New America Media - Inside the Shadow Economy

War or Peace in Mexico? Drug Cartels Declared 'Truce'

2012-11-27T10:40:00Z

Do messages attributed to three Mexican underworld organizations portend war or peace? Retrieved by Mexican soldiers, three so-called narco-banners displayed last week in the southern state of Guerrero and purportedly signed by three groups-the Gulf cartel, La Familia Michoacana and the Knights Templar-announced not only a truce among the signatories, but also a new “brotherhood” against the rival Los Zetas organization.

In the message, which had the same content written on the professionally printed banners recovered in the municipalities of Tlalchapa and Tlapehuala in the conflict-ridden Tierra Caliente region of Guerrero, the signing troika appealed for peace in Mexico but vowed to act against the Zetas, Zeta leader Miguel Angel Trevino and “all those who support him.”

The narco-banners also contained a parting shot at President Felipe Calderon, who leaves office on December 1. Accusing Calderon of being responsible for the deaths of “almost 60,000 innocent” people, the unknown authors blasted the outgoing Mexican leader for being “the worst (killer) of any delinquent group” in the country.

In downtown Morelia, Michoacan, the three-headed, anti-Zetas “brotherhood” left another sarcastic message for Calderon last week, recognizing losses suffered by their organizations but also boasting of casualties inflicted on the Federal Police.

“With all with your power and reach, it would have been a good plan for Michoacan if you could have treated your people with love and true justice,” the Morelia narco-banner read in part. “But given everything excuse us and since we are not going to have you as our ruler in December, we wish you, your family and your cabinet, as ( popular singer) Vicente Fernandez said, a beautiful farewell.”

The Guerrero narco-banners recalled similar statements that were posted across Mexico in February 2010 and largely missed by the international press at the time. Announcing the formation of the United Cartels alliance against the Zetas, the messages were soon followed by a tremendous explosion of violence in the northern border state of Tamaulipas and other regions of the country.

If authentic, the latest narco-banners could be significant for other reasons. First, the joint statement implies the patching over of differences between La Familia and the Knights Templar, which were once part of the same organization but later at odds after the death of La Familia co-founder Nazario “El Loco” Moreno in December 2010 in a fiery gun-battle with the government.

In particular, the Knights Templar group has been very active on the public propaganda front, posting anti-Zetas banners in at least 7 states this month including the state of Mexico, long considered the stomping ground of La Familia, and Coahuila and San Luis Potosi, both strongholds of the Zetas.

Second, the apparent willingness of three organizations supposedly hard-pressed by government arrests and killings of top and mid-level leaders, to come together and contemplate a new fight against the Zetas, implies a certain degree of resilience as well as an ability toreorganize and re-focus in spite of major blows claimed by government officials.

Third, the content of the newest narco-banners promises the continuation of violent rivalries honed during the past six years into the period of incoming President Enrique Pena Nieto unless, of course, some sort of behind-the-scenes peace agreement or accommodation is reached.

Additional sources: El Sur, November 22, 2012. Article by Israel Flores. Proceso/Apro, November 21 and 22, 2012. Articles by Jorge Carrasco Araizaga and Veronica Espinosa.

Long Invisible, Domestic Workers in CA Are Stepping Out of the Shadows

2012-08-10T16:30:00Z

Fifteen years ago, my graduate school instructor posed a series of questions that still guide me to this day:

If you found yourself in a time warp and living in the Jim Crow era south, would you say and do nothing, as many people did? Or, would you organize and fight against Jim Crow laws and policies? What side of history would you be on, he asked. The side of the liberators? Or would you just watch silently?

These questions continue to fuel my commitment to speak and act out on behalf of any groups who are affected by unequal laws and policies - such as domestic workers. All across California and the U.S., domestic workers toil in deplorable conditions. Not only do they work for less than minimum wage with no breaks, they are also subject to mistreatment and exploitation.

Even worse, unlike other sectors, domestic workers don't have any protections, excluded from enjoying the rights and protections enjoyed by other workers.

This injustice is rooted in our Jim Crow past. In 1938, Congress passed the Fair Labor Standards Act (FLSA), which to this day provides rights such as a federal minimum wage and overtime protections for workers. Walter White and the NAACP fought to include domestic and farm workers under these protections. At the time, two-thirds of the African American workforce was comprised of domestic and farm workers, and complaints about mistreatment were rampant throughout the country.

