By Jim Bliesner
The informal economy forms a major portion of the day to day economic life of most City Heights residents. It is very visible throughout the neighborhood. Frequent and constant “yard sales” appear daily but more often on weekends. Fruit vendors appear at random locations with everything from oranges, mangos, watermelons to fresh boxes of papaya. Soccer games are sites for icy cones, fruit, and in some cases hot food.
Food vendors circle the soccer field. When school lets out at the Adult Education Building the food is ready. Periodically tamale vendors wander down the street, followed by hand built furniture salesmen in big pickup trucks filled with tables and chairs. Rather than a food truck one may find a push cart parked outside the bars at midnight. Garages serve as sewing factories while kitchens cook tamales, various specialty dishes for local restaurants. There are two full blown Nicaraguan restaurants in someone’s living rooms and yard known only to the special invitees and guests.
The yard man hook up is inevitable when someone does a good job and the fair and effective mechanic has more business than he or she can handle without an advertising budget. Business cards appear overnight in windshields or driver side car windows or hang randomly from fence posts. Renters make a spare room and rent to a family member or friend to help cover the rent.
The informal economy is alive and well in City Heights.
Eighty seven percent (87%) of people in City Heights buy food and clothing outside the supermarket and big box stores according to a new study commissioned by the City Heights Community Development Corporation and the Ford Foundation. They are consumers engaged in the “informal economy” and most of them are low income and need to use the resources of the informal marketplace to survive.
Over 70% of the respondents had incomes below $1500 a month. Car repairs, clothes, food, personal grooming, electronics, home furnishings, maintenance and repairs were just a few of the types of informal business thriving throughout the neighborhood. While some resident groups oppose the informal economy the survey showed that about 91% of survey respondents agree that the informal economy is an important part of their community. 65.3 % of the respondents purchase food from a push cart vendor from time to time. 83.5% agree that it is useful to them and their families for financial survival.
According to Elana Cruz, the Director of the La Maestra Micro Credit program “the informal economy thrives in immigrant and low income communities because people need it to survive. It is the great motivator and a necessity.”
Not only do residents consume in the informal economy they actively work there. 94.2% said they were interested in owning their own business and growing their small informal business into a “formal business”. They are budding entrepreneurs.
Yet most do not know or avail themselves of the non profits that focus on helping businesses grow. While 94.2% of all respondents were interested in owning their own businesses they do not do so because of a lack of money (41%), time (29%), excess regulation (29%) and need for additional training (40.6%).
Organizations such as La Maestra Clinic and the International Rescue Committee provide credit and technical assistance to budding entrepreneurs, most of whom are engaged in informal businesses. These organizations were compared to similar efforts nationwide and found to rank as one of the “best practice” models.
According to Ms Cruz one of the major informal economy businesses is credit. “People bring it with them and it exists across the globe. In Mexico they call it “Cundidos”. In Korea it is called “Kye” and in China “Hui” and Africa “Susu”. It is group lending, for example twelve people who trust each other because the lending is based in trust, each put in $100 per week. They draw numbers to see in what order and each week one person has $1200 to meet their large expense, no interest.”
Her program holds classes in City Heights (as well as Vista, Escondido, El Cajon and Chula Vista) designed to assist informal businesses make the transition to the formal economy. They provide trust based loans as well as financial education on how to run a business, get licenses and pay taxes.
”More than 560 students since 2005 have participated with many now managing prosperous formal businesses throughout San Diego.”
Cindi Fargo, Director of the City Heights CDC “Walk and Shop” program that focuses on formal business development says, “It’s only natural that there would be many informal businesses in City Heights because many of the immigrant populations come from countries where the marketplace is dominated by informal businesses. We had been doing research on formal businesses, types and locations and noticed that there are as many businesses in the residential areas as on the commercial strips
This suggested that there was even a more intense business environment below the licensed ones so we asked Ford to help us analyze this phenomenon with a view toward developing ways to grow the underground. Harnessing the entrepreneurial spirit of the residents and developing it becomes a valuable economic development strategy for the community which faces high levels of unemployment, low incomes, high cost of living and housing, a variety of cultural and language barriers which restrict access to more mainstream employment.”
The researchers recommended a number of possible strategies starting with support for the programs already beginning to address this opportunity, La Maestra Clinic and the International Rescue Committee.
Second it is suggested that an “enterprise zone” be defined and authorized by City Council action to “legalize” informal businesses especially push carts, and develop a community level effort to grow them. For example the cost of getting a incense to operate a push cart is over $5,000 and requires that to stay stationery and attached to an existing business. The study also recommends a live work overlay zone that in certain areas would legalize the businesses operating out of garages and backyards.
The research was implemented by Mirle Bussell PhD and the author of this article (Jim Bliesner M.A.) who teach in the Urban Studies Department at UCSD and designed a special research class for senior level students. Shelby Cramton, Marina Espinoza, Jorge Hernanadez (who grew up in City Heights), Yada Khoongumjorn, Erika Lam, Katie Pope, Bryan Shiang and David Ward worked as Research Assistants for the Center for Urban Economics and Design during the class. The students did an exhaustive literature search and then designed a multi page questionnaire. They stood outside
Vin Dong Supermarket, at the Farmers Market, met with residents of area apartment complexes and surveyed an entrepreneur’s class at La Maestra Clinic to get the survey completed in strict accordance with research requirements.
The 104 respondents mirrored the ethnic makeup of the neighborhood and many came from homes that speak at least two languages. The research was unique among other work done nationally in that little has been done about communities with multiple immigrant groups.