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The Campaign Spot

Election-driven news and views . . . by Jim Geraghty.

Where Are America’s Workers Going? Off the Books.



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The unemployment rate declined to 8.6 percent last month . . . as 120,000 net Americans found jobs, but also about 315,000 Americans left the work force.

You’ll recall yesterday I spotlighted an interesting phrase and assessment from CNBC’s Jim Cramer: That for the first time in American history (or at least recent memory), the country is developing a sizable and significant “off-the-books” economy.

Obviously, it’s hard to quantify a phenomenon that is set up to not be measured, but it appears the Great Recession has greatly accelerated this trend, which isn’t good for employees, isn’t good for tax revenues, isn’t good for the rule of law, and probably is not, in the long-term, good for employers. (Wouldn’t an employer rather have happy, loyal, on-the-books employees?)

There hasn’t been a ton of discussion of this phenomenon, but this January 2011 Uptowner article talked about the phenomenon in New York City:

“The underground workforce is made up of individuals from many walks of life,” Susan Pozo, an economist at Western Michigan University, says via e-mail.

Smith says, “They can be tailors, janitors, nannies, dog walkers.”

While he thinks the undocumented workforce is on the rise, it’s tough to find data to support the claim. Pozo estimates that, based on the documented unemployment rate in upper Manhattan, off-the-books workers constitute roughly 13 percent of the labor force. She knows of no estimate of the total worth of the country’s underground economy.

Harvard economist Lawrence Katz says via e-mail, “There is no good systematic data on the size of the underground economy.”

Even government authorities can’t provide any figures. “We really don’t have data,” Martin Kohler, regional economist with the Bureau of Labor Statistics, says in an e-mail. “And I am not sure who would.” . . .

While undocumented immigrants always work off the books, the population of legal residents joining their ranks may be growing. “It is always on the rise,” says Richard Weiss, communications director for the Construction and General Building Laborers Local 79 union, serving New York City.

Those working without any benefits, legal protections, or without paying taxes don’t prefer to work off the books, but may do so out of desperation. “I have to pay for electricity, rent, gas, phone, food and I need some work for that,” says Browne, who was laid off a year ago from the restaurant where he worked.

“Can’t survive on welfare and unemployment,” he adds.

Weiss says, “These people are exploited due to their economic situation.” He adds that many times underground workers are paid less than minimum wage while their employers also evade taxes. “They are treated as disposable commodities,” he says.

Change has come to America.


Tags: Barack Obama , Unemployment


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