V.F.D. also appear to have been dependent on Ink Inc. in Stain'd-by-the-Sea, at least according to peripheral promotional materials, and that company is hardly squeaky-clean either. My reading is that the organisation was completely desperate and simply couldn't afford to go out of their way to put Sir out of business (or look elsewhere for their ink). Quite frankly, I suspect that there are many tycoons like Sir in the Averse, petty dictators of a sort, and it wasn't necessarily within V.F.D.'s power to stop them; they seem to be more focussed on the mysterious, helping only when they can, which is not always.
As for the police, the authorities in the Averse are likely ruled by incompetence and corruption, occasionally enforcing justice but probably somewhat limited in their scope. Sir appears to have de facto rule over Paltryville, and it's not necessarily clear that outside forces are particularly aware of how he operates; given that Mr. Poe was surprised and unhappy to find Sunny employed as a receptionist in TAA, I doubt he expected the Baudelaires to be literally working in the lumbermill in TMM.
I think that although the work was difficult and the pay was unacceptable, it was a job, and the workers were given a roof over their heads and one meal a day. It's pretty abysmal, but they could survive.
Also, I think they could have quit if they had wanted to, but none of them did until Phil.
Faith is being sure about what we hope for, being convinced about things we do not see. Hebrews 11:1 For God so loved the world that he gave his only-begotten Son, that whoever believes in him shall not perish, but have eternal life. John 3:16