Los Angeles’ chief legislative analyst may have been hawking dodgy wares regarding the true predicament of many sidewalk merchants in the city. L.A.’s first vendor licensing laws, now approved in concept, show the city council has fallen short in the “buyer beware” department.

The draft laws could be partially based on faulty information, bringing distortions and unintended consequences.

The newly approved framework to decriminalize L.A.’s perambulating peddlers, which will be followed by licensing and regulation, rests on the thinking that sidewalk vendors are “micro-businessmen” driven by entrepreneurship.

But a growing body of evidence from across the state suggests many are indentured servants.

In 2011, USC’s Annenberg Media Center assigned journalist Esther Kang to shadow Los Angeles Police Department Investigator Frank Martinez.

Martinez was one of, at the time, six police officers among the Los Angeles Police Department’s sworn force of 9,863 to focus on street vending and the sale of counterfeit goods in the city. At the time of Kang’s assignment, Martinez was tasked with making a dent in the city’s estimated 50,000 illegal sidewalk vendors.

But according to Martinez in 2011, many are working for coyotes ­— the human smugglers who got them into the country — to repay loans of between $3,000 and $6,000 that financed their journey north. Payments are in the form of servitude and the collateral is the well-being of the worker’s family or threat of exposure to law enforcement.

Pablo Gonzales (his name was changed to protect him) may be typical. He is a sidewalk fruit salesman in San Francisco’s Excelsior District interviewed in 2012 by Zoe Corneli, a reporter with Bay Area National Public Radio-member station KALW.

“He was recruited to come here by a man he knew back home in Puebla, Mexico,” Corneli reported. “Now he and seven other young men all live together in San Jose with [a] boss, who picks up the fruit from in Watsonville.”

Gonzales told Corneli that the sellers stand alone on a different corner each day. They can’t leave their wares for bathroom breaks, so they try not to eat or drink. Corneli found they were paid about $250 to $300 a week.

Another investigative piece, published a year earlier, explains what happens to their paltry pay.

Once in the country, Sue Dremann of the Palo Alto Weekly reported: “The men are brought to houses in East Palo Alto and San Jose, where they live together. To pay off their debt, the men hand over all of their earnings to the coyotes until they are debt-free.”

Dremann found a connection to indentured street vendors in Redwood City, Sunnyvale, Santa Clara, San Mateo, San Jose and Palo Alto, among others.

By contrast, a wonky 2015 Economic Roundtable study views L.A.’s sidewalk vendors as agents of free enterprise, creating “jobs for workers in the upstream supplier chain, supporting still more sales and jobs when households of those workers spend their earnings.”

In actuality, the true agents of free enterprise — ethics and legality aside — may be the coyotes described by LAPD’s Martinez. The chief legislative analyst’s office, which studied the state of sidewalk vending for the city council beginning in 2014, doesn’t recognize indentured servitude as a factor.

In business terms, the coyotes operate a vertically integrated organization that includes recruitment and aggregation of workers, a layer of middle management, a supply chain for perishable goods, cash-in-transit operations, fleet vehicles, the transportation of workers to and from street corners, routine loan servicing and special loan servicing when a transaction goes south — literally, when a borrower is deported.

Hawkers repaying loans through servitude aren’t likely to be incentivized enough to be called entrepreneurs and will have no capital to re-invest. The City Council shouldn’t expect the market’s invisible hand to do the heavy lifting.

Bay Area police officers Dremann interviewed told her they hadn’t heard of the indentured servitude. The men tell the police many different stories, she said.

Without the facts, Los Angeles City Council members weren’t able to make an informed decision. They should order the Legislative Analyst’s Office to study the matter anew, even if it means analysts must go into the field and gain the vendors’ trust.

The new laws, which will likely include licensing fees and qualifying education, could actually create more and longer-serving captives in some cases. Analysts can start by interviewing Investigator Martinez.

Jeremy Bagott is a real estate appraiser for Bender Rosenthal, based in Burbank.

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