New York gang includes small kids (5)
I believe the answer is:
Here is my best explanation:
'kids' is the definition.
'new york gang includes small' is the subsidiary indication.
'new york gang' becomes 'jets' (gang in West Side Story).
'includes' means one lot of letters goes inside another.
'small' becomes 's' (abbreviation - e.g. clothes size).
'jets' enclosing 's' is 'jests'.
(Other definitions for jests that I've seen before include "Jokes, japes", "Witty remarks, quips", "Makes a joke" and "Playful pranks".)