Below the surface, another economy Cash-only dealings go free of taxes

February 10, 1993|By Holly Selby | Holly Selby,Staff Writer

"Apartment cleaning and odd jobs very reasonable rates. Call John," says a scrawled advertisement on a bulletin board in Charles Village.

For about $15 an hour, John, wannabe musician by night and entrepreneur by day, will vacuum, scrub, move furniture and mow.

What he won't do is report his sporadic earnings to the Internal Revenue Service.

"It's a buck," says the 24-year-old. "You find a job these days."

An elderly woman who worked 20 years in maintenance for a large company and receives a check from Social Security occasionally cleans homes in North Baltimore for $30 -- cash only, please.

"I don't make very much," she says, visibly hesitant about answering questions of any sort. "I ask for cash. That way, I don't have to cash the check at night after work."

She also doesn't have to report her extra earnings.

The musician and retiree are participants in a flourishing informal economy. Frequently, the underground network is kept running by tacit agreements of silence on both sides of the business equation. As one woman put it, "I won't jeopardize my relationship with my housekeeper" by even hinting at her name.

Although the underground activities can include exploitation of the poor or of illegal aliens, these under-the-table transactions also can range from hiring for cash a teen-ager to mow the lawn or a woman to fill in for day care.

"There are a lot of native citizens doing it, so it can't be just the immigrants, can't just be a complicated paperwork question," says Saskia Sassen, author of "The Global City: New York, London, Tokyo," which examines the causes and effects of underground economies.

A shift to a service economy has created larger demand for casual jobs such as house cleaning, gardening, painting. Add an increase in two-income families, says Ms. Sassen, professor of urban planning at Columbia University, "and you're buying many more of the services you used to do yourself."

Moreover, people have a growing feeling "that they don't really know where their taxes go," she says. "A certain alienation from the whole sense of collective duty."

But the consequences for individuals who work in an underground economy can be high.

"Even a low or smaller-paying job can net you valuable returns as far as Social Security goes," says Philip A. Gambino, spokesman for Social Security Administration in Woodlawn.

"We don't see these people often until they reach retirement."

By then it may be too late. Frequently these people have worked for years, but there is no paper trail to prove it, says Richard North, director of the clinical programs at the University of Maryland School of Law.

In cases of domestic help, some employees believe that by reporting income they will suffer a reduction in pay. "These are people who live very close to the margin, and a slight reduction in pay is the electricity bill or the food budget," he says.

Although some workers request cash, others say they don't know enough about tax laws to demand that their employment be legal.

One former domestic worker came to Maryland from the Philippines when a prospective employer, a Baltimore doctor, promised her $200 a month in wages and help in obtaining legal residency here.

"I only got a six-month visa, and when she got me here she didn't want to process the papers," says the 34-year-old, who spoke on condition of anonymity.

"I was so scared being that I don't know nobody here, and she just scared me, and she said, 'Now you're here and you have to finish your contract.' "

The woman says she worked as a live-in maid for three years until she married and left the doctor's employ.

Despite the risks, silence keeps the underground economy running. "I called my plumber and asked if he would talk to [a reporter]. I said he didn't need to give his name. He said 'No,' " says a Baltimore County resident who pays his plumber in cash.

Other employers say the services provided are well worth a twinge of conscience or threat of law enforcement.

"I know someone who cleaned my house and wanted cash -- she did me a favor [by working], and I did her a favor by not asking why," says a Baltimore woman.

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