Unfortunately, Franklin Roosevelt succumbed to pressure by southern whites, who successfully fought for the exclusion of domestic and farm workers from the FLSA. White legislators would not support a bill that would result in higher pay and increased protections for black laborers.

Although the faces of domestic and farm workers have changed since then, the need to right this wrong of years past remains as great as ever. The NAACP fought for domestic workers in 1938, and we are here to help finish that fight.

The California legislature can take a big step in the right direction by passing AB 889, the Domestic Worker Bill of Rights. The second measure of its kind in this country -- New York in 2010 became the first state to pass such a bill -- AB 889 would include over 200,000 domestic workers in the labor protections that nearly all other California workers enjoy, such as overtime pay and meal and rest breaks.

Many years from now, students in a classroom will look back at our actions concerning justice matters of today. What message will our generation send them? What will be our response to the ongoing discrimination, exploitation and mistreatment of domestic workers?

Robert Rooks is executive director of the California NAACP.

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"Carwasheros" Cleaning Up L.A.'s Carwash Industry

2012-07-19T08:15:00Z

The Los Angeles area is notorious for the plethora of cars that clog its roads and highways. Less known, however, are the rampant labor violations prevalent in LA’s carwash industry, which have become the next frontier in the fight for economic justice and immigrant rights.

In the Los Angeles area, there are over 500 car washes in operation. Collectively, they employ more than 10,000 workers, many of whom toil in an environment rife with abuses. Many Carwasheros attest to spending months working for tips alone, and going home with less than $40 in their pocket after putting in grueling 10-hour days without breaks. Despite their hard work, many are routinely denied overtime pay and rest, and are threatened or fired when they advocate for their rights. Workers also are regularly exposed to toxic chemicals in car cleaning products. Experiences like this are systemic in a work environment that routinely exploits its work base, mainly comprised of immigrants or undocumented workers.

Carwasheros in the Los Angeles area are fighting back - and in doing so, have sparked a movement at the intersection of labor and immigrant rights. Workers are coming forward with their stories, and making connections with faith-based movements like CLUE-LA, labor groups like the United Steelworkers union and the AFL-CIO, and immigrants’ rights groups. They are lifting the veil on an industry rife with exploitation and abuse, and in doing so, are facilitating impactful and wide-reaching change across the country.

In 2011, Bonus Car Wash in Santa Monica became the first unionized carwash in the nation, thanks to the efforts of the carwasheros and support from the community. Shortly after, two more in South Los Angeles became unionized. The workers have since been successful in raising the profile of unjust working conditions at carwashes who contract with the City of Santa Monica. The City is sensitive to the need to protect carwash workers’ rights, and has committed to enforce those rights.

Recently, four carwasheros, with representation by the Mexican American Legal Defense and Educational Fund (MALDEF), have filed a lawsuit seeking class action status against a common carwash owner of three washes in the Southern California area, demanding justice for years of mistreatment and extreme working conditions. Last month, former employees at a Brooklyn, New York, carwash filed a federal suit alleging similar working conditions to those in Santa Monica.

All of us can play a role in ensuring safe and equal working conditions for carwasheros. As consumers, we can choose to patronize only unionized carwashes. We can make educated and ethical choices by investigating the labor practices of carwashes with whom we choose to do business, boycotting those that fail to recognize the rights of their employees - and letting them know why.

In doing so, we can leverage our spending power to help facilitate change, and use our pocketbooks to help propel this movement forward.

Reverend Erin Tamayo is a Presbyterian minister and an organizer for CLUE-L.A. (Clergy and Laity United for Economic Justice).
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SF Youth Sell Weed to Get By, and Get an Education

2012-04-20T08:00:00Z

SAN FRANCISCO -- Patty, a tall, thin 16 year-old dressed in ripped blue jeans and an oversized sweatshirt, was recently kicked out of her parent’s home. The high school sophomore couch surfs and rides her skateboard to school everyday.

To pay for food and other essentials, she sells weed.

“It’s really hard to get a job at this age,” she says. “Most people want prior job experience, but we don’t have it because we’re so young.”

