It has always been there. You perform some work for me and I will pay you in cash. That way I don’t have to file taxes, you don’t have to pay taxes and we can go on our merry way. Many construction day laborers, housekeepers, landscapers, movers, waiters, bartenders, painters, fixer uppers and dishwashers get paid that way.
It will probably always be there in some form or another whether direct pay or barter. In today’s construction industry there is a tension building around the cash economy where contractors are being forced to low bid work in order to keep their teams together and to do so means in some cases that they have to go to subs who
in turn go to labor brokers who then go to the street for day laborers in order to meet the demand for workers on the jobsite.
When they make that move they are directly contributing to the cash economy may be creating safety problems on many jobsites in a time where safety and the quality of construction is a critical issue for the industry.
The results of this approach, one that is becoming more prevalent during tough economic times, is that taxes are not getting paid, no medical benefits are being paid, social services are being overburdened, no retirement is being set aside, and responsible companies who compete in the construction industry are being squeezed and pressured to play that game in order to win the business and make a profit.
The cash economy, while sounding good on the surface is actually undermining the long term health of our industry, workforce and of the families caught in the middle of the cash economy squeeze.
See these references for more information:
http://www.sscnet.ucla.edu/issr/csup/uploaded_files/Natl_DayLabor-On_the_Corner1.pdf
http://en.wikipedia.org/wiki/Day_labor
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