Today I testified before the Chicago City Council’s Committee on License and Consumer Protection on why budding entrepreneurs should be allowed to sell fresh produce on private property and in public ways throughout the city. Unfortunately, the City Council didn’t agree with me and passed an ordinance that allows produce vending — but only in select areas, and only if a city bureaucrat decides that granting a license would serve the “best interest of the public.”

Read my testimony below — and if you live in Chicago, let your Alderman know that you want street vending of all kinds to be legal everywhere.

Testimony of Jacob Huebert, Associate Counsel,
Liberty Justice Center

Submitted to the Chicago City Council
Committee on License and Consumer Protection
May 30, 2012 

Madame Chair, members of the Committee, thank you for the opportunity to offer testimony here today. My name is Jacob Huebert, and I’m Associate Counsel with the Liberty Justice Center. We are a non-profit, non-partisan public-interest litigation center that seeks to ensure that the rights to earn a living and to start a business are available to everyone. You can learn more about our organization by visiting our website at libertyjusticecenter.org.

Starting a mobile food vending business can be a great way for a person who doesn’t have much capital to start his or her own business and earn a living. Therefore, if this Committee and the City government want to improve economic opportunity in Chicago, it should pass ordinances that make it easier to sell produce or anything else on private property or the City’s public ways.

The proposed ordinance that the Committee is considering today would do this to a limited extent, but it is far from ideal, and the City can and should go much further to provide opportunities to both would-be entrepreneurs and consumers in Chicago.

In particular, the ordinance’s requirement that vendors conduct at least 50 percent of their operations in areas “underserved by grocery stores” is not necessary and would in fact be counterproductive.

If produce merchants were free to sell wherever they choose, of course they would go to places where they believe they can make the most money. And it’s entirely possible that some produce merchants would choose to sell in areas that are underserved by grocery stores without being forced to do so by the City. After all, if there aren’t many grocery stores in an area, that means the produce merchant won’t have much competition, so he or she may be able to do a great business.

But of course it is also possible that some underserved areas wouldn’t be profitable for produce merchants, or at least wouldn’t be as profitable as other parts of the City would be.

If that’s the case, then what will be the effect of forcing merchants to spend 50 percent of their time in those less profitable (or unprofitable) places? Probably some people won’t bother to start a business as a produce merchant at all. And the people who do operate produce stands will make less money than they otherwise could.

On the surface, it might not seem so bad to force produce sellers to make less profit, but remember that produce stands aren’t operated by big corporations that make billions of dollars in profit every year; they’re operated by ordinary people, often of modest means, who are just trying to make a living. If you force them to make less profit — or make it unprofitable for them to be in business at all — you’re making it more difficult for them to support their families and move up the economic ladder.

In fact, many produce sellers may come from the very “underserved” areas that the proposed ordinance is so concerned about. If we want those areas and the people who live in them to prosper, then the best thing we can do is to give those people the ability to go out and make as much money as they can, whether that’s from selling to their neighbors or from selling to people in a different part of town.

Another effect of this requirement is that it doesn’t help people in underserved areas so much as it helps protect supermarkets in wealthier parts of town from competition. No doubt, established grocery stores don’t like the prospect of someone out on the street who doesn’t have the stores’ overhead costs from undercutting their prices. The proposed ordinance will help those grocery stores keep charging consumers higher prices by forcing vendors to spend half their time in other parts of town that the big corporate grocery stores don’t care about. If this Committee wants what’s best for both budding entrepreneurs and for consumers, then it should allow street vendors to operate everywhere and to compete against the grocery stores as much they want.

Another aspect of the proposed ordinance that is troubling is that it allows the Commissioner of Business Affairs and Consumer Protection to deny a permit to use the public way if he or she decides that it is “not in the best interest of the public.”

This language is too vague and subjective, and it creates too much uncertainty for would-be entrepreneurs. There is no way to know in advance whether the Commissioner will consider a produce stand to be in the “best interest of the public” in any given location, so this provision will likely discourage people from applying in the first place. People may not want to invest the resources when the application process is a gamble that turns on the personal opinion of one person in the City government.

Also, giving a single government official so much arbitrary power over these decisions invites abuse by future Commissioners who could decide whether a permit is or isn’t in the “best interest of the public” based on what will help their friends rather than on what will actually benefit the public. Eliminating this subjective component of the ordinance will avoid that problem and increase the public’s confidence that permits are granted or denied based on merit, not based on political considerations or other arbitrary factors.

In addition, this language gives the Commissioner so much arbitrary power that the ordinance may be subject to a constitutional challenge in the courts as a violation of substantive due process of law.

To avoid these problems, the City should use only objective criteria in determining who will receive a public way use permit to operate a produce stand. That way, someone who wants to start a business can see what the criteria are and be confident that if he or she satisfies them, then he or she will receive a permit.

In conclusion, if this Committee wants to maximize economic opportunity and do what’s best for consumers in the City of Chicago, it should pass the proposed ordinance — but only after making these important changes.