Shadow Economy Shows Joblessness Less Than Meets U.S. Eye

[Ghost Dog]

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

Such informal arrangements, while providing a safety net of last resort for workers like Kalmes, also may provide answers to puzzling discrepancies in economic data. One example: Explaining why retail sales have outpaced gains in reported income for almost four years, said Bernard Baumohl, chief global economist at the Economic Outlook Group LLC in Princeton, New Jersey.
Retail Sales

Retail sales have grown at an annual rate of 3.5 percent or more since September 2010, even as taxes have increased and jobless benefit eligibility has shrunk to 73 weeks or less from 99 weeks in some states. Unemployment (USURTOT) is 7.7 percent, up from 4.4 percent in 2007, and income rose just 2.2 percent in the 12 months through January.

“There could very well be a much-larger than expected underground economy at work here that is making a contribution,” Baumohl said...

/... http://www.bloomberg.com/news/2013-03-20/shadow-economy-shows-joblessness-less-than-meets-u-s-eye.html

One for the Quelle Surprise thread. Just like in, say, Spain...

[Dawson Leery]

1. 12% of the economy could be underground.

That is massive.

[Bay Boy]

2. This is counter to the argument that...

...the unemployment rate is worse than we hear. The reasoning behind that, of course, is that the government's rate only shows those who are actively looking for work and not those who would like a job but have given up looking.

[Ghost Dog]

3. Looks like the government's rate

only shows those who are actively looking for work and are willing to declare and pay taxes on that work.

[jtuck004]

5. Not quite

12,332,000 - http://www.bls.gov/news.release/empsit.t01.htm
7,973,000 - http://www.bls.gov/news.release/empsit.t08.htm
6,781,000 - http://www.bls.gov/web/empsit/cpseea38.htm
27,086,000 - Total unemployed people who want a job

That 6.7 million number on the third line is from the table "Persons not in the labor force..."

There were only 3,600,000 million job openings the last day in December, according to the JOLTS survey, http://www.bls.gov/jlt/

So maybe they found it fruitless to look.

(I think those were from the February report, since revised, but good enough for an example.)

[snappyturtle]

4. It's really a revolution of sorts. People have been pushed into a bad economy

with no one in the gov't helping much, or for that long, and American ingenuity wins out! At least people are spending the money how they need to vs. the gov't spending our tax dollars on such "winners" as war.

Interesting the IRS can calculate how much the little people have avoided in tax payments but big companies....not so much.

[Ghost Dog]

6. Ah, the great "little people - big company" - divide.

At every level. In every walk of life.

[Sam1]

7. Its an extremely tough way to make a living and it leads to a hard scrabble and short life.