City Journal

Howard Husock
Enterprising Van Drivers Collide with Regulation
Commuters in Queens and Brooklyn love their private van services, better than the public-sector alternative. Guess who hates them.
Winter 1996

One of his worries about government, I. F. Stone observed, lay in the fact that very few elected officials had to wait for a public bus. Times have changed: it may be more worrisome today that very few public officials in New York have waited for a private bus—or, at least, one of the hundreds of private vans, some legal but many illegal, that have sprung up to provide what their owners like to call “community transportationā€¯ along the main thoroughfares of Queens and Brooklyn, generally in black and Hispanic neighborhoods. The explosive growth of this small but visible segment of New York’s economy is both a window on the world of aspiring new generations of entrepreneurs and a parable about what government does, both purposefully and inadvertently, to quash their aspirations.

The community transportation industry has its roots in the 1980 public transit strike. Many New Yorkers adapted by donning sneakers and walking to work across the Brooklyn Bridge; others, mainly immigrants from the Caribbean, responded as entrepreneurs, buying vans and going into their own kinds of bus business. Commuters were introduced to a new transit option that many came to view as quicker and more reliable than public buses. Between 1981 and 1990, long after the settlement of the strike, the van business blossomed.

Vans lined up for regular riders at bus stops, shopping malls, and major subway stops, such as 161st Street and Jamaica Avenue in Jamaica Center. Vehicles run by firms such as Majestic Community Transport, Queens Van Plan, and Unique Van Lines offered service in the city’s notoriously inconvenient two-fare zones, where riders must take long bus rides to get to the subway system. The so-called dollar vans were a quarter cheaper than the then-$1.25 public bus fare. And though the vans were often old and dilapidated, and though the drivers were known to speed and weave in and out of traffic, riders viewed vans as a safer alternative in other respects. Van drivers accommodated single women returning home from work late at night by allowing them to wait safely inside the van—unlike public buses, whose doors were closed until departure time. Van drivers avoided drunken or disorderly passengers as well, again helping to ensure safety.

A visit to the van districts of Brooklyn and Queens finds an industry that is a routine part of life, particularly in minority neighborhoods. There are, in fact, virtually no white riders. The vans are a sort of open secret—few have signs indicating their destination. Riders simply know or might ask, upon boarding, “Is this a five?ā€¯—meaning: “Does this van ride along the route of the No. 5 bus?ā€¯ Although they are not supposed to do so, vans shadow the bus routes, dropping or picking up riders at any point along the way. The vans are comfortable, though when they get close to capacity (ranging from 12 to 20), a rider may have to climb over someone else to get to an empty seat. Most of the passengers are young, as are the drivers; on a recent trip from Flatbush station to Kings Plaza, my driver wore a baseball cap turned backward and displayed a picture of an infant on the dash. Music—in this case reggae, though more commonly black pop—played unobtrusively. Some vans have de facto bouncers to deal with troublemakers.

Statistics detail the significant van presence that one can't help but notice on a visit to African-American, Hispanic, or Caribbean Queens or Brooklyn. By the end of 1990, the Metropolitan Transportation Authority estimated that the vans of those two boroughs had taken away 16 percent of its business in southeast Queens alone. Some 2,400 vans were said to be serving 20,000 riders a day—a private mass transit system larger than all but a handful of public bus systems in the country. A report by the New York City Transit Authority, no less, found that “riders prefer vans because they are faster, less costly, and more comfortable than TA buses.ā€¯ The new $1.50 public transport fare—while the vans stick to their $1 tariff—will presumably not change such views.

If the vans provide a service to the public, they serve, too, as a path to upward mobility for their owner-operators, immigrants from Jamaica, Barbados, Guyana, Grenada, St. Kitts. They have started their own trade association—the Interborough Alliance for Community Transportation—describing themselves in their literature as “hardworking men and women, like the people who use our service. We are trying to provide for our families by offering a much-needed public service. We are trying desperately to stay off the public assistance rolls. We come from communities and traditions that value individual enterprise and effort and that work hard at being self-sufficient.ā€¯

Consider the story of Norman Harry, a Guyanese immigrant who, having a hard time getting work, borrowed $5,000 from a friend, bought a van, and began carrying passengers from Jamaica to Far Rockaway. As the owner of the Rockaway Commuter Line Inc., he now owns four vans and operates 16 others. “It is better than minimum wage, and you’re self-employed,ā€¯ he says. In fact, most drivers earn not much more than $20,000 a year; a few fleet owners, more than $30,000. The offices of major players in the industry are not much more than threadbare storefronts.

One might think that, in a city with a teeming welfare population, government would do whatever it could to encourage such a wave of self-employment. Instead, it has made such work progressively more difficult to undertake. When the van phenomenon began, it fell under existing state Department of Transportation regulations, which did provide a way, albeit a difficult one, for driver-owners to ply their trade legally. The requirements called for a special license and license plate, a physical exam, and insurance. To gain the right to pick up and discharge passengers on a given route, one had to present signatures from potential customers living more than a mile from an established public bus line. By 1990, some 500 vans owned by 97 operators had received legal permission to operate. Eleven owners of 100 vans had gone so far as to gain all legal certification, paint their vehicles in uniform colors, and list a phone number for complaints on the side of each van. That still left a majority in the underground economy, illegal but popular. Since the state DOT had but five agents enforcing its licensing regulations in all New York City, the illegals could operate with relative impunity.

