Testimony: Formalizing the Street Vending Industry in Large Cities
Irene LewDebipriya Chatterjee
Our names are Irene Lew and Debipriya Chatterjee, and we are researchers at the Community Service Society of New York (CSS), a leading nonprofit organization that promotes economic opportunity for New Yorkers. We use research, advocacy, and direct services to champion a more equitable city and state, including efforts to improve the economic mobility of low-wage workers and workers in nonstandard work arrangements. The Community Service Society is a member of the Street Vendor Justice Coalition, a group of 60-plus organizations working at the intersection of transportation, small business, immigrant and workers’ rights. We are submitting this testimony in support of a one-time allocation of $19 million in this year’s budget that would formalize the street vending industry in cities with a population of one million or more.
Street vendors are New York State’s smallest businesses, and they are an essential part of New York City’s cultural ecosystem and economy. Nearly 20,000 entrepreneurs, primarily immigrants, people of color, military veterans and women, are engaged in street vending, many existing as part of a shadow economy of workers unable to acquire necessary business licensing to legitimize their business.
For decades, there has been an arbitrary cap on general merchandise licenses and mobile food vendor permits available to street vendors, making it impossible for anyone to become a legal street vendor. There are currently only 853 licenses available for non-veteran vendors who sell general merchandise, with a waitlist of 12,000 New Yorkers. The demand for general vendor licenses is so large, the waitlist itself has been closed for applications for nearly a decade. As of 2016, there were 5,884 individuals on the waitlist to acquire a mobile food vendor permit. That waitlist has also been closed to new applications since 2007. This has forced would-be vendor entrepreneurs to either rent an expensive permit for up to $25,000 on the underground market or vend without a permit, facing steep fines, harassment, property confiscation and even arrest. This punitive system traps vendors in a cycle of debt, rather than supporting legitimate economic activity that is so desperately needed to revitalize New York’s economy.
We urge the state legislature to include a one-time allocation of $19 million in this year’s budget to formalize the street vending industry in cities with a population of one million. This allocation is supported by language in S1175 and A5081, and was included in the Black Puerto Rican Hispanic Asian Caucus People’s Budget. The legislation requires these micro-entrepreneurs to obtain licenses to operate their businesses within the existing local regulatory system, effectively ending unregulated street vending, and removing the currently insurmountable barrier to enter the industry. The allocation will ensure appropriate oversight and outreach associated with the program in New York City.
As advocates who have supported efforts to improve the economic mobility of low-wage workers and workers in nonstandard work arrangements, we believe that legalizing the street vending industry is necessary to helping New York recover from the devastating economic impact of the COVID-19 pandemic. Given that street vendors are primarily immigrant New Yorkers—hailing from 60 different countries—the formalization of the street vendor industry is critical to promoting an equitable and inclusive recovery that lifts up all workers. Not only will legalization help street vendors recover from COVID by bringing their business into the formal economy, but it will generate millions of dollars in revenue for both the city and the state, tens of thousands of jobs and small business opportunities.
Governor Hochul’s Executive Budget proposed $1 billion of relief for small businesses, including one- time grants and tax incentives designed to revitalize small businesses and ensure they survive the pandemic. Because of the limited number of licenses in New York City, however, many vendors selling food, produce, and goods don’t qualify for the relief outlined in the Governor’s budget—just as they were left out of relief throughout the pandemic due to their inability to prove business ownership or conventional employment. More than two-thirds of vendors surveyed by the Street Vendor Project in 2021 said that they are in debt, compared to only 9 percent before the pandemic hit. On top of this, many vendors failed to receive other critical pandemic relief like the federal stimulus payments or unemployment benefits, although they lost most or nearly all their income in the first year of the pandemic.[1]
Once the program is fully implemented, the annual revenue will far outweigh the cost at both the state and city levels. New York City will bear the initial upfront costs of effectively implementing the program, but these costs will be recouped at both the state and the city levels through money raised from the issuance of licenses and permits, and sales tax revenue. New York State stands to gain annually between $25-$33 million in revenue from sales tax revenue should all vendors currently on the waitlist apply for a general vendor license. At the low end, the State would see an additional $25 million in sales tax revenue, based on an estimate that corresponds to a post-pandemic economy. However, at the higher end, the State could receive an additional of $33 million in revenue, based on an estimate that corresponds to a higher intensity of business activity from before the pandemic. At the city level, the net impact to New York City if all general merchandise and food vendors on the current waitlist, would be in the range of $17 to 26 million, corresponding to post-pandemic and pre-pandemic economies.
An allocation of just $19 million in this year’s budget would help fix a broken and exploitative system that is criminalizing valued community members and aspiring entrepreneurs. To help accelerate an inclusive recovery in New York, it is the responsibility of the state to help cities effectively regulate the street vending industry, support good jobs for New Yorkers, and increase sales tax revenue. In conclusion, we request that both chambers of the legislature allocate $19 million in funding and include legislative language in other one-house budget bills and advocate for its inclusion in the final state budget to formalize the street vending industry.
Notes
1. Estimates are based on CSS analysis of the Street Vendor Survey administered by the Street Vendor Coalition during the summer of 2021. For more information on the survey, please reach out to Carina Kaufman-Gutierrez, Deputy Director of Street Vendor Project, at ckgutierrez@urbanjustice.org. For information on the estimates and analysis, please reach out to Debipriya Chatterjee, Senior Economist, Community Service Society of New York, at dchatterjee@cssny.org.