By Sadell Bradley
Catalyst Strategist
I recently attended a colloquium of Micro-Enterprise professionals at Emory University in Atlanta, GA on behalf of MORTAR. The purpose of the meeting was to research best practices in the field. What were the successes and struggles of our entrepreneurs and staff? One goal was to publish on the subject in academic reviews. We discussed the challenge of gaining access to capital, the importance of our client’s establishing a social network, and the most effective ways to develop programming that meets their needs. The professor that convened the meeting was dismayed that smaller businesses were largely considered illegitimate in general business contexts: so much so that higher education wouldn’t even write about them.
Those folks must not be aware that there’s an underground economy of small and not so small businesses in the US. Economist Edgar Feige estimated that “underground economic activity in the US totaled $2 trillion in 2012, approximately 12% of the GDP at the time.” – Investopedia Shadow economies exist all around the world. Here, this reality includes American citizens in all ethnic groups and immigrants both legal and illegal.
In the African-American community, it’s called ‘the Black Economy,’ or we use colloquial phrases like ‘off the books’ or ‘under the table’ to describe businesses that operate without paying taxes. The work is often legal. Avoiding taxes is not. Some operate this way in response to a recession or economic crisis. When the unemployment rate escalates, people are hustling or ‘on their grind’ to survive full-time, or as side income. For others it’s an education gap – underground is all they know. They’ve never filed taxes, nor have they seen anyone around them do it. People in poverty, (the poverty line in the US is $23k for a family of four) can see taxes as something burdensome that they can’t afford to pay. From a macro standpoint, the government still observes currency flowing and people spending, but the corresponding taxes are somehow not being paid to the tune of a $500 billion gap.
These economies are not just illegal drug sales, gambling and prostitution rings, or even unauthorized immigrant labor in cities. It’s landscapers, dog walkers, caterers, mechanics, general contractors, photographers and baby sitters. It’s artists, musicians and event promoters. It’s salon owners, authors and even pastors who don’t report collected offerings…and you might be surprised at how much bartering goes on without exchange of dollars.
One task I have at MORTAR as a class facilitator and Alumni strategist is to educate some of our graduates who have been operating off the books why it’s necessary to come above ground. This takes convincing when it feels (and sometimes is) a loss for them initially. Our job is also to remove barriers and open opportunities for them to grow their businesses to such an extent that they are not in poverty and it’s worth their while because their enterprises are employing people and stimulating the economy. This is one way we build communities through entrepreneurship.
