America's Shadow Economy
Updated: Saturday, August 3 2013, 02:34 PM CDT
In an increasingly virtual work world, an estimated one-third of U.S. workers no longer report to traditional 9-to-5 jobs.
That's given way to a shadowy U.S. workforce that's making billions of dollars a year.
The impact freelance workers are having on the economy.
Who are the people working in America's Shadow Economy?
It might not be who you think.
It's people who are designers, computer programmers, people who are preparing taxes, accountants, making tens of thousands of dollars, but who prefer to do it off the books.
In a bid to cuts costs and stay profitable, companies increasingly rely on skilled freelance labor.
We see that this is this huge rising trend. It's now 42 million Americans, a third of the workforce.
Big companies like IBM are predicting that this is going to be half the workforce in just the next 10 to 15 years.
Sara Horowitz founded the Freelancers Union, which now counts more than 200,000 members across the U.S., all of whom report their incomes to the government and pay taxes and social security.
But she says the pressure to work off-the-books is there because freelancers often pay higher taxes than everyone else:
They are just really taxed so severely, that they are the ones who are really providing the economic development and growth.
Economists estimate roughly $2 trillion worth of income go unreported each year and that lost revenue affects the "legitimate" economy.
Analysts say it's harder for businesses to play by the rules if their competitors aren't paying payroll taxes or compensation to employees in the event of injury.
What we really need to do is say, "Okay, it's illegal, absolutely; but, you know what, a lot of people there have the ingenuity and creativity, the power to innovate. And if that's where they're going, then we want to help them eventually come back into the mainstream.
Something experts say will be difficult to do.
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