

The licensure program limits competition by requiring potential vendors to file letters-of-intent differentiating themselves from brick-and-mortar shops. New vendors must show that the products they wish to sell are not the same “type” of product sold at established businesses within two blocks or 600 feet.

However, what constitutes a similar type of product is left up to individual administrators. Potential vendors cannot predict how administrators will act, especially if brick-and-mortar stores seek to influence the process, further cautioning applicants.

License applicants must also consider that fees to obtain a license, which exceed $700, are non-refundable in the event of a rejected application. Many vendors are deterred from applying. In addition, customers have fewer choices, and the city loses licensing revenue.

Fewer than 10 new street-vending applications were filed with the San Francisco Police Department last year. With so few applications being filed, it is likely that some vendors are choosing to sell their goods without a license. Others may change their minds about starting a vending business. It is difficult to measure these effects, so the real costs of these regulations are understated.

Most importantly, it should not be an administrator’s job to filter the market in this way, no matter how forgiving the filter might be. San Francisco is justified in having a licensure program for street vending to ensure public safety, but competition (and community animus) does not threaten public safety. SB 946 would promote entrepreneurship by forbidding cities from making economic competition and community animus objective public concerns.

The San Francisco Planning and Police Departments have given two primary reasons for vendor restrictions. The city claims that it must maintain the character and purpose of distinct areas in San Francisco. While the city does have a reasonable prerogative to regulate food trucks to prevent unexpected traffic, this central-planning mentality should not apply to simple set-ups such as push-carts in plazas, parks, and sidewalks. City governments should not be deciding which districts will be bustling. A city is not a theme park with variously-themed zones, and its residents are not robotic attractions to be allocated throughout the city.

The city’s second reason for its restrictions is to protect established businesses from competition. A police officer in charge of the licensure process informed me that it is “unfair” if a person is selling belts in front of a store that also sells belts because brick-and-mortar shops have a high overhead. It is curious that the letter-of-intent restriction covers two blocks or 600 feet, and not the immediate purview of a shop’s entrance. To help small businesses, the city should focus on lowering fees for all businesses, including eliminating its misguided high minimum wage, and not just for the attractive few.

The city’s contention of fairness does not account for the realities of competition. While a vendor’s license fees are less than those of a small business, an established shop has its own advantages. For example, shoppers may trust the overall quality of the shop’s products, or they might appreciate a wider selection of products.

One could attempt a pros and cons list of the two types of enterprises to determine what should be supported, but it is impossible to predict all the ways people may wish to spend their own money. Cities such as San Francisco should not concern themselves so much with choosing favorites and constraining consumers’ choices.

No matter how great the current plethora of choices and means of purchase for consumers, it would be short-sighted to dismiss vending regulations as a trivial issue. Street vending has been a valuable source of income for thousands of Californians. As many as 50,000 street vendors operate in Los Angeles County alone, for example. Scaling back these restrictions would allow vendors to act more like established businesses by freeing up their options on how best to serve their customers.

Positive press coverage and Democratic sponsorship of the bill give SB 946 a good chance of passage.  The State Senator that introduced the legislation, Democrat Ricardo Lara, can appeal to progressive priorities such as preventing deportations as well as to those most concerned about freedom to shop.

The bill in its current form is not perfect, but repealing regulations shielding established businesses from street vendors would provide significant benefits. One subsection within the bill may give cities enough legal room to renew certain regulations, but the bill is a step in the right direction. It would give consumers more choices and sellers, many of them lower-income, a path to a higher standard of living. 

Joshua Hardman is a contributor to Economics 21

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