In the summer of 1990, things began to change. The Transit Authority, losing an estimated $30 million to $50 million annually to the vans, began to compete actively. It tried to improve service and reduce fares. But it also sent lawyers to state hearings to oppose the granting of new van licenses, and it urged the state to crack down on illegal vans. Deputized city and transit police augmented those five state DOT inspectors. A wave of citations descended upon van drivers: from July 1990 to December 1991, they got hit with 6,500 state notices of violations, said to be for safety problems and carrying $3 million in fines. Failure to pay meant vans could be impounded, and many were. In addition, licensed, legitimate drivers got citations from the city for such offenses as stopping at bus stops for passengers: technically, even legal vans are authorized to take passengers only from a specific pickup point to a specific neighborhood for drop-off, with no stops en route. Between July 1990 and December 1991, 11,700 such city citations were issued on top of the 6,500 state tickets. Van drivers worry incessantly about “police and tickets, tickets and police.ā€¯ Getting stopped can mean getting slapped with a bunch of citations all at once, for responding to a hail on the street, for having insufficient insurance, for having no permit at all.

Today, policy toward the vans clearly lies within the city’s discretion. In October 1994, a tough new law with tough new enforcement mechanisms moved jurisdiction over “commuter vansā€¯ from the state to the city’s Taxi and Limousine Commission. License fees went way up: from a one-time license fee of $50 to an annual fee of $275 per van, plus $60 for each driver. The city’s commissioner of transportation alone would determine, and advise the Taxi and Limousine Commission, "whether the service proposed will be required by the present or future public convenience or necessity." Potential licensees had to pass a significant final hurdle—approval by the City Council Transportation Committee and the council as a whole. And for the first time, improperly licensed vans could be confiscated for a first offense.

Since passage of the law, exactly two van lines have won licenses from the city. In some places, a modus vivendi continues. Some police do assist van drivers, arranging queues and working to keep traffic flowing. At the same time, drivers live in fear of police who will cite them for cruising near bus stops or for minor safety infractions that could lead to the loss of their vehicles and livelihood.

“When you invest $30,000 in equipment and you have to run and hide, it just doesn’t make sense,ā€¯ says Hector Ricketts, owner of Queens Van Plan and head of the Interborough Alliance for Community Transportation. “You’re part of a $50 million industry, and you’re running like a crook.ā€¯ Indeed, in August 1992 one Brooklyn van driver, a Jamaican immigrant, was arrested for driving with a suspended license. He was allegedly thrown into a door at the police station during the arrest and is now paralyzed from the chest down. Officers have been indicted for assault.

Why is it that the “community transportationā€¯ industry, offering a service very much in demand, finds itself under siege? What broader themes can we glean from government’s response to the van phenomenon?

First, it is worth noting that neither the state law that had governed commuter vans nor the city law that has taken its place has anything to say about employment. In other words, in drafting occupational licensing and regulation laws, policy makers have not, historically, considered job creation among the factors that should concern them. This is true no matter what sort of occupational licensing or activity permit one is discussing. When New York limits its number of taxi medallions or food vendor licenses or community transports, it does so under statutes that do not mention any public need to encourage employment or entrepreneurship.

Clearly, it lies within government's purview to protect the public safety, to minimize traffic congestion, to require that those offering a public conveyance be of good character. But arguably, government has an interest, too, in seeing that as many citizens as possible are able to find legal employment.

As it stands, the law reflects no empathy with the entrepreneur, no presumption that his struggle is worth supporting. The goal of employment is nowhere invoked. There is public purpose here after all, as well as private: if the impulse toward legitimate business is thwarted, we risk inadvertently encouraging the low-income entrepreneur to take up the illegal and antisocial instead.

If maximizing the prospects for employment were to be considered along with other public purposes, regulations might change profoundly. One can imagine lower license fees or a publicly facilitated insurance pool. The system might even begin with the presumption that a prospective van owner has good cause to start a business, rather than requiring him to make the case for his plans in a bureaucratic setting before someone who, omnisciently, has the power to decide whether the public needs that service. Indeed, the lack of faith in the signaling mechanism of the market is striking. The taxi and limousine commissioner cannot anticipate all public needs—nor should he stand as a bulwark against entrepreneurs whose ideas may be misguided and who will lose money—or, conversely, might successfully challenge existing interests.

What about the behavior of the public sector competition? In this case, the competition is not only the Transit Authority but also the city's Department of Transportation, which franchises 15 private bus lines in Brooklyn, the Bronx, and Queens, seven of which receive $52 million in annual operating subsidies from the city (and additional state and federal operating subsidies as well). They are able to keep their franchise not because of the efficiency of their operation but because of the threat that they might go out of business—leaving the city without a guarantee of bus service on routes it feels it must cover, not least for political reasons.

