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Wednesday, October 26, 2011

The Battle to Save American Street Vending

Vending is not merely work, but a way of life. Now that way of life is being threatened by an government-operated monopoly.

Larry Miller and Stanley Hambrick are classic American entrepreneurs. Both men started their businesses from scratch, and for more than 20 years they’ve been living their American Dreams.

They each own and operate popular vending stands outside Turner Field in Atlanta, serving baseball fans with tasty snacks, fully licensed Braves merchandise, parody shirts, and other goodies at steep discounts. They pay all the required and varied taxes on sales and business to city and state officials.

Little did they know that in July 2011 they would find themselves at the center of a major effort to vindicate the rights of street vendors nationwide.

Vending is not merely work, but a way of life.Street vending has long allowed entrepreneurs to provide for themselves and their families while satisfying customer demands and creating jobs. Together, Miller and Hambrick employ about a dozen people. They see vending not merely as work, but as a way of life. As Miller puts it: “I’ve been able to develop a lifestyle around vending. I’ve been able to purchase me a home and raise children and grandchildren.”

Hambrick takes pride that his business provides jobs, supports his entire family, and pays for his children’s education: “I employ six people, and they are depending on me, and I’m depending on them now. I’ve been able to put my kids through college working here and being successful.”

But a new law on the books in Atlanta is about to destroy both of these businesses, along with untold others throughout the city.

Unprecedented Monopoly

Vending is thousands of years old and has thrived in America since the 1600s.

By 2007, street-vending businesses throughout the country generated revenues in excess of $40 billion. Vendors in Atlanta alone brought nearly $250 million to their local economy.

The recession in 2008 tightened consumer wallets and forced many out of work, which led to a street-vending boom. And, sure enough, new regulations followed.

In 2009, Atlanta officials decided to create a citywide vending monopoly. The city signed off on a deal that hands over all vending on public property to a single multibillion-dollar corporation.

Atlanta Mayor Shirley Franklin signed an exclusive 20-year contract with a Chicago-based shopping-mall management company, General Growth Properties (GGP). While governments have long meddled with street vendors, this was the first time in American history that a city gave one company the “exclusive right to occupy and use all public property vending sites . . . including without limitation those vending sites currently occupied by public property vendors.”

The GGP contract calls for the construction of vending kiosks around Atlanta. As the kiosks are built the existing vendors are forced to move out or else start paying up to $20,000 annually in rent and fees to work out of a cramped GGP kiosk. Vendors used to paying $250 a year for their vending site must now hand over $500 to $1,600 every month for the privilege of working for the monopoly. This makes it all but impossible for most Atlanta vendors to stay in business.

Incoming monopoly-funded kiosks may as well be a coffin for vendors.This is not the first time Atlanta legislation has had the effect of destroying vending businesses. When Atlanta hosted the Olympics in 1996, then-mayor Bill Campbell gave a personal associate the right to sublease out vending spots throughout the city. Thousands of vendors were pushed away, and many lost their businesses and life savings.

The GGP kiosks now popping up in Atlanta are designed for advertising rather than selling merchandise. They are covered with ads on three sides, limiting visibility and function while making it difficult to attract and interact with customers.

Further, the new Atlanta law absurdly requires GGP to prohibit their vendors from competing with nearby bricks-and-mortar businesses. The contract stipulates that GGP lessees may only sell products that “complement and not compete with existing ‘bricks-and-mortar’ retailers in the areas of the vending units.”

The transition to kiosks is occurring in several phases. As soon as the first phase went up numerous vendors were forced into unemployment. The second phase includes the area around Turner Field, with construction scheduled to begin toward the end of this baseball season. Once phase two is implemented, Miller’s and Hambrick’s businesses will almost assuredly be destroyed.

On July 15, Miller came to work to find a spray-painted outline of a kiosk on the ground next to his vending location. At a press conference two weeks later he pointed to the outline and lamented, “That might as well be my coffin.”

Trouble in Texas

Unfortunately, Atlanta vendors are not alone. Consider Yvonne Castenada.

Castenada is a proud Texan. Born and raised in El Paso, she created a successful vending business that provides for her daughter and injured husband. Castenada is a food vendor. By 5 o’clock in the morning she is already up and getting her food ready for the day. She cooks her popular burritos in a nearby commercial kitchen, loads them into warming trays in her food truck, and sets out into the El Paso streets to serve her customers.

Her business was thriving until city officials passed a law that turned El Paso into a no-vending zone – for the sole purpose of protecting bricks-and-mortar restaurants from competition.

The protectionist regulations made it illegal for mobile food vendors like Castenada to operate within a thousand feet of any restaurant, convenience store, or grocer. The city even prohibited vendors from parking to await customers, forcing vendors instead to constantly drive around the city until a customer flagged them down. Once the customer was served, the vendors had to leave immediately.

