Growing Shadow Economy Continues To Confound Economists

Better to work off the books than be regulated and taxed to death

But one $2 trillion part of the equation that's missing is the growing shadow economy: A grey market made up of people who aren't on the official payrolls but are finding ways to get by nonetheless.

"It's important to note this is not the illegal economy," Yahoo! Finance senior columnist Rick Newman tells The Daily Ticker. "We're talking about people who are doing legitimate work that would be ordinary work if it were taxed, but they're getting paid in cash."

So this work is under the table and it's not taxed as wages would be, and these folks are also not counted in the monthly jobs numbers.

Examples would be people working as consultants (in something like IT), drivers, people running small eBay (EBAY) businesses, nannies, and landscapers.

Estimates from a University of Wisconsin-Madison study put the underground economy at that $2 trillion mark for last year. That's twice the amount estimated in a 2009 study.

Comments

[Sevo]

"It's important to note this is not the illegal economy,"

It certainly is. It's illegal to the feds, since there's no tax or S/S paid, and if you're in most any city, it's illegal since you don't have a local business license.
In SF, it's probably illegal for several more reasons, such as operating a business from a residence-zoned neighborhood.
It is illegal; if you're caught, you will be fined at a minimum.

[Warrren]

Illegal yes, unethical; no.