It's known variously as the underground or shadow economy, getting paid under the table or working off the books.
Call it what you will, Missouri Department of Labor director Larry Rebman calls the practice unfair, illegal and another barometer reflecting the depth of the jobs crisis.
In 2008, the labor agency identified or cited 180 Missouri workers for inaccurately reporting full-time employees as part-time workers or consultants.
In 2011, the state expects to call out nearly 6,000 workers — an increase that exceeds 3,000 percent.
It's the same nationwide. In a 2009 study, the Austrian economist Friedrich Schneider placed the value of the parallel U.S. economy at $1 trillion.
Encompassing an estimated 8 percent of the gross domestic product, its an economic sector that extends well beyond the musicians, street vendors, sex trade workers and others fitting the off-the-books stereotype.
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Asked to name some of the professions that have recently come to the Labor Department's attention, Rebman stopped short after listing janitorial, trucking, construction, manufacturing and retail.
In a downturn that has seen countless full-time employees rehired as consultants or agents or freelancers, the bottom line is that no business sector is exempt from the practice.
"People still have to eat, even as firms lay off employees and businesses contract," said Stephen Ferris, a finance professor at the University of Missouri-Columbia. "So they start their own businesses, work off the books, and they become a kind of force in the entrepreneurship of poverty."
Ferris points to a pair of factors that generally accelerate activity in the underground economy — a faltering mainstream business climate and tax hikes.
In an effort to address a line often blurred, the Labor Department placed a link on its website — — to steer employers and employees toward the "gray areas" differentiating full-time workers from independent contractors.
The line, as demonstrated by the definition of employment advanced by the state and Internal Revenue Service, is fairly straightforward.
"Anyone who performs a service for wages is an employee if the employer can control what will be done and how it will be done," it reads. "If an employer/employee relationship exists, it does not matter what the worker or the relationship is called. The employee may be called an agent or contract labor. It does not matter how payments are measured or paid, what the payments are called, or if the employee works full or part time."
The rise in off-the-books Missouri workers can be traced in part to a Labor Department crackdown on businesses and employees working off the books.
Sensing the extent of the problem, Rebman expanded the statewide net by upgrading audits meant to flush out employers and employees working off the books.
The state soon realized it had an unintentional ally: an economy that laid exposed a fair share of violations when employees injured on the job applied for workers' compensation or displaced wage earners showing up a Missouri Career Centers seeking unemployment benefits.
Many a wounded or laid-off worker has come up short the past couple of years, Rebman notes, because a most recent employer company has failed to set aside funds on their behalf for workers' compensation and jobless insurance.
The empathetic Rebman understands how an unforgiving economy can entice a worker to take home $10 an hour under the table compared with $7.25 an hour after mandated payroll deductions.
The caveat, he cautions, is the hypothetical $2.75 per hour dividend evaporating as soon as the job is stripped away or an employment-induced injury prompts a worker to seek benefits.
"At the end of the day, you're worse off," the labor agency director says.
On the business side, any and all monetary gains disappear the moment the illegal dodge comes to the attention of state or federal labor officials.
Rebman said the vast majority of businesses cited by the state have settled the matter by quietly paying restitution plus penalties that can range from $50 to $1,000 per day per worker.
So far this year, the state has collected $837,000 from miscreant businesses.
A continuing pattern of infractions or particularly egregious instances of noncompliance trigger a Class A misdemeanor criminal complaint punishable by up to six months in jail and civil fines that can run as high as $50,000.
The law notwithstanding, Rebman believes playing by the rules is a matter of basic marketplace fairness.
"When (profit) margins are this tight, how can you compete when someone else is saving 20 percent off the top?" he says. "This levels the playing field for honest Missouri businesses."
