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Odd jobs fuel unreported income

TNS Regional News • Feb 27, 2014 at 7:07 PM

Hiring remains weak in Ohio’s traditional business sectors, but some residents are completing odd jobs for cash in the state’s informal economy.

Ohioans are paying their bills by doing yard work, cleaning homes, shoveling snow, repairing electronics, fixing cars, painting houses and completing countless other tasks that range from mundane (garbage removal) to highly quirky (acting as a princess at children’s birthday parties).

The business transactions can be legitimate, with all parties correctly recording their incomes as required by law.

But the recession and weak economic recovery likely has pushed many people into the thriving underground economy, where workers earn money off the books and illegally dodge local, state and federal tax laws, experts said.

The unreported economy deprives governments of billions of dollars in tax revenue. And paying gigs can be a tough way to make a living.

The odd economy

Steve Gorman, 54, of Findlay, said he has not received a steady paycheck since 2008, but he scrapes by doing odd jobs, primarily for poor people and elderly residents on fixed incomes.

Gorman helps remove trash twice a week. He salvages metal and cleans garages and barns. He said he has cut down trees, repaired roofs and fixed bicycles for low-income people who cannot afford standard service providers.

“I do the jobs nobody else wants to do,” he said. “(My customers) can’t go down to the bicycle shop in Findlay and pay the guy $12 to $16 per hour to fix up their bike — I advertise $5 repairs.”

Gorman said his criminal record and lack of a driver’s license makes it difficult to find a normal job. He said most people perform odd jobs out of necessity, because they cannot find more stable employment.

In December, there were about 2.6 unemployed U.S. workers for every job opening nationwide, according to the U.S. Bureau of Labor Statistics. There were 10.4 million unemployed workers but only four million available positions.

And the number of job-seekers would be much higher if millions of Americans had not dropped out of the labor force because of weak job opportunities.

But when the going gets tough, the tough get creative. Like Gorman, many Ohioans are finding paying work, just not in the formal economy.

Each day, dozens of local job ads are posted on websites, such as Craigslist.com and Backpage.com, that seek workers for odd jobs.

Earlier this month, a man in Centerville was looking for someone who could patch up his leather boot. He indicated he was willing to negotiate prices.

A Hamilton resident offered $200 to any mechanic who could immediately replace a heater core in a Dodge Caravan.

A Kettering landlord offered $100 or more for high-resolution photographs of his or her commercial property. Someone needed a trench dug north of Middletown and offered between $200 to $300 for the job.

“Anyone who needs something done is a potential employer,” said Jeremy Redleaf, founder of OddJobNation.com, an online resource for people seeking temporary-employment opportunities. “As for who responds, some people are between jobs, some are just looking for some extra cash on the side, and some are hustling their way to their dream career.”

Many odd jobs are labor intensive.

People need their yards cleared, their garages cleaned, their houses painted, their cars fixed, their homes tidied, their children watched and their pets walked and fed.

But some jobs are truly out there.

People have been paid to camp out and hold someone’s place in line before a highly-anticipated new product is released. People are paid to participate in sleep studies, give plasma and pose in the buff for art projects. People have been paid to babysit snakes and serve as pool sharks at children’s pool parties. A Clark County man was offering $8 an hour for a partner to arm wrestle. That job, however, has been filled.

“I had many responses (23) but unfortunately many of them were spammers or people who acted interested but for various reasons were unable to commit,” the arm wrestler told the the newspaper.

Redleaf said the odd job economy serves as an unofficial safety net that helps struggling families pay their bills.

“The American spirit is strong; we’re constantly inspired by our odd jobbers willingness to hustle,” Redleaf said. “We’ve seen everything from retirees operating bouncy castles to recent college grads slinging cow manure.”

But gig workers often receive low and inconsistent wages. And some wages are not being properly recorded and taxed.

Odd job living

Gorman said he is lucky to work 30 hours a week, and he often earns less than $7,000 per year. He lives with family and receives food assistance.

“My life is so difficult, just to live day to day as far as income goes, that I have to really distinguish between a need and a want,” he said. “I have to take whatever I can get and be like a spider, catching whatever that falls into my web, because if I don’t make money today, I don’t know when I’ll make money again.”

Speaking of spiders, Gorman is terrified of them. The same goes for heights.

But Gorman said he will accept any work that is legal and moral, even though some jobs require him to climb into spaces that are overrun with arachnids while others require scaling tall structures or ladders.

Other troubles also crop up.

Gorman said he was fired from a job after completing extensive roofing work. He said he was never paid for days of hard labor, and he does not have the money to take the person to court.

Despite the sporadic nature of his work life, Gorman said he saves receipts and he keeps records of all business transactions. He said he has a biblical responsibility to be honest and truthful.

But in the murky world of cash transactions, people often fail to properly report their incomes, writes Bernard Baumohl, chief global economist with the Economic Outlook Group, a financial forecasting and assessment firm in Princeton, N.J.

And it's likely that weak economic conditions have pushed a record number of people into the underground economy, where millions of jobless workers earn cash off the books doing odd jobs, Baumohl said.

There is some economic evidence of a growing shadow economy.

Household spending has risen to surprising levels considering that unemployment remains high and the labor force participation rate continues dropping, Baumohl said. Retail sales have grown at rates that defy the unemployment rate.

Workers in the unreported economy typically accept lower wages and charge lower prices but can still take home good money because they do not pay taxes, said Edgar Feige, an economics professor at the University of Wisconsin-Madison, who has closely studied the underground economy.

Off-the-books employment allows employers, workers and self-employed residents to reduce their costs by avoiding taxes and other contributions, such as workers’ compensation.

But while unreported transactions put more money in people’s pockets, they come at the expense of government coffers.

In 2012, about $1.7 trillion in earnings were not properly reported to the IRS, plus or minus $90 billion, according to Feige’s estimates.

That unreported income created a tax gap of between $370 billion to $390 billion, he said. A tax gap is the tax liability of taxpayers that is not paid.

Feige said low-income people are not the only ones making money in the unrecorded economy. He said plenty of doctors, lawyers and wealthy business owners that accept cash are tax cheats and law breakers.

“From a social point of view, it reduces overall tax collections, and therefore for a given level of government services, it puts a greater burden on honest taxpayers,” he said. “It’s a redistribution of income away from honest taxpayers towards dishonest citizens.”

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By Cornelius Frolik - Dayton Daily News, Ohio (MCT)

©2014 the Dayton Daily News (Dayton, Ohio)

Visit the Dayton Daily News (Dayton, Ohio) at www.daytondailynews.com

Distributed by MCT Information Services

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