Salon.com > Inside the Shadow Economy

“Self-deportation” doesn’t shrink the shadow economy

Tue, 31 Jan 2012 13:00:00 +0000

Chalk it up as one of the unexpected consequences of the intense media attention devoted to the Republican presidential nomination race. When Mitt Romney announced his support for the concept of "self-deportation" during a Florida debate last week, reporters instantly shone a bright spotlight on a strategy for removing illegal immigrants from the United States that had hitherto been mostly flying under the radar.

The word "self-deportation" has an agreeable, voluntary ring to it, suggesting that undocumented workers will happily decide of their own free will to return to their home countries, without the necessity for direct government action by ICE agents. The truth is something different: Self-deportation, as practiced today, is supposed to be the only choice left available to immigrants whose life has been made miserable by new, punitive laws put into place at the state level.

Finding apps for the shadow economy

Thu, 19 Jan 2012 13:00:00 +0000

Could the right smartphone app help bring light to the shadow economy? The Department of Labor thinks so. Last May, the DoL announced the release of a new iPhone app: Timesheet. The purpose of the app is to help combat the off-the-books plague of "wage theft" -- the increasingly common practice in which employers shortchange their workers by denying them overtime pay or break time, or failing to pay the legally mandated minimum wage.

Timesheet, says the DoL, is an app that will "help employees independently track the hours they work and determine the wages they are owed. Available in English and Spanish, users conveniently can track regular work hours, break time and any overtime hours for one or more employers."

"This new technology is significant," reads a DoL press release, "because instead of relying on their employers' records, workers now can keep their own records. This information could prove invaluable during a Wage and Hour Division investigation when an employer has failed to maintain accurate employment records."

Hot dog cart bound for the future

Fri, 11 Nov 2011 17:00:00 +0000

SAN FRANCISCO -- My name is Samir Mogannam. I'm 21 years old [and] I live in the Mission District. If you live in my neighborhood and go out to clubs at night, you see guys selling bacon-wrapped hot dogs on the street, and it’s awesome.

I always had the idea to do that, but with vegan chili-dogs, something a little different and something everybody could eat.

It took months before I got my [food] cart; talking to these mysterious guys and communicating with them, getting their numbers. You can’t just find a cart on Craigslist or whatever. Finally, I found a guy named Saul who was able to help me.

My dad always had a restaurant. My cousins opened up Bi-Rite (market) over there on 18th and Dolores, which was originally my grand uncle’s place back in the late '60s. It was a liquor store and market, then eventually the kids took it over and it evolved into what it is today. I’m born into working with food.

My vending routine begins with prepping; getting the onions chopped up to grill. If I'm doing my vegan chili-dogs, it’s hard work. I have to go to the farmer's market in the morning and get all the produce needed. I make my chili from scratch; nothing out of the can. So I reduce all of the tomatoes and get the beans cooked, getting my chili ready for the day.

In praise of the shadow economy

Wed, 19 Oct 2011 15:00:00 +0000

"Half the workers of the world," writes Robert Neuwirth in his new book "Stealth of Nations: The Global Rise of the Informal Economy," work in jobs that are "off the books ... neither registered nor regulated." The combined economic activity of these 1.8 billion workers adds up to $10 trillion. If the informal economy were squeezed into a single political structure, observes Neuwirth, it would be the second largest economy in the world.

For many economists, labor organizers, government leaders and law enforcement officers, those numbers represent a huge problem: a tragic panorama of exploited workers, criminal activity and crippling shortfalls in government revenue. But where others see darkness, Neuwirth -- reporting from China, Brazil, Nigeria and elsewhere -- witnesses something more promising. In a world of growing inequality and faltering "real" economic growth, the shadow economy is where job creation is actually happening. Calling upon the most meager of resources and without any government assistance, people are somehow finding a way to survive, and even prosper.

Employers’ new ruse: “Independent contractors”

Fri, 07 Oct 2011 17:30:00 +0000

Leonardo Mejia is a truck driver at the Port of Long Beach, Calif. He's worked at the port for 10 years, a vital cog in the infrastructure that moves cargo containers between ships and warehouses and other transport networks. He used to own his own truck but was forced to sell it when he couldn't afford to fix its engine. Today, Mejia leases a truck from a company called Shippers Transport Express, a subsidiary of the massive container shipping terminal operator SSA Marine.

It's a good deal for Shippers -- Mejia has to cover the costs of his own health insurance, maintenance on the truck, and diesel fuel -- but not so great for Mejia. Although he works exclusively for Shippers Transport Express, according to his employer he's an independent contractor, with no safety net to protect him from misfortune except for whatever scraps he can carve out from his barely subsistence level wages.

He misses his old truck.

"Every day is getting worse," says Mejia. "Before when we used to have our own trucks, every time we have a problem with a dispatcher or the owner of a company we just take the name of the company off our truck and we go to somewhere else. Right now we don't have nothing to take with us. Except maybe my clipboard."

Confessions of a male escort

Thu, 29 Sep 2011 11:45:00 +0000

OAKLAND, Calif. -- My name is Edward and I am a male escort. That is simply a person that goes out and has sex with people for profit. I live in Oakland, Calif.

I don't do it on a daily basis. I do it when I really, really need the money -- if I can't pay a phone bill, or if I need food or something that really, really is needed. For little things, I charge from $20 to $45. For anything, you know, past "3rd base" it's more expensive, from $100 to $150.

When I say little I mean, like a hand job. Or, say, the person is into looking, and really likes how my body looks they'll want to touch. Because I take care of my body and I like how I look, I charge a touching fee. You can touch wherever you like, but I just need the money upfront. That's roughly $20 to $30.

Within the last month I've had three, yeah, dates -- if that's what you want to call them. And all three were generous, actually. I got a good amount of money; I was quite happy. Most of my customers are men. I'll rarely get females; the majority are men. For the big thing, actually going the whole way, my prices usually run from $100- $150 to about $200. Actually, the prices vary a lot. For most women I would only charge $50 to $70 for 30 to 35 minutes. This is for oral. It never goes as far as sleeping with the women. It's always oral or touchy-feely type things.

A growing underworld bazaar

Thu, 29 Sep 2011 11:45:00 +0000

A day laborer waiting on a street corner for a morning's worth of work hacking brush. A sweatshop employer paying less than minimum wage and skimping on overtime. A woman running a day care center out of her apartment. Drug dealers, sex workers, unlicensed street food vendors. A plumber who deals only in cash or a farmer who trades food for help with the harvest.

What do they all have in common? They're part of the "shadow economy." Also known as: the underground economy. Pick an adjective, any adjective: informal, gray, black market, under-the-table, hidden, unobserved. There are many different names for the realm where taxes aren't paid, labor laws are ignored, and cash is king. But on at least one point most observers agree: the shadow economy -- in the U.S. and abroad -- is growing. And that's not healthy. In a shadow economy, workers are often unsafe and ruthlessly exploited, while governments are deprived of crucial revenue -- yet still forced to foot the bill for essential services.