Young people ages 16-19 make up some 34 percent of California’s unemployed, the highest level of youth unemployment in the nation.

Sometimes trading bags of marijuana for a night on a couch, Patty notes that so far she’s able to separate her studies from her livelihood. “My education is definitely more important to me than making money and selling pot.”

Still, she says she hopes to one day use her college degree to become a licensed independent grower.

The weed economy is indeed a lucrative one. Long the United State’s number one cash crop, estimates put marijuana sales somewhere in the vicinity of $38 billion annually. In San Francisco, a pound sells for roughly $2,500, though if shipped across the country the price jumps to between $4,000 and $10,000.

Even those whose job it is to connect dealer and buyer or to transport the goods can earn upwards of $100 per transaction. Trimmers who work the fields get $200 a day without even breaking a sweat.

It’s that kind of fast money – far more than what you can earn at a minimum wage job -- that’s attracting a growing number of generation Y and Z’ers to the weed game. Most say they’re not looking to build a Scarface-like empire, but are simply trying to put some cash in their pockets, whether for school, life or play.

The dangers, however, are real.

Dizzy, who didn’t want his real name used because of a pending case against him, didn’t have many friends before he started selling weed. But the 20-year-old says that all changed when people found out he was dealing.

“A lot of the times I wouldn’t do it for profit,” he recalls, “but for the homies.”

Weed was his ticket to the in crowd, but over time he picked up some habits of his own, and it soon became a way to purchase harder drugs. His need for money grew and it got harder to hang out with friends without having to carry a supply of drugs.

“Eventually all of your friends expect you to be like this. They won't call you unless you’re trying to party and use drugs… it's hard to go against people’s image of you.”

Dizzy eventually ended up on the streets, where he got picked up on serious possession charges. The experience, he says, has turned him off the game.

Others take a more business-like attitude.

Juan, 23, is a student at City College of San Francisco. His family moved here from Mexico, though he was born and raised in the city and, like Patty, lives apart from his parents.

Covering rent and tuition out of his own pocket, he says he “hustles all month” in order to make ends meet, including selling his artwork and doing odd construction jobs. Marijuana, though, is his main source of revenue.

“I’ve learned a lot about people,” he says. And though clearly not the corporate type, he’s developed some essential business acumen. “It takes a good deal of social skills to get in and sell to people. Everybody is a potential customer.”

And to build your base, you have work fast. Competing with other dealers, Juan says he doesn’t smoke weed himself because it “lowers his motivation.”

Sitting in class, he sometimes receives texts, which make it hard to focus on school. “If you don’t set limits,” he says, the game can “consume every waking minute.”

Juan began selling weed in high school because, like Patty, he couldn’t find work. When he began, he only sold to friends, though now that he’s older he worries about the ramifications of getting caught. Operating by word of mouth, he says he tries to stay “under the radar.”

Under California law, possession of an ounce or less of marijuana is considered an infraction punishable by a $100 fine for persons without a prior record. Larger amounts are deemed a misdemeanor and punishable by a $500 fine and/or six months in jail. Possession with intent to sell remains a felony charge.

But despite California’s relatively lenient stance, tensions between state and federal laws on the sale and cultivation of marijuana remain a hot button issue. In early April, federal authorities raided Oakland-based Oaksterdam University, which offered classes in the cannabis industry. The San Francisco Chronicle reported earlier that the school’s future is now in doubt.

That doesn’t seem to have deterred Juan, who says his family wanted him to drop out of school and get a full-time job. “But that would mean giving up my dream of becoming an artist,” he said. Ferrying weed by bike to all corners of the city, he says he hopes to one day earn enough from his art to get by.

For now, though, he says he takes each day one delivery at a time.

Street Singer is A Warm Light in The Shadow Economy

2011-12-13T11:05:00Z

SAN FRANCISCO, Calif. – Street performers have always furnished the busy arteries of the city. From Metro stations to Union Square, music is almost inescapable in this town. But among the medley, an open violin case and a velvety voice emerge.

Twenty-four year-old Karla Mi Lugo has been street performing for four years. Up and down the West Coast and San Francisco is her current stage. Originally from Georgia, her transient spirit brought her to the Golden State to see what business the Fog City could offer.