Vendors caught violating the new law faced thousands of dollars in fines.

City officials harassed and cited Castenada on multiple occasions. She said, “It has gotten to the point where I’m concerned about being able to pay my bills. I find myself constantly looking over my shoulder just because I might be too close to a restaurant.”

A spokesperson for the El Paso Restaurant Association admitted in an interview by the local ABC affiliate that the law is purely protectionist: “We wanted this ordinance in place to help established restaurants keep their business.”

Even the city’s health inspector admitted before the El Paso city council that the law was put in place “to address concerns of the fixed food establishment. . . . [T]here’s not a health reason or a Texas food rule that I can find that justifies that.”

A National Problem, a Nationwide Initiative

In November 2010 The Economist wrote that “thanks to Twitter and the tough economy, some of the best food Americans eat may come from a food truck.” Predicting that the recessionary street-vending boom would lead to “the biggest shift in America’s culinary landscape in 2011,” the magazine noted that new regulations were popping up in several cities, and in others there was pressure to ease restrictions so vending could flourish.

A new national report released by the Institute for Justice (IJ), Streets of Dreams, evaluated the vending regulations in the 50 biggest cities in the United States. The results were disturbing. For instance:

• 33 cities have established no-vending zones, which often include potentially lucrative areas such as downtown or areas near sporting venues.

• 20 cities ban vendors from setting up near bricks-and-mortar businesses that sell the same or similar goods.

• 19 cities prohibit mobile vendors from staying in one spot, forcing them to spend much of their day moving instead of selling.

• 5 cities prevent mobile vendors from stopping and parking unless flagged by a customer.

In January, IJ launched its National Street Vending Initiative, creating a nationwide litigation and activism effort aimed at vindicating the right of street vendors to earn an honest living. The first targets were El Paso and Atlanta.

“I’m fighting for my American Dream.”

Thankfully, Castenada refused to let her competitors and their friends in government run her out of El Paso. Instead, in January she teamed up with other vendors and the Institute for Justice in a major federal lawsuit against the city. They argued that the vending regulations were anticompetitive and unconstitutional on the grounds that they violated the economic liberty of El Paso vendors.

In Chicago, it is illegal for vendors to put toppings on a hot dog from their cart, or to serve any food before 10 a.m.And just weeks after the suit was filed, the city backed down and repealed its protectionist regulations.

Miller and Hambrick joined the vending initiative in July. Together with IJ, they announced a lawsuit challenging Atlanta’s vending monopoly. The Wall Street Journal editorialized that “the Atlanta case is one more example of the way that governments tend to collude with private interests to benefit the powerful. We hope Atlanta’s new law is tossed out in court, so vendors like Messrs. Miller and Hambrick can get back to business.”

Hambrick clarified why he brought the lawsuit: “I’m fighting for my American Dream. And I’m fighting for the rights of other vendors and small businesses.”

Indeed, a victory by Miller and Hambrick could have national implications. A ruling in their favor would set a precedent for future challenges to restrictive vending laws in cities across the country.

Momentum is building. On August 17, vendors in Chicago joined forces with area law students and the IJ Clinic on Entrepreneurship in a grassroots street-vending campaign. The city has recently taken to ticketing and even arresting vendors simply for serving their customers. Regulations currently prohibit vendors from working within 200 feet of bricks-and-mortar restaurants. It’s also illegal for vendors to put toppings on a hot dog from their cart or serve any food before 10 a.m. The grassroots campaign seeks to overturn these needlessly restrictive regulations.

Judicial Engagement

Importantly, such vending laws exist throughout the country today because the courts fail to protect economic liberty. In the name of “judicial deference” judges have largely abdicated their responsibility to protect this right and enforce limits on government power. Without meaningful judicial supervision, laws favoring special interests have proliferated to an almost unimaginable extent.

For instance, IJ challenged a blatantly protectionist law in Louisiana that made it illegal to arrange and sell flowers without first obtaining permission from the government – the only law of its kind in the country. Aspiring florists were forced to pass a subjective licensing exam . . . that was graded by existing florists! Remarkably, a court upheld the law on the grounds that it was theoretically possible that without a flower cartel the public could be harmed by “infected dirt.”

Unless judges are engaged – taking our rights and the facts before them seriously – such abuses are inevitable. For vendors and other Americans to fully enjoy their right to earn a living, the courts must decide that protectionism is not a constitutional exercise of government power. Currently the federal circuit courts are split on this issue.

For their part, Miller and Hambrick are ready to fight all the way to the Supreme Court if that’s what it takes to vindicate the right to earn a living for entrepreneurs nationwide.

  • Bob is the Director of Media Relations for the Mercatus Center at George Mason University.