Report finds dot-com bust made S.F. no city for small businesses

The dot-com boom and bust left a legacy of overly subdivided industrial buildings no longer suited to the small- and medium-size businesses that employ many of The City’s least-educated workers, according to findings in a new report.

The 57-page report by the city-led Back Streets Businesses Advisory Board outlines the important role small businesses play, while painting a picture of the challenges faced by small businesses as they try to stay afloat in a city known for high taxes and limited space.

Other challenges identified in the report include a shortage of skilled laborers, high land costs, poor quality roads in industrial areas, a lack of mass transit for workers in industrial areas, and a failure by the businesses to collectively lobby for tax breaks and similar government incentives.

About 10,000 San Franciscan back-streets businesses — called that because they tend to keep low profiles and operate out of back streets — prepare food, fix cars, courier documents, sew uniforms and serve other important but little-noticed functions in the local economy, the report says.

They employ more than 70,000 people and pay about $55 million a year in payroll taxes to The City, which is one-fifth of the total collected, according to the report.

According to board chairman Peter Cohen, one of the biggest challenges faced by the businesses is their “benign neglect” at the hands of The City. He said San Francisco is starting to pay more attention to the businesses.

“Some of our recommendations have as much to do with creating an atmosphere of caring as it does about hard dollars,” Cohen said Tuesday during a discussion hosted by the San Francisco Planning and Urban Research Association.

On average, back-streets businesses pay employees about 10 percent less than other companies, according to the report, but they are important employers for workers who lack educational certifications.

Many back-streets businesses operate out of the southeastern part of The City. Supervisor Sophie Maxwell, whose district covers that area and who helped form the task force, said she would hold public hearings next month to discuss findings and recommendations in the report.

“We want to bring as much attention to it as we possibly can,” Maxwell told The Examiner. “Then we’re going to look at what we can legislate.”

jupton@examiner.com

 

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