Street performing is Mi Lugo’s main source of income. She says 40 bucks a day is good enough for her. Mi Lugo is part of the growing under ground economy, a market where service is given without contracts or receipts and the term “under the table” is the password. Although Mi Lugo’s work isn’t forbidden like some others in the underground, her persistent dedication of going out and parking herself at a street corner and playing music proves she’s a true member.

Mi Lugo’s unique act sets her apart from other buskers. She sings, plays violin, and balances on a ball (usually a globe), all at the same time. Her resonant voice transforms her into a bohemian Madeleine Peyroux with hints of Billie Holiday. Her violin playing accompanies her jazz blues songs sleekly and the circus-inspired ball balancing makes it a transcendental performance.

“[Performances] that are more of a spectacle tend to work out better,” Mi Lugo says. “Like you really have to dress up or just be some kind of novelty, some kind of signature thing that will get responded to better than just a guitar.”

Mi Lugo’s music derives from years of constant traveling. She started singing when the café she was working at hosted open-mics and needed extra musicians. She then worked at a circus where she learned how to balance on top of a ball and decided to incorporate it in her act.

She describes her sound being inspired by an eclectic mix of jazz,Eastern European music, anarchist musicians and surrealist art. Butshe notes that her music career really took off after her heart was broken, which she describes as a “rite of passage in musicianship.”

Mi Lugo explains that when she sings, her songs are almost always improvised. She has phrases and lyrics that she uses but her songs fluctuate every time. This freestyle fashion makes her act that much more pure and passionate.

Her cost of production isn’t much of problem, she says that the strings on her violin have never broken and usually stays in tune. The only issue she runs into is when her globe breaks. Her constant use of the globe causes it to break or flatten on the top where she stands. She says that many of her friends have been replacing her globes.

Mi Lugo says that she hasn’t had a lot of confrontations with the police. Street performing after all is such an accepted event in the city that often cops don’t bother them at all. She says that little things like moving her tip case out of the way of people has been the only problem. But the main issue for cops, she explains, is the volume of the music and if passers-by complain of the noise. Mi Lugo’s songs are generally soft and draws praise.

She says that the money varies from day to day and it’s never the same even if she goes to the same spots. Sometimes she goes home with very little money and sometimes with enough to pay the bills.

“I’m still struggling between doing it for money and doing it for love and mixing the two,” Mi Lugo explains.

Besides performing as a job, Mi Lugo stresses that her main motivation for playing every day is to make a connection with her community through promoting music and art. She says that she likes performing for locals rather than tourists.

“I feel like the community is more receptive because they appreciate good music and art in their area, and tourists are looking more for something that they can take back with them,“ she adds.

Her favorite spot to play is the Mission District. She says that she loves the people there and can relate to the local artists and young crowd. You can catch her playing between 16th St. and Valencia.

Mi Lugo’s music hits just the right niche in San Francisco’s multifarious art scene that is easily embraced and desired, and hopefully, is reflected by the amount of bills her violin case accumulates.

The genuine sentiments of a true musician is alive in Karla Mi Lugo and, as a hard working performer, she is a beautiful light in the shadow economy.

Hot Dog Cart Bound for the Future

2011-11-12T09:00:00Z
Inside the Shadow Economy is a collaboration between New America Media and Salon.com

SAN FRANCISCO — My name is Samir Mogannam. I’m 21 years old [and] I live in the Mission District. If you live in my neighborhood and go out to clubs at night, you see guys selling bacon-wrapped hot dogs on the street, and it’s awesome.

I always had the idea to do that, but with vegan chili-dogs, something a little different and something everybody could eat.

It took months before I got my [food] cart; talking to these mysterious guys and communicating with them, getting their numbers. You can’t just find a cart on Craigslist or whatever. Finally, I found a guy named Saul who was able to help me.

My dad always had a restaurant. My cousins opened up Bi-Rite (market) over there on 18th and Dolores, which was originally my grand uncle’s place back in the late ’60s. It was a liquor store and market, then eventually the kids took it over and it evolved into what it is today. I’m born into working with food.

