Some 10,000 “back-streets businesses” play an unobtrusive but vital role in keeping the San Francisco economy functioning smoothly. These are the little-noticed small and medium-size businesses that tend to operate out of back-street industrial buildings where the rents are relatively cheaper.
Those low-profile businesses provide a livelihood for many of The City’s least-educated workers — who prepare food, fix cars, sew clothing and perform other important functions that are a necessary support for the flashier elements of Bay Area commerce. The southeastern quadrant of The City — represented by Supervisor Sophie Maxwell — is home to many of these back-streets firms.
A city-led Back Streets Businesses Advisory Board that Maxwell helped form has just issued a report spotlighting just how badly San Francisco needs a thriving small-business sector; even though The City has done little to help these companies survive the challenges of a dauntingly anti-competitive environment known for high taxes and limited space.
The back-streets businesses historically receive minimal pampering from City Hall, despite employing more than 70,000 people and contributing one-fifth of The City’s payroll taxes — some $55 million per year. On average, back-streets businesses pay employees about 10 percent less than more established companies, but they are important employers for workers who lack educational certifications or job experience.
In neighboring Bay Area counties, not to mention more far-flung competitors, small businesses pay less taxes and lower rents, face notably less regulations and a less convoluted bureaucratic maze. Other obstacles identified in the task-force report include lack of suitable commercial and light industrial space, a shortage of skilled laborers, high land costs, difficult truck access in industrial areas and inadequate public transit for back-streets employees. In addition, The City’s struggling back-street businesses have rarely organized to lobby effectively for tax breaks and other government incentives.
According to Back Streets Businesses Advisory Board Chairman Peter Cohen, one of the most pervasive challenges faced by the hidden-away companies is their traditional “benign neglect” at the hands of City Hall. San Francisco government has rarely paid much attention to back-streets commerce except to pile on the restrictions and wring out more revenue.
The primary purpose of the advisory board and its inaugural report is to define the back-streets business sector as a distinct element of San Francisco commerce that makes important socio-economic contributions and deserves much greater government support. As board Chairman Cohen put it, “creating an atmosphere of caring” at City Hall must be a necessary precursor to obtaining hard-dollar legislation. It must become an ongoing city priority to enhance the competitiveness of invaluable back-street businesses that add so much to the local fabric.