Wednesday, December 14, 2005

L.A.'s underground cash

The L.A.Daily News reports:
Los Angeles County's underground cash economy is expanding rapidly, eroding the work force and sapping an estimated $2 billion a year from city, state and federal coffers, according to a key finding in a major regional report scheduled to be released today.

Driven by what the report authors call economic desperation, the region's cash-only work force has grown about 5 percent in the past four years to nearly 680,000 workers - nearly half of them in the city of Los Angeles alone. They account for about 15 percent of the total Los Angeles County work force, according to the report on a Milken Institute study titled the "Los Angeles Economy Project."

At the same time, payroll jobs in the entire county that contribute with taxes and fees to the social safety net declined by roughly 2 percent - from 3.9 million to 3.8 million.

"Given this large number of informal jobs and the continuing practice by many employers of avoiding legally mandated payroll taxes, there is a real risk that a steadily increasing number of employers will adopt this illicit labor-management practice in order to remain competitive within the Los Angeles region," the authors concluded.
High taxes and regulations cause a lot of problems.