My vending routine begins with prepping; getting the onions chopped up to grill. If I’m doing my vegan chili-dogs, it’s hard work. I have to go to the farmer’s market in the morning and get all the produce needed. I make my chili from scratch; nothing out of the can. So I reduce all of the tomatoes and get the beans cooked, getting my chili ready for the day.

Then it’s getting everything on the cart. After I make sure I have everything on my checklist — hot dogs, buns, plates, napkins — then I start hauling that thing to my destination, which is the hardest part; just dragging that thing. Depending on how much stuff is on, it could get up to around 120 pounds. In the Mission nothing’s too far away and [the neighborhood] is mostly flat. After I find a good spot — usually in Dolores Park — it takes 20 minutes for me to set up.

I go to the park on nice sunny days. I just try to find people at the park hanging out chilling. Maybe they’ll get the munchies. I thought, it’s a great place to set up because everybody’s young and alive and everyone’s so nice over there and it’s a good vibe. I thought it would be a good idea to be conveniently there for people to just walk a couple feet and get something to eat, some street food, without having to kill their high by walking all the way down to the market to spend a bunch of money.

I’ve probably put $700 into it at least, and I’m not planning on breaking even on the investment any time soon. It’s probably going to take me at least a dozen times of taking the thing out and having really good days to really break even on the investment, but it’s something that’s going to be there in the long run and it’s something I’m passionate about and something I like doing.

I kind of worry about getting harassed by SFPD [San Francisco Police Department] about it sometimes; then other times I’m not really tripping. Thankfully, nobody has a problem with me out there.

They can see how I conduct myself; I kind of know what I’m doing. I’m not doing anything unsafe and everything is sanitary and kept at the right temperature. Cops haven’t been a problem [even though] I’m sure they have seen me in Dolores Park. And I don’t think the health inspector is there too much, so … I haven’t really had that problem yet.

[Not having a permit] does restrict me from just posting up on the street out in the middle of the day when I want to. I never even tried to get one. I grew up out here and I gotta hustle and bustle, you know? No time to ask or pay for permission.

I want to make a deal with an establishment that would authorize me to be right outside of their place. People love to grab a quick bite of street food, after the club.

I don’t want it to be a full-time thing or anything like that — I serve tables at Chilly’s in San Bruno, too — but if I can have fun, serve people good food and make a little bit of money at the same time, that wouldn’t be bad. Right now, little side hustles like my cart are essential to me. Just having one job won’t pay the bills.

I would like to one day own my own establishment. That was definitely one of my fantasies and one of my dreams. That would be cool.

I eventually want to get away from making money off meat and animals and want to serve people things that are wholesome and just delicious, using my creativity and letting that be a choice in people’s day: to spend money on my food.

There are a lot of communities that don’t have the choices to get healthy food. You got liquor stores and there’s nothing healthy in there, nothing wholesome. Then you got fast food all around you, so like throughout your day there’s nothing you can get that’s convenient and healthy. I’m just trying to start that whole movement, actually, and be that person to serve healthy foods — and not only serving food but building awareness about living healthy.

Donny Lumpkins, 22, is a multi-media content producer at New America Media.

Inside the Shadow Economy -- A Growing Underworld Bazaar

2011-09-29T15:45:00Z

Inside the Shadow Economy is a collaboration between Salon.com and New America Media.

A day laborer waiting on a street corner for a morning's worth of work hacking brush. A sweatshop employer paying less than minimum wage and skimping on overtime. A woman running a day care center out of her apartment. Drug dealers, sex workers, unlicensed street food vendors. A plumber who deals only in cash or a farmer who trades food for help with the harvest.

What do they all have in common? They're part of the "shadow economy." Also known as: the underground economy. Pick an adjective, any adjective: informal, gray, black market, under-the-table, hidden, unobserved. There are many different names for the realm where taxes aren't paid, labor laws are ignored, and cash is king. But on at least one point most observers agree: the shadow economy -- in the U.S. and abroad -- is growing. And that's not healthy. In a shadow economy, workers are often unsafe and ruthlessly exploited, while governments are deprived of crucial revenue -- yet still forced to foot the bill for essential services.

