Odd jobs fuel unreported income

Unreported economy deprives governments of billions of dollars in tax revenue.
MCT Regional News
Feb 27, 2014

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

Comments

truckin

Her we go..just a start..
Soon the government will go after the snow shovel'r, odd job guy/gal.
I can see it now..
Someone catches wind that your neighbor is putting on some new brake pads for ya and charging a case of beer......Federal agents raids!!!
How would ya tax that?.. after a week all the evidence will be drank
The government hates bartering.....etc....
MARK my WORDS.. within 10 years we will be in a cashless society!
We are dealing with the likes we only read about in books..
Wake up America!

Foodforthought

Should read: Governments at all levels steal billions of dollars daily from hard working people so they can fuel their personal gains, give to the lazy, ship money oversees and keep demanding more and more from us who work our tails off.

Really are you ...

Bravo! Well put!

truckin

Your right.
I mean, who really cares if i decide to skip out of my "own" duties with my lawn and decide to slip someone 20 bucks to do it for me? The money was earned and taxed once.. but that still isn't enough.
Next will be the buying of used cars, furniture, etc. from individuals. They already dispute prices all the time.
I just see cashless society REAL SOON!

Contango

Re: "cashless society,"

Got that right.

The kleptocrats want to move everyone to debit and credit cards so there's a paper trail.

This is why there's an interest in cryptocurrencies like Bitcoin.

Contango

Eliminate the individual state income tax and institute a 'reasonable' consumption tax in order to garner more of that off-the-books income.

World-wide, the underground economy or "System D" is the second largest "economy" next to the U.S.:

http://freakonomics.com/2011/11/...

People are just tired of the kleptocrats stealing their hard earned pay and giving it to their cronies.

truckin

The way it will be presented will be...the BIG war on drugs, illegal activity.. cure?? cashless society.
Then it will effect even liberals.. you know the one's??
The ones, just like any other red blooded American.. figuring out how to give your offspring "YOUR"own hard earned (already taxed) savings.
Just Pathetic how we, as American's, are totally subject to the BIG Overlords..
Nothing has changed with this great experiment of "freedom". The KINGS still want control, and with tech and so many who find the "convenient" aspects and so many already dependent? Cashless society will spring and not even a shot will be fired and the PUBLIC will be trapped.. Everyone will be scratching there heads, while so many will already be too indoctrinated.
all the while,people keep saying history won't be repeated and i am the "dumb one". "get over it" "what do you have to hide" just don't get it!
Well one day they will when there bank card is regulated by the government and due to health care takeover, will find there future purchases on something simple as: how many bags of chips a month they can buy..
then maybe??

Cliff Cannon

Contango : Having long been in favor of a consumption tax.Let me say, I think we both know why it will never be enacted.


1. Everyone would pay equal taxes . ( So all those special breaks, that cost so much graft to be built into the tax code would be useless)


2. It would eliminate the IRS. ( And with it a ton of government control )


3. It makes perfect sense. ( That defiantly makes it a D.C. no-no, doesn't it ? )

Contango

@ CC:

Please note: The topic is OH.

Agree however, that the progressives will never do away with fed income taxes.

Also, sales taxes have always been the purview of the states.

The feds might attempt some form of VAT in addition to an income tax.

Ultimately, the end user pays all taxes.

somescrewyname

All that truly needs to be said here is ****1984****

kURTje

Unreported income is allowable by law, though I forget the amount allowable. Meanwhile old crones like Nancy Pelosi & Nancy Reagan get free health care.

didhejustsaythat76

Our government wants us to be dependent on only them ! If they get everyone to follow suite then they wouldn't have the worry to be overthrown and their own little corrupt worlds will remain unchanged .. Jobs in ohio suck and they think they are a part of our every move , wake up . This will not change as long as we keep voting these losers into office . I'm not racist in any way and would be the first to admit it and commend a BLACK man if he did bring change ... But he hast done anything other than drive the middle class to poverty while the rich keep getting richer .. Keep messing the constitution and the beast shall be awakened I'm sure .. Same reason drugs and robberies are worse now than ever , killings , hold ups and all that jazz have been happening more and more frequent than in the past ... People are going to greater means to provide cause an honest living anymore is just a dream for to many ! I myself am tired of working my back off and only keep living week to week with a family of 6 while scumbags , drive 50,000 $ suv's , eat lobster and steak , and buy expensive clothes on our dollar ! Medicare same thing just gives the crooks more of our money at their disposal for their own good .. And they keep their income for LiFE after their tour in office is up ... While the man taking bullets on the front lines to defend are keeping peace for pennies ... I used to say I was proud to be an American , but these days it's hard to admit ... I'd spit on the shoes of our government given the chance