To Get By, Americans Increasingly Work Off the Books

Beyond reach of regulators and tax collectors

WASHINGTON – When Kevin Kalmes received a foreclosure notice on her home after being unemployed for more than two years, she said, she started selling the contents of her basement, figuring, "I can't fit all this stuff in a Wal-Mart shopping cart."

"Then I just kept the basement sale open, forever, without getting permits, because I didn't sell it all," said Kalmes, 61, who lives in Chicago. She then sold items for family, neighbors and friends, dubbing her never-ending sale the "Little Shop of Hoarders."

Kalmes is among the 4.8 million unemployed Americans – 40 percent of all those who are jobless – who have been out of work for more than 27 weeks, even as the economy has been growing since June 2009 and the job market shows recent signs of healing. As her unemployment benefits have run out, she has entered the informal economy to make ends meet.

America's shadow economy includes activities that are actually illicit – prostitution and drug dealing – as well as more benign jobs like working construction for a day for cash, or even the $2 a child that Kalmes gets for walking neighborhood students to the bus. Added together, economists estimate $2 trillion could be involved.