In an era of seemingly permanent high unemployment -- what some call the "new normal" -- the shadow economy is where people end up after having been downsized or forced out of their homes or displaced by globalization. And while the shadow economy does offer opportunities for survival -- and even a modicum of upward mobility -- for desperate people in desperate times, it's also proof that capitalism as we know it just isn't working. Once upon a time, underground economies were seen as a problem for developing nations that hadn't figured out either democracy or how to manage an economy. But now, increasingly, the shadow economy is a developed world problem -- contributing to a growing disenchantment with the political process, and a growing sense that workers are on their own, scrambling for ever smaller pieces of pie at the bottom while those on the top consolidate their gains.

Both the shadow economy's size and speed of growth, however, are uncertain. When a sector of the economy's essential attribute is that it doesn't show up in the numbers collected by government or reported by employers, we're dealing, right off the bat, with an entity that is fundamentally hard to quantify. We don't even know, for sure, what the impact of the Great Recession has been on the shadow economy in the U.S. High unemployment has clearly forced workers to do whatever they can to get by, but it has also resulted in a stark decline in illegal immigration -- which, in the past, has been considered one of the biggest contributing factors to the growth of the shadow economy.

But most of all, we don't know exactly why the shadow economy is growing. On the one hand, conservatives and libertarians see the rise of underground economies as a necessary (and justified) response to high taxes and excessive regulation. The bigger the heavy hand of government, the harder people -- both workers and employers -- will try to escape. The "coercive power of the state," as Friedrich Hayek liked to say, is the enemy of true liberty.

Progressives and labor organizers have a diametrically opposed view: Globalization and deregulation have smashed the traditional employer-employee relationship, they say. In the dog-eat-dog world of global competition, the rules on the books are no longer being enforced and workers everywhere are getting squeezed. That construction worker willing to cut you a discount if you pay cash for your new porch is in part responding to pressures exerted by China and the global triumph of capital over labor. That shantytown bike mechanic hasn't been liberated from the state; he's been cut off from true participation in an economy that will allow him to prosper.

As Peru's Hernando de Soto, one of the first economists to truly appreciate the importance of the shadow economy, has emphasized repeatedly, the real challenge isn't necessarily to remove regulations, but to find ways to legitimize what's already happening, to make it easier for the dispossessed to move out of the shadows.

Watching Washington politicians demagogue about deficits and job creation while they drown the nation in endless partisan squabbling isn't getting us any closer to understanding what's really pushing the growth of the underground economy -- or pointing us towards a possible solution. Horse-race coverage of the latest government shutdown idiocy seems less and less connected to the everyday challenges of everyday lives. "We have to wake up to the world that we live in," says Martha Chen, a lecturer in public policy at Harvard's Kennedy School of Government who has studied the informal economy.

And that means paying attention to the street. So today, Salon, in partnership with New America Media, is launching a new series, "Inside the Shadow Economy." The first goal is to get a closer look at the people who make up the shadow economy. Their stories, their lives, will help illustrate some of the larger questions -- why and how this is all happening.

Beyond that, the greater challenge is to figure out what we can do about it. Resurrecting the power of labor in a globalized world is a monumental task -- it is decidedly unclear whether any single nation can do it on its own. But organizing a global worker's movement seems an equally quixotic enterprise. Refocusing government on the dire situation on the ground will require grass roots pressure and the smashing of outdated partisan paradigms. Finding ways to legitimatize the shadow economy while protecting workers from abuses may even demand that the developed world take some lessons from the experience of emerging nations. With economic growth sagging everywhere, it's going to be an uphill battle. But that doesn't mean we should stop looking for solutions, and we'll be exploring potential paths forward in this series.

Because if there's one thing that the stories of the shadow economy do tell us, it's that no matter how dire the situation, people will find a way to make it through the day. Change does happen. It might come from the street, instead of Washington, and it may need encouragement, instead of scorn. But disenfranchised will, eventually, find their voice. The sooner we hear it, and act, the better off we'll all be.

What is the shadow economy?

The standard estimate of the current size of the shadow economy in the United States ranges from around 8-10 percent of total GDP -- in 2010, an amount equal to around $1.4 trillion. In California alone, lawmakers are quick to cite numbers that place the underground economy at anywhere between $60 billion and $150 billion. But the critical issue isn't the overall size, but instead the rate of growth. One influential measurer of the underground economy, Austrian researcher Friedrich Schneider, pegged the U.S. shadow economy at 4 percent of GDP in 1970 and 9 percent in 2000. Others have concluded that the informal economy has been growing at a rate of 5 to 6 percent a year since the early 1990s -- faster than the "regular" economy.

