I’d concur that underemployment has increased. Having an increasingly educated workforce coming online in Eastern Europe, South America, India, China and other markets with full access to telework facilities capable of supporting offshoring will continue to displace U.S. citizens with less than a high school diploma.
In our rural community of 1,000, I can easily think of 20-30 under-employed workers out of the working age population of ~500 to 600. They lack a high school diploma, lack training in any specific trade or craft and find little consistent work. My neighbor has a son-in-law who receives permanent disability and walks with a cane in town, but puts up hay and does other cash-based work for farmers around here (with no impairment). When his beer money runs short, he’s always available. He also sells wood chips for smoking meat for cash with no visibility to sales tax. We have a dozen plus “hired men” types who tend to cattle and do other labor requiring no training. And then there’s the dozen or so junk guys who will pick up old vehicles or other farm metal for the scrap value. Many of these people have small farms or other side businesses they do for cash. The scrap guy over the hill to my west sells farm fresh eggs and delivers to dozens of households. Another west of him has sheep and goats and sells goat milk.
Again, they’re all living outside of the tax system, make a living that exceeds minimum wage due to the lack of a tax liability. A few who really hustle and have their own animals or produce to sell in addition to their labor net $30K annually with little difficulty, which would take a over-the-road truck driver’s gross income if taxes and social security were to be factored for a comparable taxable wage. Of course, they don’t show up in government statistics since they’re mostly invisible (except for those on disability, which are also not accounted for as employed).
Are these people a problem? I’d have to estimate they exceed 5% of the natural workforce. I’m not even including the small percentage of criminals, meth dealers, etc. that are self-employed under the tax radar. While the IRS might be alarmed, many (excluding the criminal element) provide a necessary bottom feeder role and help society with necessary efficiency optimization. If we’re really concerned about the tax issues of these undereducated unsophisticated non-filing self-employed individuals, then we really need to get a flat-tax put into place that ensures compliance at the consumption level.
