Informal Gems

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Rosalind McLymontIf imitation is the best form of flattery, then the jobless immigrants who introduced dollar vans to U.S. commerce are due for some puffing up. So, too, does the informal economy, where dollar van-type “popular entrepreneurship” thrives.

As of this month, New York City bus drivers will run dollar vans in the borough of Brooklyn, with the blessing of the Metropolitan Transportation Authority, the Taxi and Limousine Commission and the Transport Workers Union. These are drivers who were laid off when the city eliminated bus routes in June in an attempt to close the MTA’s nearly $800 million budget gap. TWU Local 100, which represents 500 laid-off bus drivers and mechanics, says the drivers will earn union wages, $24 to $26 an hour, plus benefits.

A Caribbean import, the original dollar vans are a vibrant sector of the city’s informal economy. They have been a staple in Caribbean communities in Brooklyn, Queens and the Bronx since the 1980s, when MTA fares were $1. They kept their fare at $1 even when city fares hit $1.50 in 1995. The name stuck, although the vans now charge $2 per ride against the city’s $2.25. The majority of them unlicensed, and all of them pocketing every penny they snatch from the city, they are the bane of the MTA, TLC, TWU and the New York Police Department. 

Now, with tens of thousands of bus riders literally left on the street, the city has eaten crow and hijacked the dollar van concept. It ran off the enterprising few who jumped in to fill the bus-vacated void, and this month will roll out a TLC-approved Group Ride Vehicle Pilot Program on five of the defunct routes in Brooklyn and Queens. It’s bringing in buses that can seat 20 people — the original dollar vans seat on average 10 — and will charge the same $2 that the original vans charge. 

The union claimed from the outset that the program is illegal and an insult to the city’s transit workers, and filed a lawsuit to have it done away with. But no sooner had the TLC begun to solicit applications from van companies for the program, than the union set up a nonprofit company, TWU Express, and applied for and won a special license to provide service on one of the routes. It’s charging riders $1. The union also applied for permission to run vans along the remaining four routes in the program, but at presstime the TLC had not issued a decision. 

Lawmakers and city administrators who scoff that the informal economy is marginal, with no bearing on its formal counterpart, should heed the lesson of the dollar vans and the Western Hemisphere’s largest public transportation system. The size of the U.S. informal economy in no way comes close to that of, say, Georgia, which, at 67.3 percent topped a 2005 list of countries with the highest ratio of revenue generated by the informal economy to the overall economy. Bolivia, Panama, Azerbaijan, Peru rounded out the top five on the list.

While the United States ranked at the bottom of the list, with its informal economy accounting for just 9 percent of gross domestic product, that figure has been rising — it was 8.6 percent in 1999 — and likely will continue to rise as the formal economy remains in the doldrums and unemployment skyrockets. With the informal economy’s potential for significant job creation and income generation, who knows what other gems cash-strapped, recession-battered municipalities may find there. If, of course, they don’t mind eating some crow.