Schneider is one of the more vocal advocates of the view that the size of the shadow economy is correlated with levels of taxation and regulation: "Countries with relatively low tax rates," he writes, "fewer laws and regulations, and a well-established rule of law tend to have smaller shadow economies."

But that doesn't quite jibe with historical trends in the U.S. over the past few decades, observes Pascale Joassart, a professor of geography at the University of California at San Diego and the co-author of a groundbreaking study of the growth of the "informal economy" in Los Angeles.

"The informal economy is growing," says Joassart, "but in the last 20 years, our economy has been deregulated and marginal taxation rates have gone down."

What's really going on, says Joassart, is that there has been "a restructuring of the economy which, in order to promote flexibility and global competitiveness, has led to greater reliance on part-time and contingent labor."

"This includes a large informal sector made up primarily of lower-skilled workers who are required to work (such as former welfare recipients) and immigrants who have limited protections," he says. "I would argue that it is a deregulation of the economy, including a decline in welfare programs and an increase in free trade and global competition, that has led to an increase in informal work in industrialized nations."

That deregulation, says Sara Flock, policy director at the California Federation of Labor, goes hand in hand with a failure to enforce the labor laws currently on the books. Flock acknowledges that one driving force in the growth of the shadow economy has been the desire of employers to avoid profit-cramping requirements like worker's comp, payroll taxes, minimum wages and overtime. But the difference now is that employers can easily get away with doing so, because no one is minding the store.

A study conducted by UCLA researchers in 2010, "Wage Theft and Workplace Violations in Los Angeles," reported that between "1980 and 2007, the number of minimum wage and overtime inspectors declined by 31 percent."

"And that's while the labor force is growing," says Flock. "The labor force grew by 52 percent but enforcement has declined by 31 percent."

"The underground economy has always existed," adds Flock, "and has always preyed on the most vulnerable workers -- immigrants, women, young people, and now increasingly seniors. But what's different now is that there has been a real erosion of the traditional employer-employee relationship. Employers are much more mobile and are using many different tools to make sure that they don't actually directly employ workers."

A selection from the wage theft study makes the point in even stronger terms:

Today, at the start of the twenty-first century, the nation is facing a workplace enforcement crisis, with widespread violations of many long established legal standards. The crisis involves laws dating back to the New Deal era that require employers to pay most workers at least the minimum wage and time-and-a-half for overtime hours and that guarantee employees' right to organize and bring complaints about working conditions. Also violated frequently are more recently established laws that were designed to protect workers' health and safety, laws that require employers to carry workers' compensation insurance in case of on-the-job injury, and laws that prohibit discrimination on the basis of age, race, religion, national origin, gender, sexual orientation, or disability.

High unemployment, unsurprisingly, has also been correlated with a larger informal economy. But what's interesting, says Joassart, is that in the past, the informal economy rose and fell in a cyclical pattern. In a recession, the informal economy would grow, but when the economy returned to health, it would decline. That pattern is no longer visible. Since 1990, the shadow economy keeps growing, irrespective of what's happening in the business cycle.

Welcome to the 21st century! The bottom line: Globalization has substantially shifted the relative power of labor and capital.

"What you have had is a huge labor injection of labor from China and India and all of that," says Martha Chen, "and you haven't had a commensurate injection of capital. So the labor-to-capital ratio is at a point where capital is really in the driver seat."

That's the ideological mathematics that explains both "the new normal" and the shadow economy.

When capital is in the driver's seat, government is no longer enforcing labor laws, and unemployment is high, workers have no leverage. Opportunities for jobs with benefits and good pay decrease, and everyone is forced to scramble for whatever is available. Increasingly, that means work that is completely outside the regulated sector. Work that is found in the shadow economy.

ALSO READ Inside the Shadow Economy -- Touch Me for Money, Life as a Male Escort

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More: Andrew Leonard

Inside the Shadow Economy -- Touch Me for Money, Life as a Male Escort

2011-09-29T15:30:00Z

Inside the Shadow Economy is a collaboration between Salon.com and New America Media.