One would have hoped that a public monopoly that loses money on virtually all its bus service would act differently, that it would respond with curiosity and interest toward the advent of private mass transit, perhaps seeing it as evidence that there might be ways to limit the need for public transit subsidies and to curtail overall Transit Authority employment. The vans offer a reason to examine the first principles of public transit operating subsidies. Do the vans lower costs by not serving the handicapped? (Answer: probably, but that doesn’t mean that large public buses are the only way to serve the handicapped.) Do they skim profitable routes while leaving the Transit Authority to serve unprofitable ones that can’t be dropped for political reasons? (Answer: probably not. The TA loses money on all its bus routes. But the fact that the vans serve so many rush-hour patrons means that the TA likely could minimize its need for extra capacity and manpower just for the peak travel times, were it to accept peaceful coexistence with the vans.)

Some combination of subsidized public transit and unsubsidized private transit would seem to offer hope for both improving the city's transit system and accommodating the ambitions of van owners and drivers. In fact, the TA, in January 1992, did issue a thoughtful, thorough internal report that considered such options as “withdrawal from markets where vans operate at a competitive advantageā€¯ and the “development of coordinated public-private bus service.ā€¯ The latter option, said the report, is "complex, involving new ways of doing business." Which may help explain why it was not pursued. It is difficult, to say the least, for huge agencies to take actions that threaten the vested interests of their own employees—especially when authority is divided, for historical, not logical, reasons, between an independent authority and the city, with its own bus franchise and subsidy operation.

Moving to acknowledge the vans—to accept and accelerate change—would have required great political will and adjustments in the structure and staffing of the city's transit operations. Given such obstacles, it is no wonder that the Transit Authority pursued instead another of the options outlined in its 1992 report, the option entitled “aggressive competition and enforcement.ā€¯ One aspect of that strategy strikes special fear into the hearts of van owners. They worry that if they operate a profitable, legal route, they will be at the mercy of the TA, which has the right to establish its own service along the same route, then move to have the van service permit revoked in light of the “adequacyā€¯ of the public service. It is worth noting that former Metropolitan Transit Authority chairman Robert Kiley, now president of the New York City Partnership, has endorsed just such an idea of a combined public-private bus system—and has despaired of the MTA’s ability to move it forward. It is government's difficulty in making incremental change that drives movements toward drastic change: defunding, devolution, privatization.

There is a tendency to look only for venal motives in all this. And indeed the present, heavily regulated system is clearly an invitation for public employed, unionized bus drivers to protect their positions via campaign contributions to regulators in a position to restrict private entry to the market—in this case, City Council members.

But it is worth remembering that regulations could not go on the books if they were aimed solely at discouraging enterprise and protecting politically well-connected interests. In part, regulations like those restricting vans reflect an appropriate social order and control that exists in tension with the spirit of enterprise. Balance is all: tipping too much toward the maintenance of order risks stifling enterprise.

Community transportation isn’t the only New York conflict between the government’s mandate to ensure order and an impulse, bubbling up from below, toward self-employment. On both 125th Street in Harlem and Jamaica Avenue in Queens, the city has cleared street vendors from the sidewalks because of the congestion they have caused and the competition they represent to taxpaying storefronts. But the city has, in effect, acknowledged that it's not a good idea to put such vendors out of business; instead, it has arranged for them to create an open-air market on previously-vacant lots or to move to indoor markets with space available. (See “New York Diarist,ā€¯ page 132.)

Selling food on the street is a similar issue, as is the presence of illegal commercial bodegas in residential zones. As with community transportation, the impulse to self-employment, given the extent of illegal enterprise and the coming limits on public assistance, is very much worth nurturing. Perhaps the question for public regulators ought not to be, “How better to enforce existing laws?ā€¯ but rather, “How to design regulations that best achieve a variety of public purposes, including the encouragement of self-employment?ā€¯

We would do well to keep in mind that the urban ecosystem supports myriad schemes and plans, many of which will die, but some of which will blossom into the important businesses of the next generation.

Small businesses, whether vans or food carts, might seem marginal, in terms of both their numbers and their impact. But they do have symbolic value: the nature of their regulation signals whether New York is a city that values enterprise and initiative. And, what's more, one can never tell what person doing what job will have what new idea that becomes an important generator of future employment. As Jane Jacobs has written: “Acute practical problems in cities often bear most heavily upon people lowest in the social hierarchies, and thus are noticed, and also often understood, by those people long before they are taken seriously by those who lead more sheltered lives. If people who do lowly work cannot add new work to it, serious practical problems that will ultimately affect everyone are apt to remain unsolved. A metropolitan economy, if it’s working well, is constantly transforming many poor people into middle-class people, many illiterates into skilled people, many greenhorns into competent citizens. Cities don't lure the middle class. They create it.ā€¯

Cities will do so only if we let them. Unless we consider regulation in the context of employment and adjust accordingly, they will not.

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