Notes from the Underground: America's Sprawling Informal Economy

By Tucker, Jeffrey | Policy Review, Summer 1993 | Go to article overview

Notes from the Underground: America's Sprawling Informal Economy


Tucker, Jeffrey, Policy Review


Government policies usually have unintended consequences, but one effect is literally invisible to policymakers. When regulations get too complex or costly, or taxes too high, employers, workers, and entrepreneurs sometimes move outside the official system and into what is called the "informal sector." A growing body of research suggests that the informal sector - also called the underground, unofficial, black, subterranean, or non-registered economy - is an extremely large and highly productive subsection of the economy. In it mostly legal goods and services are bought and sold in a manner that evades the government's regulatory and fiscal reach. During the presidential transition, public attention focused on the off-the-books hiring of nannies, sometimes illegal immigrants. The Zoe Baird phenomenon is but a small part of a vast subterranean economy that has grown in response to overly burdensome and arbitrary government.

The informal sector has been studied extensively by professors of anthropology, urban planning, and sociology, whose political sympathies lie with the Left. Nevertheless, their studies highlight a question that should be of interest across the ideological spectrum: Isn't something wrong when an entire segment of the population works extremely hard, possesses valuable skills, and produces goods and services people want and use, yet is shut out of the official economy? Shouldn't their activities be considered legitimate?

New York Off the Books

Professor Saskia Sassen-Koob, who teaches architectural planning at Columbia University, has studied New York City's informal sector for well over 10 years. She thinks American culture places too much emphasis on what she calls "valorized" occupations - those with a high degree of visibility to match their high wage levels. Professor Sassen-Koob and her graduate students are doing hands-on work interviewing informal street vendors, car repairmen, cab drivers, and others employed in the informal economy all over New York.

The researchers have found substantial informal activity throughout the apparel industry, general construction, masonry, stonework, plastering, toys, sporting goods, and electronics. They found unlicensed or unregistered work in most of the 40 standard industrial classification sectors they examined. Concentrating mainly on new immigrant communities in New York, they found an extremely diversified informal economy among Hispanic, Chinese, Koreans, and Russian immigrants in Brighton Beach.

In many areas of Queens (Jackson Heights, Ridgewood, and Astoria) and in Brooklyn (Sunset Park and Williamsburgh), skilled cabinetmakers produce customized furniture for a high-income clientele and basic furniture for lower-income residents. Many of the furniture shops are located on the second floor of buildings, since the first floors must adhere to enforced zoning codes, making them available only for other uses.

Professor Sassen-Koob and her researchers estimate that in one four-block survey in Manhattan, 90 percent of all interior work was done without required permits and licenses. In government-funded projects, on the other hand, the official sector dominates. But in those public sector projects using subcontractors, growing numbers of informal workers are involved, as indicated by the increased number of labor violations recorded by the Department of Buildings. These are the "fly-by-night" operations often denounced in the press.

Sometimes it takes an accident and follow-up investigation to reveal informality. One such case occurred in the early 1980s when a crane operator dropped a block of cement and nearly crushed a passerby. The newspapers were outraged to discover that he was unlicensed, and a follow-up showed an unexpectedly high incidence of people working without licenses.

Clothing is one of the most important informal industries. Professor Sassen-Koob has discovered that most production workers in the apparel industry in New York and New Jersey do unregistered work in "sweatshops" and at home and sell their product to registered New York firms. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Notes from the Underground: America's Sprawling Informal Economy
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.