"Edward," 19, of Oakland, Calif., lives in the shadow economy. One of four siblings abandoned by jobless, drug-addicted parents, he grew up in a foster home. He now attends City College of San Francisco but has never had a normal job. When he needs cash fast he relies on the one thing he has complete control over: his body. As a casual male escort in Oakland, he has been able to hustle up work for himself, braving the dangers of sex work while taking pride in the service he delivers.

In return for telling his story to Sean Shavers, a New America Media content producer, "Edward" asked that his real name not be published.

AUDIO: Edward tells his story, Part 1

AUDIO: Edward tells his story, Part 2

OAKLAND, Calif. -- My name is Edward and I am a male escort. That is simply a person that goes out and has sex with people for profit. I live in Oakland, Calif.

I don't do it on a daily basis. I do it when I really, really need the money -- if I can't pay a phone bill, or if I need food or something that really, really is needed. For little things, I charge from $20 to $45. For anything, you know, past "3rd base" it's more expensive, from $100 to $150.

When I say little I mean, like a hand job. Or, say, the person is into looking, and really likes how my body looks they'll want to touch. Because I take care of my body and I like how I look, I charge a touching fee. You can touch wherever you like, but I just need the money upfront. That's roughly $20 to $30.

Within the last month I've had three, yeah, dates -- if that's what you want to call them. And all three were generous, actually. I got a good amount of money; I was quite happy. Most of my customers are men. I'll rarely get females; the majority are men. For the big thing, actually going the whole way, my prices usually run from $100- $150 to about $200. Actually, the prices vary a lot. For most women I would only charge $50 to $70 for 30 to 35 minutes. This is for oral. It never goes as far as sleeping with the women. It's always oral or touchy-feely type things.

When it comes to escorting, or picking up clients or anything like that, my name is always bounced around. I've never had a bad feedback. I've always been recommended. People have referred other people to me. It is what it is. Usually, they find me. I don't go out and look. I'm usually stopped on my way home or wherever I'm coming from. It can happen through Facebook, email or school. I actually had a friend who gave my number out to a few people, and they've called to set up a date. It's not that hard, actually.

I started when I was 17 years old. I went with a family member to pick up some drugs he had bought, and I was put in this position where the only way this guy was gonna give what my relative wanted was if he had sex with me. And at first, it was like "No, I'm not gonna let you do this. It's not cool," but then he showed me how much it was worth, and I had second thoughts.

I was looking at how much it was, got a little greedy and asked for more, because ya' know I care about my body. The final price was $450, and I told him OK. And we did what we had to do. My relative got what we came for. And since then, I had the thought in my head, "Well, if people are gonna pay for my body then why not? I'm making money, I'm not getting in trouble and not many people know about it."

It's a side hustle I don't have to worry about. As far as doing this on an everyday basis, I don't think I'd want to. Like I said, it would be only for real, real emergency reasons. Or if something was out of my control.

What I've come to learn is that a man knows how a man wants to feel when he's being pleased. Me being a man, I know what pleases me. I know what I'm doing with another man, so that while I can make my profit, I also know that this person is satisfied and he's not wasting his time. When I'm doing business, I don't like wasting time.

It is a very dangerous business because you have to look out for the police, decoys and other people that might set you up.

I went to an event with a friend once, and we were casually walking down the street, and a guy pulled up, asking how much, and we told him our prices. I didn't get in the car, but my friend did. Within five minutes an undercover police car pulled up and he went to jail. My friend had run into a decoy. I felt a sense of relief that it wasn't me that got caught, but I felt bad that it was my friend who had to take the blame.

Where I live, male escorting is very common. I can almost guarantee half of the neighborhood men go out and escort. But they don't do it in the daytime. They wait until after-hours. You won't see them out at noon, 12:30, or 1 p.m. They'll come out at 11 of 12 at night and stand outside till almost 4 or 5 in the morning. They go back home and come out the next night. For some it is a cycle; some just can't let it go. And there are some, like myself, who only do it when I really, really need to.

ALSO READ Inside the Shadow Economy -- A Growing Underworld Bazaar

Sean Shavers is a content producer at New America Media, specializing in video. His most recent piece was Living in Storage -- Growing Up Poor in the Bay Area.