America's Shadow Economy on the Rise
The term “shadow economy” tends to invoke images of sly back-alley business deals. But in reality, the term encompasses everything from bucket drummers on the streets of Chicago to the woman who sells tamales at my workplace. Because of the recession and layoffs, a growing number of Americans and illegal immigrants have been forced to try and make ends meet in this informal market.
It is staggering to learn how large the shadow economy really is: about a trillion dollars and rising, according to a recent Christian Science Monitor article that explores many aspects of the informal market. Economists are curious about where all this money is ending up, and what it is doing to the economy as a whole.
Some argue that a rise in the shadow economy unfairly increases the competition with local small businessmen — people who are already struggling with a damaged economy, reports the Monitor. But others from the International Monetary Fund claim that the competition actually increases the efficiency of both markets. They believe that the shadow economy makes goods and services more available and affordable than in formal markets. Their studies also show that roughly two-thirds of the money illegally generated in the shadow economy is actually spent in the official economy.
In the end, it boils down to the fact that the majority of those working in the shadow economy are the same ones who have been excluded from the official economy — typically because of socioeconomic status. In October, the U.S. Bureau of Labor Statistics reported that the unemployment rate had reached a 26-year high of 10.2 percent nationwide. For many Americans and illegal immigrants who have been the hardest hit by this recession, the shadow economy is often the only way to get by. The trillion-dollar size of the informal market is yet another signal that people everywhere are struggling.
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Comments
Shadow Economy
I think instead of "shadow economy" they should call it "thinking outside the box economy." This really is what most people have to do in today's world in order to survive. It is the sad reality.
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