Inside the Trillion-Dollar Underground Economy Keeping Many Americans (Barely) Afloat in Desperate Times
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Price compared the growth of the underground economy to payday lending; “a typically undesirable practice that develops and thrives because it fills a need created by the failure of public policy to address societal needs.”
The informal economy, though, does not only consist of low-wage workers. Saskia Sassen, Robert S. Lynd Professor of Sociology at Columbia University, pointed out in her book Cities in a World Economy that there is also an informal economy of creative professionals. In an article titled “Cities Today: A New Frontier for Major Development” she wrote:
“In brief, the new informal economy in global cities is part of advanced capitalism. One way of putting it is that the new types of informalization of work are the low-cost equivalent of formal deregulation in finance, telecommunications, and most other economic sectors in the name of flexibility and innovation. The difference is that while formal deregulation was costly, and tax revenue as well as private capital went into paying for it, informalization is low-cost and largely on the backs of the workers and firms themselves.”
She points out that by keeping creative professional work informal, these workers avoid the corporatization of creative work, and maintain the freedom to be innovative and self-sufficient.
While these creative workers prize independence, Lisa Dodson stressed the way communities come together to help one another through tough times, often through off-the-books economic activity, in her book The Moral Underground: How Ordinary Americans Subvert an Unfair Economy .
In one passage, she tells the story of arriving in a small-town farmer's market in Maine, only to overhear a discussion between locals on “neighbors and the market erosion of common fairness.” She wrote:
“Just then a middle-aged woman, who had been talking to friends, suddenly turned around to face other shoppers and asked, 'What’s happening to us? Why doesn’t the government do something?' A local farmer, sorting vegetables nearby, responded immediately, 'The government is the same as the oil companies. There’s no difference. We can’t wait for them to do anything.' A young mom holding a baby as she stood in line said, 'So what do we do?' There was no single response, but they were looking at each other to find it.”
Without solutions coming from Washington or local governments, it continues to be up to working people to find a way to negotiate the rough economy. Price argued, “People shouldn't have to give up fundamental human rights like access to income in retirement or safety on the job because they need work. But in a society like ours, which tolerates high levels of unemployment, the underground economy is often the next best alternative to starving.”
While some have been able to flourish working underground, it's important to remember that most workers are not off the books to dodge paying taxes or because they prefer it that way. As we see more and more people dropping out of the formal labor market in despair, the informal economy will remain a destination of last resort—and will keep growing.
Sarah Jaffe is an associate editor at AlterNet, a rabblerouser and frequent Twitterer. You can follow her at @seasonothebitch.